A U.S. government review into the nation’s No. 1 mortgage finance company, Fannie Mae, charges it with inappropriate accounting practices and called into doubt past financial results, the company’s board said on Wednesday.
The company’s regulator, the Office of Federal Housing Enterprise Oversight, outlined to the company on Monday findings alleging accounting methods that deviate from standard practice, internal control deficiencies and a culture that emphasized stable earnings at the expense of accurate financial disclosures, Fannie Mae’s board said in a statement.
Regulators launched a review of Fannie Mae’s accounting after an accounting scandal at sibling mortgage finance enterprise Freddie Mac in 2003 that resulted in a $5 billion earnings restatement and a $125 million civil penalty for that company. Fannie Mae and Freddie Mac are among the largest financial institutions in the United States and own or have guaranteed close to half of the $7.8 trillion U.S. mortgage debt outstanding.
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