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Company: Fannie Mae

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Fannie Mae in government probe

Date Class
24th Sep 2004 Fraud Investigation
 
Details
Shares of Fannie Mae fell again on Friday, capping a three-day slide of more than 13 percent, as investor concerns widened after a government regulator accused top executives of the mortgage giant of mismanagement and serious accounting misdeeds.

Regulators at the Office of Federal Housing Enterprise Oversight who investigated Fannie Mae's books said the problems they found, at least in a key area of accounting, were more serious, far more complex and wider in scope than previously thought.

The fallout could eventually reach millions of Americans if they have to pay higher rates for new mortgages for home purchases or refinancings, analysts say. That could be one of the consequences if Fannie Mae is forced to pay higher rates on its nearly $1 trillion in debt.

Fannie Mae, a government-sponsored mortgage financer, purchase billions of dollars of mortgages each year from banks and other mortgage lenders, then package them into bonds that are resold to investors. While they are not directly guaranteed by the government, they have special privileges notably the ability to borrow directly from the U.S. Treasury, which makes their borrowing rates lower than competing firms.

 

 

 


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