2869687_sFannie Mae and Freddie Mac, two mortgage finance companies that have received major boosts from the government seem to have some explaining to do. This past quarter, each posted profits, which is a stark change from their previous losses experienced. However, according to new reporting, both may have some underlying problems according to the agencies regulator. Monday, The Federal Housing Finance Agency released findings that indicate both Fannie and Freddie may have mislead the public on actual profits as neither company is as of yet reporting all their losses that occur from loan write-offs.

As of April 2012, both companies were given three years to make the adjustments necessary to correct accounting practices that required them company to charge off any loan still delinquent after 180 days. Due to the fact that these loans were not written off, the losses reflected from these mortgages nearing foreclosure are not seen and profits are demonstrated as higher. These changes in accounting must be in place by January of 2015 to come in accordance with standard practice for other financial institutions.

“The guidance FHFA has issued would change our methodology for charging off loans, but would not materially change our results,” said Andrew Wilson, a spokesman for Fannie. However, the FHA seems to disagree, citing that changes in its policy could cause either of these mortgage giants to  “charge off billions of additional dollars related to loans.” Additionally, the FHFA’s inspector general has indicated that the deadline should be moved up. “Three years appears to be an inordinately long period,” wrote inspector general Steve Linink.  Since the government had seized control in 2008, these two companies have reflected a cost to taxpayers of almost 200 billion to present.