Fannie Mae Delays Quarterly SEC Filing

The nation's biggest mortgage lender disclosed the potential loss in a press release late Monday. The news came as Fannie admitted that it won't be able to file its third-quarter financials with regulators on time. Fannie said its auditor needs more time to go over its finances, in light of the serious questions raised about the firm's accounting practices by its regulator. The Washington-based company offered no timetable for completing the review, other than to say it won't be done this week.

In the filing, Fannie also says its third quarter will be an ugly one. The firm expects net income to decline by 9% from a year ago to $2.4 billion, or $2.45 a share. Core business earnings, a metric Fannie prefers to use to measure its performance, rose 1% to $1.84 billion.

Meanwhile, the company says it's likely to incur a $26 million after-tax loss for the first nine months of this year if it's forced to restate earnings. Fannie reiterated its stance that it believes its accounting has been appropriate, though it said Monday that "Fannie Mae will modify its accounting, if necessary, to comply with the SEC's views."

The far bigger news is Fannie's disclosure that it may have incurred $9 billion in after-tax losses in its derivatives transactions since January 2001. Fannie said it would incur that loss if regulators reject the accounting treatment Fannie had been using for the past several years to value those derivatives contracts.

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Thanks for sharing, R. I've been keeping an eye on Fannie Mae, and also on GNMA to see what would happen. We know that there have been some serious allgeations of fraud at Fannie Mae.

The CEO has left, I believe. Auditors found out that they had been UNDERREPORTING earnings, rather than overstating (like Enron). So something serious has been going on here.

I know they've been trying desperately to keep a lid on this because if there are some big losses, the real estate market could tank, or at least get hit by this. Very serious stuff.

I read on another thread that there are 3 times as many paper mortgages than there are physical properties (!!).

if the market crashes and families around the country lose their homes, there are always buyers waiting in the shadows, right?

I think this is just another step in the willful destruction of the america we all thought we knew.

They are after all of us middle classers.

as CEO of Fannie Mae? I hadn't heard that.

I hate when politicians go right from office to running companies. What did Frank Raines know about running Fannie Mae other than being well connected in Washington?

Also, isn't Fannie Mae somehow backed by the government?

This could be another Savings and Loan bailout.