Industry NewsMortgage

Regulators cut Fannie Mae more slack

Fannie will raise $6 billion to counter losses

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Federal regulators have formally lifted many restrictions imposed on government-chartered mortgage financer Fannie Mae in the wake of accounting and management scandals, even as the company reported a $2.2 billion first-quarter loss and predicted losses will grow in 2009. In lifting a 2006 consent order, the Office of Federal Housing Enterprise Oversight said Tuesday that "two years of hard work" by Fannie Mae officials had resolved many internal accounting and management problems. Regulators will continue reducing surplus capital requirements imposed on Fannie Mae after the company was forced to restate several years of earnings, OFHEO said. On March 1 OFHEO removed a cap on the size of Fannie Mae's mortgage portfolio -- loans or mortgage-backed securities the company holds for investment. About three weeks later, OFHEO reduced a 30 percent capital surplus requirement imposed in a May 2006 consent order to 20 percent, giving Fannie Mae more leeway to guarant...