Fannie Mae, the company that guarantees most of America's mortgages, revealed a $1.2 billion mistake on its third-quarter earnings statement, which it revised on Wednesday.
The revision took total accumulated other comprehensive income to minus $15.228 billion from its original statement of minus $16.364 billion and total assets shifted from $1.018 trillion to $1.019 trillion. Reuters reported that the revisions will only impact balance sheet items and would not affect the income statement. Net unrealized gains on securities rose $1.28 billion to $3.415 billion, Reuters reported.
"If this is all there is, it won't have a major impact," Eric Farls, investment analyst, BB&T Asset Management in Raleigh, North Carolina, told Reuters.
The U.S. Office of Federal Housing Enterprise Oversight (OFHEO), which oversees Fannie Mae and Freddie Mac, told Reuters it is looking into what caused the error. This comes in the wake of an accounting and management scandal at Freddie Mac.
This week's Fannie Mae changes appear to be the result of the company's revaluing of securities in the investment portfolio, Stephen Ryan, an accounting professor at New York University's Stern School of Business, told Reuters.
Fannie Mae chalked up the changes to computation errors related to the implementation of Financial Accounting Standard No. 149, an amendment to the notoriously complicated accounting statement relating to derivatives, FAS 133, Reuters reported.
OFHEO Director Armando Falcon, Jr., told Reuters that an upcoming review of Fannie Mae should help to shine the light on what went wrong and whether the quasi-governmental agency needs additional funding to keep it from happening again.