Freddie Mac Delays 2005 Financial Reports for Two Months

MCLEAN, VA-As it continues efforts to emerge from the accounting debacle of 2003 that left it with a $5-billion restatement of earnings, Freddie Mac is still playing catch up. The firm will delay the anticipated release of its quarterly and full-year financial results for 2005 until May. The mortgage lender, which has not had regularly scheduled earnings reports since 2003, had previously committed to producing the information in March.

According to Freddie Mac officials, the delay was prompted by a decision to integrate new accounting valuation methods that will allow the company to sharpen estimates of the values of its guarantee assets and guarantee obligations. "The goal of Freddie Mac's new management team is to build an infrastructure for the company that meets a high standard of excellence," Freddie Mac president and COO Gene McQuade says. "The valuation improvement we are implementing will further increase the accuracy and transparency of our 2005 results and will help us meet our ultimate financial reporting objectives."

In addition to implementing new practices and cooperating with the Office of Federal Housing Enterprise Oversight, Freddie Mac also continues to restructure internal leadership to help rectify and avoid past financial woes. Most recently, the government-sponsored enterprise tapped former MBNA America Bank executive vice president and controller to come on board next month as senior vice president-controller and principal accounting officer.

"Getting this infrastructure to the point where it can support timely, reliable quarterly reporting continues to be an enormously complex task," says Freddie Mac CFO Martin F. Baumann. "We continue to work hard to strengthen our controls for financial reporting, and we continue to invest heavily both in systems and in the human resources we need."