An article in yesterday's Business section incorrectly stated that the Federal National Mortgage Association, known as Fannie Mae, had informed shareholders of only half of the $20 million it expected to lose as a result of dealings with the Virginia mortgage banking firm Freelander Inc. The full amount had been disclosed in a press release in 1988. (Published 7/20/90)

Eve A. Freedlander, a 64-year-old mortgage banker in Richmond, pleaded guilty yesterday to federal charges of defrauding investors, banks and the Washington-based Federal National Mortgage Association of more than $200 million.

Freedlander, whose company once was the fourth-largest mortgage lending firm in the nation before filing for bankruptcy last year, faces up to 15 years in prison and $750,000 in fines for her guilty plea to bank and mail fraud, according to the federal prosecutors.

Papers filed yesterday in federal court in Richmond describe a complex set of transactions in which Freedlander Inc. The Mortgage Company, wrote millions of dollars in second-mortgage loans to homeowners in more than 30 states, sold the loans to banks, investors and other financial institutions, and later hid evidence that many of the loans had gone sour because borrowers were falling behind in their payments.

One of biggest customers for Freedlander's loans was the Federal National Mortgage Association (Fannie Mae), which yesterday estimated that it would realize losses of $20 million because of its dealings with the Freedlander organization, only $10 million of which had been previously reported to shareholders.

Fannie Mae won a judgment of about $20 million last year from Freedlander as a result of a civil suit filed in federal court in Richmond, but payments are now tied up in Freedlander's bankruptcy court proceedings, a Fannie Mae spokesman said.

Also stung by the Freedlander scheme were Richmond-based Dominion National Bank, New Jersey-based First Jersey Savings & Loan, and NCNB Corp., the regional banking giant based in Charlotte, N.C., all of which have all been involved in civil suits and counter-suits involving the Freedlander organization over the past few years.

In its suit, NCNB charged that the Freedlander family lived lavishly off its mortgage company, taking $3.5 million out of the company in salaries during 1986, for example, and spending another $2.75 million on corporate jets, company cars and horse-breeding activities. The family denies those allegations.

Most of the $200 million, however, was lost to homeowners who failed to make payments on their mortgages.

Eve Freedlander and her husband, Ruben, founded the mortgage company in the 1960s, and by 1986 they were writing 1,200 loans, mostly second mortgages, each month.

Henry E. Hudson, U.S. attorney for the eastern district of Virginia, said yesterday the two-year federal investigation, involving the Internal Revenue Service, the FBI and Virginia's Henrico County Commonwealth Attorney, was continuing, and involves the Freedlanders' sons, Eric and Ben Freedlander, who are still executives with the firm.

"This is an unfortunate tragedy and Mrs. Freedlander regrets that this has ever occurred," her attorney, Joseph Kaestner, said yesterday.

A statement of facts filed with Eve Freedlander's plea yesterday in Richmond indicated that Fannie Mae bought about $215 million worth of second mortgages written by Freedlander between November 1982 and August 1985, and then, as is customary in the mortgage banking business, contracted with Freedlander to collect monthly payments from the homeowners and pass them on to Fannie Mae.

While many of the loans were kept current, some were not -- in fact, delinquencies were running at 25 percent by 1986 on a batch of 10,000 loans worth $160 million that it was servicing for Fannie Mae. According to the statement, the company concealed the level of nonpayment from Fannie Mae and other parties, telling them that delinquencies were running at only 5 percent. Company officials then attempted to cover up the shortfall in cash by taking funds illegally from other accounts over which they had control.

In her statement, Freedlander said she "ultimately hoped and intended that Fannie Mae would not lose any money ... . "

Freedlander also admitted to selling loans to private investors that were already were in various stages of delinquency without disclosing to those investors the status of the loans.

Freedlander said that, after she became aware that company executives were using money they should have held for investors to pay other creditors or investors, she directly participated in some of the coverup scheme "in order to save her business."