Fannie Mae fell short of some home ownership goals in 2005
Monday, February 13th 2006, 4:15 pm
By: News On 6
WASHINGTON (AP) _ Mortgage giant Fannie Mae last year fell a bit short of some of the government-set goals for making home ownership affordable as it worked to untangle its accounting in an $11 billion scandal.
A preliminary analysis by the government-sponsored company, which finances one of every five home-mortgage loans in the United States, shows that it ``fell slightly short'' _ by less than 1 percent _ of two housing ``sub-goals,'' a Fannie Mae official said Monday.
Bush administration officials have said in recent years that Fannie Mae and Freddie Mac, its smaller rival in the $8 trillion home-mortgage market, must do more to help low- and moderate-income families become homeowners. In 2003, the companies met the government-set goals only because three unusual multibillion-dollar deals were counted toward the targets.
Fannie Mae and Freddie Mac have been under intense scrutiny and political pressure since their accounting scandals surfaced in June 2003 and September 2004, respectively. Legislation pending in Congress would tighten federal oversight of the two companies.
The Securities and Exchange Commission, which has ordered Fannie Mae to restate earnings back to 2001, and the Office of Federal Housing Enterprise Oversight are investigating the company's accounting. The Justice Department is pursuing a criminal investigation.
``It ... appears that we fell slightly short'' of the two sub-goals, Chuck Greener, Fannie Mae's senior vice president for communications, said in a statement. ``... We are fully committed to working with HUD in an effort to meet these goals.''
The Department of Housing and Urban Development sets the annual affordable housing goals. Fannie Mae's apparent shortfall was first reported in Monday's editions of The Wall Street Journal.
Fannie Mae gave its chief executive officer, Daniel Mudd, $8 million of restricted company stock and a $2.6 million cash bonus for 2005 in addition to his $950,000 salary, the company disclosed in a regulatory filing last week. The Fannie Mae board took the position that Mudd, who replaced ousted CEO Franklin Raines in December 2004 after six years as the company's chief operating officer, was not responsible for its accounting lapses.
The company said its executives were paid in accordance with their performance in meeting several objectives, including progress toward restating earnings and financing housing for low-income people.
Fannie Mae and Freddie Mac buy and guarantee repayment of billions of dollars of home loans each year from banks and other lenders, then bundle them into securities that are resold to investors worldwide.
While not directly guaranteed by the government, the two companies have special privileges including the ability to borrow directly from the Treasury. In return, they are charged with enabling more low-income and minority people to buy homes and must meet the HUD goals.
The goals have three performance gauges: Financing mortgages for:
_Low- and moderate-income home buyers
The sub-goals were added in 2005. Within each category, they are percentages of the total number of loans purchased to finance the initial purchase of single-family, owner-occupied properties in metropolitan areas.