Fannie Discloses More Errors

Still more errors have turned up in Fannie Mae’s government-ordered review of its accounting, the mortgage giant disclosed Tuesday. It also said it didn’t expect the review to be finished before the second half of the year.

The government-sponsored company, which finances 1 of every 5 home loans in the U.S., said it had found accounting errors in addition to those it had disclosed March 13. Fannie Mae said it would miss a regulatory deadline today for filing its financial report for the first quarter.

Federal regulators in 2004 accused Fannie Mae of serious accounting problems and earnings manipulation to meet Wall Street targets, and the Securities and Exchange Commission ordered the company to restate earnings back to 2001 -- a correction expected to reach an estimated $11 billion. The Justice Department is pursuing a criminal investigation.

The company also has said that it expects an internal report to show that its financial controls remained insufficient as recently as the end of last year.

“We have substantially completed a comprehensive review of our accounting policies and practices in order to determine whether these policies and practices are consistent” with standard accounting principles, Fannie Mae said in its filing Tuesday with the SEC.

Daniel Mudd, the company’s chief executive, said in a conference call with analysts: “We’ve made progress. We’ve got some more to do.”

Mudd acknowledged that the $800 million or so that Fannie Mae expected to spend this year on the massive reworking of its accounting was “quite frankly, higher than I can stomach.”

Washington-based Fannie Mae said the newly disclosed errors involved transactions in its business of buying home mortgages from banks and other lenders and bundling them into securities, and the guaranty fees it charges the banks and other lenders.