This should shock just about nobody. Fannie Mae and Freddie Mac cooked their books once to appear profitable so the fact that they’re doing it again really isn’t a surprise.
Fannie Mae and Freddie Mac, which have reported record profits after a taxpayer bailout, are ignoring billions of dollars in potential losses on delinquent loans as they take three years to adopt a new accounting system, a government auditor said in a letter made public today.
The accounting change could have a material impact on the companies’ finances and should be implemented immediately, according to the Aug. 5 letter to Federal Housing Finance Agency Acting Director Edward J. DeMarco from Steve Linick, the regulator’s inspector general.
“Three years appears to be an inordinately long period to fully implement” the change, Linick wrote in the letter posted on his office’s website today.
The FHFA, which oversees Fannie Mae and Freddie Mac, in April 2012 ordered the companies to start writing off all loans delinquent for at least 180 days, a standard practice for regulated financial institutions. The companies previously hadn’t charged off all loans in that category. FHFA later gave the companies until January of 2015 to comply.
In other words, Fannie and Freddie aren’t accounting for delinquent loans, making themselves look more profitable than they really are. This is exactly the type of bad behavior that helped spark the last housing crisis.
William Mills Agency @wmagencyJon Pugh @JonPughRealtorTianna Woods @DesertLifeRE
The two companies have received $187.5 billion in taxpayer aid since 2008. They’ve sent Treasury dividends... fb.me/6iiluU7SFDave Rice @DaveRiceSD
Fannie Mae, Freddie Mac Ignoring Write-Offs, Report Says - Bloomberg bloom.bg/1dAFehl ...well that would explain the turnaroundW.B. @WendyTheRealtorDonna Rowley @DonnaLerowSusan Lubin-Brownlie @susanbrownlieSteve Tucker, Sr. @steve5347
Fannie Mae, Freddie Mac Ignoring Write-Offs, Report Says fb.me/1D6krEi0Tvickigay @vickigay
Fannie Mae, Freddie Mac Ignoring Write-Offs, Report Says fb.me/2xdxduJBdhomecoin.com @homecoin