Fannie Mae, accused by regulators of deliberately flouting accounting rules, said yesterday that it could not meet a deadline for a quarterly financial report and may be required to record $9 billion of previously unreported losses if the Securities and Exchange Commission determines that its accounting was wrong.

Such a correction would erase nearly 38 percent of the District-based mortgage funding company's reported income since Jan. 1, 2001, when the key rule took effect.

The company faced a deadline late yesterday to file a report with the SEC for the quarter ended Sept. 30 but said it was unable to do so because its auditor could not complete the required review of its financial statements. In a news release, Fannie said its income for the third quarter fell $251 million, or 9 percent, to $2.4 billion from the third quarter of last year.

Fannie Mae's accounting has been under investigation by the Justice Department and the SEC, and it has become the subject of investor lawsuits.

Regulators at the Office of Federal Housing Enterprise Oversight reported in September that they found pervasive accounting violations at Fannie. The company was driven by a desire to make its earnings growth appear consistent, OFHEO Director Armando Falcon Jr. testified before Congress last month. In 1998, the company also improperly delayed booking $200 million of expenses, enabling top executives to receive their maximum bonuses instead of no bonuses, the agency alleged.

OFHEO accused Fannie of violating two accounting rules. One, known as FAS 133, governs the treatment of complex financial instruments known as derivatives used to hedge against changes in interest rates.

Fannie said yesterday that if its hedge accounting is invalidated, it could be required to retroactively report $13.5 billion of losses and $4.5 billion of gains, netting a $9 billion decrease in earnings since the beginning of 2001.

There would be a corresponding $9 billion decrease in Fannie's regulatory capital, the cushion it is required to maintain against a potential financial downturn. As of June 30, the minimum was $31.2 billion and Fannie had $36.1 billion.

The company estimated the net cumulative loss if its accounting is wrong on the other rule, known as FAS 91, would be $26 million.

In addition to the problems regulators cited on that rule, Fannie said yesterday that it found a mistake in some of its accounting related to FAS 91. The net effect of correcting that mistake will be to increase earnings for 2001 and 2002 and decrease them for 2003. The impact on 2003 will be insignificant and the overall effect of correcting the problem Fannie discovered will be a wash, Fannie said.

Fannie continues to assert that its accounting methods "are consistent with generally accepted accounting principles."

The company has long argued that FAS 133 produces a distorted picture of its earnings because the rule forces it to include unrealized gains and losses on its income statement.

Fannie said its outside auditor, KPMG LLP, concurred with the interpretations it presented in recent letters to the SEC defending its accounting.

But Fannie also hinted that it may take time for KMPG to sign off on its financial statements again. The auditor's review "is subject to resolution of" the questions pending before the SEC and a separate review of OFHEO's findings being conducted by an outside law firm for Fannie's board of directors. The SEC resolution could be months away, SEC spokesman John Nester said.

If Fannie is required to correct past financial statements, chief executive Franklin D. Raines and chief financial officer J. Timothy Howard could be required to give up past bonuses and stock gains linked to the improper accounting.

Chartered by the government to provide a steady flow of funds for home mortgages, Fannie Mae is one of the nation's largest and most complex financial institutions, with a stock market value of about $68 billion and debts of $956.6 billion.

Missing the filing deadline does not necessarily trigger any regulatory response. The SEC evaluates such situations on a case-by-case basis, spokesman Nester said.

Fannie's smaller mortgage funding rival, Freddie Mac, announced in January 2003 that it expected it would need to correct accounting from prior years. The company, which has hired an army of consultants to help upgrade its accounting systems and has spent more than $370 million on accounting and legal expenses, has not resumed issuing quarterly financial statements on a timely basis and says it does not plan to do so until next year.

Fannie released its statement after the market closed. Its stock closed at $70.20, down 21 cents.