Fannie Mae Plans to Bring Reports Up to Date by February

Fannie Mae, the mortgage finance giant trying to fix its accounting after overstating profit by $6.3 billion, plans to release its 2006 annual report next quarter and update its financial statements completely by February.

The timetable shows "momentum in our efforts to catch up and become a current filer," chief executive Daniel H. Mudd said in a statement yesterday. The District company plans to hold its annual shareholder meeting Dec. 14, its first since May 2004.

Fannie Mae, which is regulated by the Office of Federal Housing Enterprise Oversight, hasn't filed timely financial results since July 2004. Getting back on schedule would cap a three-year effort by the government-chartered company to correct its accounting, controls and governance.

Fannie Mae's flawed accounting from 2001 through June 2004 prompted the ouster of top executives, a $400 million federal fine and a regulatory crackdown.

This "is way ahead of market and OFHEO expectations," Jim Vogel, head of agency debt research at FTN Financial in Memphis, wrote in a note to clients yesterday. "Getting caught up with where you were supposed to be all along doesn't exactly qualify as good news, but it's way better than falling further behind."

Freddie Mac, Fannie Mae's main rival, has yet to resolve all of its bookkeeping problems that led to a nearly $5 billion profit understatement from 2000 to 2002. Freddie Mac said at its annual shareholders meeting yesterday that it plans to release first-quarter 2007 financial results Thursday.

"For the first time in five years, we will return to quarterly reporting next week," Freddie Mac chief executive Richard F. Syron told shareholders. "It's been an enormous, almost backbreaking task." The company hasn't set a target date for restoring timely reporting, which entails filing results within 40 days after the end of a quarter.

Shares of Fannie Mae rose 91 cents yesterday to $64.35 in New York Stock Exchange trading. The stock, which fell below $42 in October 2005 because of the uncertainty surrounding earnings and a regulatory crackdown, is near a 52-week high. Freddie Mac fell 78 cents, to $64.63.

Fannie Mae and Freddie Mac own or guarantee 40 percent of the nation's $10.9 trillion residential mortgage market.

Created by Congress to increase financing available to home buyers, the two companies channel money into the mortgage market by buying home loans from lenders. The companies profit by holding mortgages and mortgage bonds as investments and by charging a fee to guarantee and package loans as securities.