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Ex-Freddie Mac Chief Loses Lease

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By Annys Shin
Washington Post Staff Writer
Friday, September 30, 2005

The state of Maryland Wednesday terminated a lease with former Freddie Mac chief executive Leland C. Brendsel and his wife for 98 acres of state land surrounding his estate on Wye Island, after an official determined that the lease was improperly awarded.

Just six months ago, the Department of Natural Resources granted Brendsel a five-year lease for the Eastern Shore property without putting it up for competitive bid, as the agency had done in prior years.

Leland and Diane Brendsel, who bought the 27-acre Wye Hall estate on the island six years ago for $5.1 million, were the first non-farmers in at least a decade to lease the nearby 98 acres on the island's eastern tip. The state owns 87.5 percent of the 2,800-acre Wye Island, part of which it leases for farming and the rest of which is maintained as a natural preserve.

After the Brendsels signed the lease in March, they landscaped a portion of the property that led to the entrance of their home and made other improvements that state officials have been reviewing to see if they violated terms of the lease.

Stephen S. Hershey Jr., assistant DNR secretary for property management, began reviewing the lease after complaints from a neighbor and said yesterday that he had decided that the department erred in leasing the land to Brendsel without competitive bidding.

The former Freddie Mac executive, who retired from the mortgage company in 2003 after revelations that the company had violated accounting rules, is paying $13,676 a year for the use of the land. While that is only about $700 less than paid by the previous tenant, a local farmer who had won rights to the property through competitive bidding, Hershey said he was canceling the lease "to undo a wrong."

Brendsel is not alleged to have done anything wrong in the acquisition of the lease.

The Brendsels did not return phone messages left at Wye Hall. Brendan Sullivan, who is representing Leland Brendsel on matters related to his tenure at Freddie Mac, was out of town, according to Sullivan's secretary, and did not respond to a message left at his office.

Under state policy, property that is considered "landlocked" -- inaccessible by a state road or other means -- can be leased without a competitive bid. Though previous tenants of the Wye Island land had undergone a bidding process, local DNR staff members had in this case characterized the property as landlocked -- a judgment that Hershey now says was wrong. The state Board of Public Works approved the lease in January without discussion, according to a meeting summary.

As the head of Freddie Mac, Brendsel oversaw the company during an accounting crisis that led it to restate more than $5 billion in previously reported earnings. The company recently agreed to assist its chief regulator, the Office of Federal Housing Enterprise Oversight, in efforts to withhold more than $33 million in severance benefits paid to Brendsel when he retired.

Wye Hall was built in the 1930s on the site of the estate of William Paca, a signer of the Declaration of Independence. Since purchasing it, the Brendsels have renovated the red-brick, Colonial-style mansion and told neighbors and contractors that they intended to retire there.

Hershey said that he gave the Brendsels until the end of the year to harvest crops that they had allowed a local farmer to plant on the land. The parcel then will be put up for bid, and Brendsel can try to lease it again. If he is outbid, he may have to remove some of the landscaping.

Hershey had also been reviewing whether the Brendsels violated the terms of their lease by making cosmetic changes to the ecologically sensitive property.

Brendsel last year had approached DNR officials with a proposal for changes to the state land around Wye Hall but was turned down, Hershey said.

After the couple obtained the land in March, according to Hershey and a neighbor, they moved trees to the side of the road, planted dozens of ornamental shrubs and paved a portion of Wye Hall Drive up to their driveway -- changes that the Brendsels' landscape architect, Kevin Campion, said were made with the approval of a local DNR official. When visitors reach the edge of the leased property, they are greeted by a sign that reads "Wye Hall," which a neighbor said had been moved from its previous location closer to the house.


© 2005 The Washington Post Company

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