Written by: Beck
For those of you with a fascination for the amount of debt that flows through the Federal National Mortgage Association, they're going to have to restate potentially $8 billion in incorrectly accounted debt. The size of the impact is pretty much unknown right now, and this could be nothing more than a minor error with no real impact. It could also be the beginning of Armageddon. These things can be hard to gauge.
The Office of Federal Housing Enterprise Oversight, which regulates Fannie Mae, ordered the company to recalculate losses on the bonds by next Friday. The recalculation could force Fannie Mae to restate its profits downward, although the oversight office did not order that step.
It is not clear how large a restatement Fannie Mae might have to make. The bonds under scrutiny include $8 billion in securities backed by mobile homes and $300 million backed by aircraft leases. Although the securities make up less than 1 percent of Fannie Mae's portfolio, they have become a focus for critics who say that the company hides losses and is riskier than it appears.