Freddie Mac’s top financial officer apparently committed suicide just weeks before the mortgage company was scheduled to release its latest financial statement.
David Kellermann reportedly was found hanging in the basement of his Vienna home early Wednesday. The company, formally named the Federal Home Loan Mortgage Corp., is scheduled to release its first-quarter results May 14.
“Their earnings are going to be terrible,” Morningstar analyst Matthew Warren said.
Like its bigger sister company, Fannie Mae — or the Federal National Mortgage Association — Freddie was founded to insure long-term, cheap home mortgages. The McLean company currently backs about $2 trillion in home mortgages, and the companies combined own or guarantee more than half of the country’s mortgages.
Although created by the government in the 1970s, Freddie and Fannie are private companies. When the housing market collapsed, the two mortgage giants were left in dire financial shape. Freddie posted $50 billion in losses last year.
Government regulators seized the companies in September, forced out top management and announced a probe into Freddie’s accounting practices.
“Freddie Mac knows of no connection between this terrible personal tragedy and the ongoing regulatory inquiries discussed in our [Securities and Exchange Commission] filings,” spokesman Doug Duval said.
On Tuesday, the Federal Housing Finance Agency, which oversees the companies, told Congress that Fannie and Freddie mortgage delinquencies among the most creditworthy borrowers had leapt 50 percent in a month.
“It’s eating through their revenues and then some,” Warren said. “It’ll be awhile before everything bottoms out.”
Officials hailed Kellermann as an “honest” accountant Wednesday.
“His extraordinary work ethic and integrity inspired all who worked with him,” interim Chief Executive John Koskinen said.
The government receivership has created tensions of its own. Then-Chief Executive David Moffett resigned from Freddie in March after only six months on the job. Koskinen, who had been chairman, has been running the company since then.
The Obama administration has made it clear that the two mortgage insurers, which have received vast infusions of taxpayer funds to keep them alive, are serving at the pleasure of the president, not its shareholders.
“It’s clear that the model of publicizing risk but privatizing gains blew up in our faces,” Georgetown finance professor James J. Angel said. “Fannie and Freddie are on permanent life support now. Their future is going to be dictated by the actions of the Obama administration.”
