Fannie Mae reported that an internal review has identified all the errors that spurred its massive restatement. As a result, the mortgage company will be able to file its long-anticipated 2004 annual report by the end of this year.
The restatement will provide better news than have previous company reports, which estimated that derivatives accounting spurred a $10.8 billion loss in December 31, 2004. That consisted of an $8.4 billion loss on derivatives other than mortgage commitments and a $2.4 billion loss on mortgage commitments.
But Fannie has since determined that a net gain was realized on certain mortgage commitments. Although it says that it’s currently unable to quantify the amount, the company expects the gain to “significantly reduce” the $2.4 billion loss.
“Restating our 2002 and 2003 financial statements and preparing our 2004 financial statements has required, and continues to require, a substantial amount of time and resources because the restatement entails significant complexities,” Fannie said.
“We are committed to devoting all resources necessary to complete the restatement as expeditiously as possible,” it added. “However, because many of the activities are sequential in nature, accelerating the completion of the restatement is difficult.”
The announcements were made in a regulatory filing announcing that Fannie Mae would be unable to file its second-quarter results on time.