Fannie Mae (NYSE: FNM), the largest source of money for U.S. home loans, must provide 2005 financial results by December 2007 in order to retain its share listing on the New York Stock Exchange, the company said Tuesday in a federal filing.
Fannie Mae, which hasn't adhered to financial reporting schedules since accounting investigations in 2004 uncovered years of earnings manipulation, said last week it will file a 2005 financial statement within nine months. The Washington-based company has been allowed to maintain its NYSE listing even though exchange rules allowed for a delisting on Dec. 16, 2005.
The NYSE informed Fannie Mae in a Dec. 7 letter this year that the government-chartered company must file 2005 results by "Dec. 31, 2007 in order to continue to trade its securities,'' Fannie Mae said in a filing with the Securities and Exchange Commission.
Fannie Mae in a Dec. 6 restatement filed with the SEC revealed it overstated profits from 2001 until mid-2004 by $6.3 billion. The restatement provided the first accurate picture of the company's performance for the period. The company hadn't released a complete earnings report since July 2004.
The accounting manipulation at Fannie Mae prompted the ouster of top executives, led to an SEC-ordered restatement and resulted in a federal fine of $400 million.
Shares of Fannie Mae stock is up 22 percent so far this year.
Congress created Fannie Mae and McLean, Va.-based Freddie Mac (NYSE: FRE) to expand homeownership by increasing mortgage financing. The companies own or guarantee about 40 percent of the $10.5 trillion residential U.S. mortgage market. They are the biggest borrowers in the U.S. after the federal government.
The companies generate about two-thirds of their profits on the difference between their costs to borrow in the bond market and the returns on mortgages in their combined $1.4 trillion mortgage portfolios. They also earn money by charging lenders a fee for guaranteeing credit on mortgage-backed bonds.