Fannie Remains Interested in Lower Credit Grade Customers.(Federal National Mortgage Association)

WASHINGTON -- Fannie Mae executives are upbeat about completing a restatement by the end of this year and they are looking forward to entering the subprime market to "remain relevant to their customers."

Fannie president and chief executive Daniel Mudd assured investors and analysts last week that the restatement of the 2001, 2002, 2003 and 2004 financial results will be issued by the end of the year.

"We believe that we have now identified all of the accounting issues that will require restatement," Mr. Mudd said during a conference call. Fannie accountants are running the numbers and actually starting the auditing process, he said.

The publicly traded company also disclosed in a securities filing that the price tag for its accounting scandal should be lower than its original $10.8 billion loss estimate.

The government-sponsored enterprise originally estimated its misapplication of derivative accounting is going to cost $8.4 billion. And it expected an additional $2.4 billion loss related to mortgage commitments.

But the accountants discovered offsetting gains in pricing the mortgage commitments, which should reduce some of the loss - although they have not determined the amount yet.

"We believe the net effect of restating the mortgage commitments will be significantly less than the $2.4 billion we previously disclosed," Mr. Mudd said.