Mortgage giant names new chief audit executive

Tuesday, June 28, 2005 | 9:24 a.m.

WASHINGTON -- Mortgage giant Fannie Mae, whose accounting is under investigation by federal regulators, said Monday it has named a new chief audit executive from outside the company.

S. Jean Hinrichs, who is a certified internal auditor and fraud examiner with experience at a large investment firm and the Federal Reserve, will assume the job of senior vice president for internal audit next month, Fannie Mae announced. She will report directly to the board of directors' audit committee.

Fannie Mae, the largest U.S. buyer of home mortgages, in December was ordered by the Securities and Exchange Commission to restate its earnings back to 2001, a correction that could reach an estimated $11 billion. Another federal agency has given the government-sponsored company until Sept. 30 to boost its capital cushion against risk by 30 percent, or some $5 billion.

To make up the shortfall, Fannie Mae has been reducing its portfolio of mortgage loans and raised capital by issuing some $5 billion in preferred stock.

A report released Monday by the company shows it reduced its loan portfolio by an annualized rate of 28.9 percent in May, following a 16.3 percent decline in April.

Hinrichs will be responsible for designing, developing and executing a comprehensive audit program for Fannie Mae, the company said.

She will replace Ann Eilers, who has held the senior audit position on an interim basis since late January -- when Sam Rajappa, then-senior vice president for operations risk, stepped down to take a temporary advisory role at the company along with two other senior executives.