updated 3/17/2005 8:48:42 PM ET 2005-03-18T01:48:42

Mortgage giant Fannie Mae, previously accused by regulators of manipulating earnings, disclosed Thursday that it will miss the regulatory deadline for filing its financial report for 2004 and may have to record an additional loss of some $2.4 billion. The discovery of falsified signatures raised the possibility of criminal activity by company employees.

Fannie Mae, which is the largest U.S. buyer of home mortgages, recently was ordered by the Securities and Exchange Commission to restate its earnings back to 2001, a correction that could reach an estimated $8.4 billion. That would erase nearly one-third of the company’s reported profit since 2001. The newly disclosed potential loss would bring the restatement to nearly $11 billion.

In a filing with the SEC Thursday, the government-sponsored company said it would not be able to meet a March 31 deadline to file the annual report and was unable to provide “a reasonable estimate” of its earnings for 2003 and 2004.

The company still hasn’t filed its third-quarter 2004 report, which was due in November. Fannie Mae missed that deadline after its independent auditor KPMG refused to sign off on the report.

The latest downturn in Fannie Mae’s fortunes since its accounting crisis came to light last September came as news emerged that federal regulators had found cases of company employees falsifying signatures in ledgers and improperly altering database records.

Investigators at the Office of Federal Housing Enterprise Oversight, who previously found serious accounting problems at Fannie Mae, are trying to determine whether the employees in question aimed to manipulate the company’s financial reports, an agency spokesperson said, declining to be identified by name and confirming a report in Thursday’s Wall Street Journal.

The employees and their positions at the Washington-based company were not identified.

The disclosure raises the possibility of criminal activity by employees at Fannie Mae, whose accounting also is under investigation by the Justice Department and the SEC.

Asked whether there were indications of criminal activity, an OFHEO official said that was possible, The Journal reported. It did not name the official.

In an accord with OFHEO last week, the company agreed to set up new controls against faulty accounting — including policies to prevent the falsification of signatures in ledgers. Fannie Mae also agreed to separate the chairman and CEO jobs, a split it had formerly resisted.

Companies that miss SEC quarterly and annual filing deadlines are technically in violation of agency rules. The SEC rarely imposes sanctions, however, because investors would not benefit from companies with restatements under way putting out unreliable financial figures in a rush to meet the deadlines.

Fannie Mae and Freddie Mac, its smaller rival, were created by Congress to pump money into the $8 trillion home-mortgage market. They buy and guarantee repayment of billions of dollars of home loans each year from banks and other lenders, then bundle them into securities that are resold to investors worldwide.

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