|Farmer Mac Loans Should Have Been Reported As Bankruptcies
10-Q filing indicates $4.8 million in loans affected
August 19, 2002
By MortgageDaily.com staff
A government sponsored enterprise has identified loans that should have been reported as bankruptcies in its latest earnings release. The disclosure follows controversy stirred up by newspaper articles questioning management.
The Federal Agricultural Mortgage Corporation, more commonly known as Farmer Mac, has reportedly identified $4.8 million of loans that should have been reported as bankruptcies in its latest earnings release. In a recent news article, Dow Jones Newswires said the company, which guarantees agricultural mortgage loans, made the disclosure in a 10-Q filing released by the Securities and Exchange Commission last week.
The change represents 3.6% of stockholder equity -- which was reported at $134.4 million on the company's 2001 annual report.
Farmer Mac made no change to its reserves as a result of the added delinquencies, Dow Jones said, and indicated the loans were correctly reported as bankruptcies in prior reporting periods. Delinquency on loans for which the company assumes 100% credit risk is now 1.45%, compared to 1.35% as previously reported on July 19.
Farmer Mac has been criticized in articles recently published by the New York Times. The Times has accused the company of maintaining inadequate reserves for its $2.5 billion off-balance sheet guarantees and overcompensating executives and directors, among other things.
The company fired back in a press release, accusing short sellers of orchestrating "recent publications of materially misleading assertions regarding the company's financial condition."
Dow Jones reported that Farmer Mac expects additional legal and consulting fees to be about $300,000 to $400,000 higher per quarter until the "effects of certain inaccurate and misleading publicity about Farmer Mac have dissipated."