Fannie Mae Plans Hundreds of Job Cuts

Mortgage giant Fannie Mae is in the process of remaking itself as it recovers from a massive accounting scandal last year.

As a result, the mortgage company said it plans to be cutting its 6,500-person workforce by several hundred employees by year’s end.

The planned job cuts, the company said Tuesday, are part of a cost-cutting measure Fannie Mae has undertaken to reduce its operating expenses by $200 million this year compared to 2006.

The company, which plays a vital role in thousands of Florida mortgages, confirmed the cuts following reports by both the Washington Examiner and the Washington Post newspapers.

“Our objective is to bring costs in line following a period of significant increases in overall administrative expenses,” spokesman Brian Faith said.

The second-largest U.S. financial institution after Citigroup, Fannie spent about $1 billion last year on a massive review of its accounting.

Locally, the government-sponsored company backs one of every five Florida home loans. It’s one of the largest private employers in the D.C. area.

Fannie Mae has said that it expects to file its financial statements for 2005 by August and its 2006 report by year’s end.

In December, the mortgage lender announced a long-awaited restatement for 2001-mid-2004 that erased $6.3 billion in previously reported profit.

The accounting scandal brought the ouster of top company executives and a record fine of $400 million in a civil settlement with federal regulators.

As part of the company’s ongoing restructuring, expect Fannie Mae to limit the growth of its Florida mortgage throughout 2007 holdings and make widespread changes in its corporate hierarchy.

SOURCE: Jackson Clarion-Ledger