WASHINGTON – Mortgage finance company Freddie Mac (FRE) Tuesday said it will revise its profit for the first half of 2005 downward by about $220 million, citing computer-related accounting errors.
Net income for the first half of 2005 dropped to $1.4 billion, compared with $1.6 billion previously reported by the company Aug. 31. The company noted that the amended profit represents less than 1 percent of its core capital as of June 30.
The lowered net income figure came after the company corrected interest accruals for mortgage-related securities that were earlier miscalculated.
Freddie Mac shares were down $1.21, or about 2 percent, to $60.03 on the news in heavy trading on the New York Stock Exchange.
The error comes as the company works to resume regular financial reporting after an accounting scandal in 2003.
"We've made enormous strides in fixing our financial infrastructure but, as we have previously disclosed, the effort is not yet complete," said Martin Baumann, Freddie Mac's chief financial officer.
Baumann said the company can still return to regular and timely financial reporting in early 2006.
Freddie Mac said its timetable for beginning to register its securities with the Securities and Exchange Commission is not likely to be "significantly" changed.
The company said it expects to release fourth-quarter and full-year 2005 results and begin filing monthly capital reports to regulators no later than the end of March 2006.
Freddie Mac, like sibling Fannie Mae, operates under congressional charter to buy mortgages from lenders and support housing markets.
Freddie Mac said it expects to reduce previously reported net income for the first quarter of 2005 by $136 million to reflect overstatements in prior years and by another $33 million for the overstatement in the first quarter.
The company also said it expects to reduce previously reported net income for the second quarter by $51 million.