Fannie Mae Won’t Expand Portfolio in 2006

Government-backed Fannie Mae announced Wednesday that it has no plans to increase its retained mortgage portfolio in 2006, Reuters reports.

The company, which has been embroiled in a number of scandals, notified the U.S. Securities and Exchange Commission (SEC) that an anticipated $2.4 billion loss on some mortgage commitments had been overstated.

Recalculating those mortgage commitments will significantly reduce the company’s previously estimated $2.4 billion loss related to the post-SFAS 149 commitments, Fannie Mae stated. That estimate is still subject to review by company accountants, the firm said in its filing.

Under an agreement with its regulator, the company, along with sister company Freddie Mac, was to hold its retained mortgage portfolio at the level at the end of 2005. In a new business plan sent to the regulator in July, the company did not seek to lift that limit.

In the filing, the company also stated that it would not file its quarterly report on time because the company has not completed financial statements for the quarter. Fannie Mae also said that it expects to record some $800 million in expenses largely due to restatement and regulatory costs.

While the company does not plan to increase its retained mortgage portfolio in 2006, Fannie said it anticipates submitting an updated business plan to its regulator in early 2007, and may at that time seek to increase its mortgage portfolio. Along with the FHA, Fannie and Freddie seek to regulate the nation’s housing market through the purchase of Americans’ home loans on the secondary market and repackaging them as securities.