Mortgage Firm Freddie Mac to Resume Profit Reports in 2005

Freddie Mac, the second-biggest provider of financing for U.S. residential mortgages, said Monday that it would resume quarterly reports of its earnings for the second quarter of 2005 after more than a two-year hiatus.

Freddie Mac has made a series of changes to management and accounting policies since it said last year that it had manipulated earnings from 2000 to 2002 to reduce their volatility.

The company will report 2004 net income by March 31 and then announce the first- and second-quarter 2005 financial statements together in August, Chief Financial Officer Martin Baumann said during a conference call with investors and analysts.

The company will wait until 2006 to file a report on its capital with its federal regulator and become a registrant with the Securities and Exchange Commission.

“It’s a little disappointing,” said Paul Miller, an analyst at Friedman Billings Ramsey Inc. “They are dragging their feet. The solid answer is that we have to wait a year and a half to get solid answers” on the company’s financial performance, he said.

Baumann defended the timeline, saying the changes were complicated. “I’d caution we still have a lot of work to do,” he said during the conference call.

Ten analysts currently have “buy” recommendations on Freddie Mac shares, six analysts rate it a “hold” and nobody has a “sell” recommendation.

McLean, Va.-based Freddie Mac and Washington-based Fannie Mae are publicly traded companies that were chartered by Congress to raise money from investors to make funds more widely available for home loans.

The companies own or guarantee about half of the $7.6-trillion U.S. mortgage market. They make money on the difference between the interest cost of debt they sell and the return from mortgages they buy from lenders. The companies also profit on fees they charge for guaranteeing credit on mortgage-backed securities.

Investors have backed Freddie Mac this year, sending its stock higher by 14.3% compared with a 1.7% gain for the Standard & Poor’s 500 index. Its shares rose 5 cents Monday to $66.65 on the New York Stock Exchange.