Fannie Mae to delay filing financial report

/ Source: The Associated Press

Government-sponsored home-mortgage funder Fannie Mae said Wednesday it will not file its 2006 third-quarter report on time, due to a pending restatement of its financials.

In a filing with the Securities and Exchange Commission, Fannie Mae said it determined financial statements from January 2001 through the second quarter of 2004 should no longer be relied upon, due to issues with accounting practices and material weaknesses in internal controls over financial reporting.

The company plans to restate earnings for fiscal years 2002 and 2003, as well as the first and second quarters of 2004.

The company plans to file restatements, its quarterly report and annual report for 2004 by the end of this year. In the meantime, because of the late filing, Fannie Mae will need to request extensions from the NYSE in order for its shares to remain listed on the exchange.

Fannie Mae, formally known as the Federal National Mortgage Association, recently emerged from a major accounting scandal. In August the Justice Department ended its two-year criminal investigation, and the lender was ordered by the SEC to restate earnings back to 2001 — a correction expected to amount to around $11 billion.

The company estimates that restatement and related regulatory costs will total about $850 million for 2006 and that costs associated with the preparation of financial statements and periodic SEC financial reports for periods after 2004 will total over $200 million for fiscal 2006.

Fannie Mae shares closed at $59.90 on Tuesday on the New York Stock Exchange.