Fannie Mae announced late Monday that it would be unable to comply with the Securities and Exchange Commission's (SEC) filing deadline for the quarter ending September 30, 2004. The filing (which was already delay) was due at the close of business that day.

The Corporation could have requested an additional five day extension to the deadline but, as it stated in a press release late Monday, it '' has been advised by its independent auditor that it (the auditor) is unable to complete its review of Fannie Mae's interim financial statements for the (third) quarter.

According to the Associated Press, Fannie Mae's auditor, KPMG could not be reached for comment.

As background, and as previously reported here, regulators from the Office of Federal Housing Enterprise Oversight have accused Fannie Mae of earnings manipulation and have ordered the Corporation to make massive recalculations in its interim third quarter earnings. This has led to speculations that any recalculations might lead to a restatement of earlier earnings statements, perhaps going back many years, and possibly to criminal investigations of both the corporation and its executives. The later, experts say, may have been the beneficiaries of any accounting irregularities.

Fannie Mae stock tumbled 3.6 percent in trading prior to the open of the NYSE but had recovered to $68.40 (down 1.14%) by the close. This is, however, a 16% decline in the stock's value since the accounting problems hit the news.

All of this may seem esoteric and not very important to the public at large. Fannie Mae, however, is the second largest financial institution in the country (following CitiCorp) and some analysts estimate that serious readjustments in its financial reporting could impact mortgage rates by as much as one quarter of a point independent of any other economic factors.