Accounting Rule To Ease Sting Of Changing Fannie,Freddie Loans
June 18 2009 - 5:15PM
Dow Jones News
Federal Housing Finance Agency Director James B. Lockhart said a
looming accounting change will make it less painful for Fannie Mae
(FNM) and Freddie Mac (FRE) to modify loans.
The government-controlled mortgage-finance giants are a key part
of the administration's strategy to help strapped homeowners. But
accounting rules require them to take a 60% write-down on loans
they purchase out of pools of mortgage-backed securities to modify
them, Lockhart said Thursday in Washington.
That will change on Jan. 1, when a new Financial Accounting
Standards Board rule will take effect, forcing Fannie and Freddie
to bring the mortgage-backed securities they guarantee onto their
balance sheets.
"With a stroke of a pen, the FASB is going to increase their
balance sheets from $2 trillion to over $5 trillion," Lockhart
said.
- Jessica Holzer, Dow Jones Newswires; 202-862-9228;
jessica.holzer@dowjones.com