Fannie Mae said Monday it had agreed with regulators to take a pre-tax charge of between $240 million and $260 million in its second-quarter results, but saw no need to restate its previous financial reports.

The mortgage giant said the charges related to the recalculation of the drop in value of certain assets and the exact size of the write-down depended on how the losses would be recalculated and other factors.

In a filing with the SEC, the company said that taking into account guidance from the securities regulator, it has determined its accounting policies for some assets that have lost value were consistent with Generally Accepted Accounting Principles, or GAAP.

Fannie Mae, which had come under fire for omitting some data from a quarterly earnings release April 19, also reported that shareholder equity in the first quarter fell $1.5 billion to $20.8 billion at the end of the first quarter. The company said the drop reflected a tumble in interest rates in the first three months of the year.

Fannie Mae added that its losses from certain derivatives positions had climbed by $1 billion to $7.9 billion at the end of March from $6.9 billion at the end of December. The losses relate to derivatives positions that had been closed out between 2000 and the end of the first quarter.

Company officials said the delay was due to the difficulty of preparing the information and had promised to provide a clearer picture in the SEC filing.

REGULATOR SAYS RESTATEMENT UNDETERMINED

Meanwhile, as a result of guidance from the SEC on its accounting for impaired assets, Fannie Mae said, "We believe that no restatement of prior period financial statements is required."

But a spokeswoman for the company's federal financial regulator, the Office of Federal Housing Enterprise Oversight, said that whether Fannie Mae would ultimately need to restate earnings as a result of a broad accounting review is "to be determined."

The regulator is examining the company's accounting practices as a precaution after Freddie Mac acknowledged accounting improprieties last year that led to a $5 billion restatement.

Freddie Mac, the No. 2 U.S. home mortgage finance company, acknowledged that senior executives ignored accounting rules to understate earnings and hide volatility. The company replaced five senior executives and paid a penalty of $125 million to regulators.

The Office of Federal Housing Enterprise Oversight said last week that Fannie Mae had not applied proper accounting to recognize income and revenues from its manufactured housing and aircraft lease securities. It has given the company until Friday, May 14, to recalculate the proper amounts.

The regulator said the company might have to restate earnings as a result of the changes.

Fannie Mae said in its SEC filing it would comply with the request

Article © Anywhere Communications All Rights Reserved