effort to restore its good name in financial markets hit a speed bump Tuesday as the mortgage company was forced to revise previously reported earnings because of computer errors.
Freddie says it earned $1.4 billion in the first six months of 2005, not the $1.6 billion it claimed on Aug. 31. The $200 million haircut "reflects the correction of interest accruals recorded for certain mortgage-related securities stemming from miscalculations since 2001 in a legacy computer system," Freddie said.
"Management found and corrected the miscalculations in the course of its ongoing internal control enhancements. The correction represents less than 1% of the company's $36.1 billion of reported regulatory core capital as of June 30, 2005," Freddie claimed.
On Nov. 23, 2003, Freddie restated several years' results following an accounting scandal that resulted in the ouster of two CEOs and the payment of a $125 million fine.
"We've made enormous strides in fixing our financial infrastructure but, as we have previously disclosed, the effort is not yet complete," the company said Tuesday. "When we found this error, we corrected it immediately. We are continuing to move forward to complete the job of producing timely, accurate financial reports early in 2006. We've also made great progress this year in our business -- increasing our market share, building on our already strong capital position and maintaining excellence in risk management."
The stock fell 93 cents, or 1.5%, to $60.31.
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