Fannie, Freddie Ignoring Potential Losses
Washington, DC, Aug. 19, 2013 -- Fannie Mae and Freddie Mac are allegedly ignoring billions of dollars in potential losses on delinquent loans as they take three years to adopt a new accounting system, according to a government auditor's report, Bloomberg News said.
The accounting change could have a significant impact on Fannie's and Freddie's finances and should be put in place immediately, according to the letter from Steve Linick, the regulator’s inspector general.
Because they’re not charging off some loans delinquent longer than 180 days, Fannie Mae and Freddie Mac aren’t setting aside reserves against those losses, Linick said.
Both companies, which were bailed out by taxpayers, have been posting record profits in recent quarters as the housing market rebounded.