Fannie Mae Plans to Cut Hundreds of Jobs

Mortgage giant Fannie Mae, in the process of remaking itself as it recovers from a multibillion-dollar accounting scandal, is cutting its 6,500-person work force by several hundred employees by year’s end.

The planned job cuts, the mortgage company said Tuesday, are among cost-cutting measures that Fannie Mae has undertaken to reduce its operating expenses by $200 million this year compared with 2006.

The mortgage company officially confirmed the cuts following reports by both the Washington Examiner and the Washington Post newspapers.

“Our objective is to bring costs in line following a period of significant increases in overall administrative expenses,” spokesman Brian Faith said. “The work force will be reduced by several hundred full-time employees by the end of the year.”

Fannie Mae, the second-largest U.S. financial institution after Citigroup, spent about $1 billion last year on a massive review of its accounting.

The government-sponsored company finances one of every five U.S. home loans and is one of the largest private employers in the Washington area.

In December, the mortgage lender announced a long-awaited restatement for 2001-mid-2004 that erased $6.3 billion in previously reported profit.

Fannie Mae, which has expressed concern over the nation’s widespread subprime mortgage meltdown, said that it expects to file its financial statements for 2005 by August and its 2006 report by year’s end.

The accounting scandal brought the ouster of top company executives and a record $400 million civil fine in a settlement with federal regulators.

Fannie Mae also agreed to limit the growth of its mortgage loan holdings and make top-to-bottom changes in its corporate culture, accounting and risk management systems.

SOURCE: Jackson Clarion-Ledger