Freddie, Fannie shares feel fresh pressure

By Robert Schroeder, CBS MarketWatch
Sept. 24, 2004

WASHINGTON (CBS.MW) -- Shares of Freddie Mac fell Friday as the market digested news about the mortgage company's earnings, which were restated lower for 2003.

The McLean, Va.-based company (FRE: news, chart, profile) also cautioned on its results for 2004.

Freddie's shares stood lately at $63.80, down 58 cents.

Freddie's restatement of earnings, contained within its 2003 annual report filed early Friday, reflected a reserve for legal proceedings arising from a previous restatement. The adjustment had the effect of reducing the company's 2003 profit by $75 million.

As for its results for 2004, the company said volatility caused by accounting for derivatives will "adversely affect our GAAP results in the first half of 2004," referring to the accounting principles used by publicly traded companies.

Freddie's announcement comes as federal regulators continue their probe of rival Fannie Mae (FNM: news, chart, profile). The Office of Federal Housing Enterprise Oversight issued a report Wednesday accusing Fannie of improper accounting to smooth fluctuations in earnings and other accounting improprieties.

Fannie's shares dropped $2.25, or 3.4 percent, to $64.90.

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