The Fraud This section describes the business activities of Fannie and Freddie before the fraud occurred. Since the 1990s, lenders have been increasingly using automated underwriting systems (AUSs), a technology that changed the mortgage industry (DiVenti, 2009, p.236). These systems executed underwriting criteria and statistical algorithms to foresee the default likelihood of loan applications (DiVenti, 2009, p.236). GSEs became industry leaders in the growth and adoption of these systems, which they used to appraise their loan purchases. Fannie Mae’s system, Desktop Underwriter, and Freddie Mac’s system, Loan Prospector, significantly decreased the expenses and time linked with loan approvals (DiVenti, 2009, p.236). In 2000, Fannie Mae and Freddie Mac broadened their procurements to comprise “Alt-A,” A-minus, and subprime mortgages, aside from private-label mortgage securities (Blackburn & Vermilyea, 2010, p.5). In order to expand their mortgage purchases, Fannie Mae used the Expanded Approval system and Freddie Mac enlarged its Loan Prospector system to contain risk-based pricing (DiVenti, 2009, p.236). ...Show more
Fannie and Freddie’s Fraud: Misstated Earnings, Exploitation of Stakeholders Name University Introduction From public trust to public downfall, two large American government-sponsored enterprises (GSEs), Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac), became involved in misstatements and other fraudulent acts, which the Office of Federal Housing Enterprise Oversight (OFHEO) revealed in its 2006 report, Report of the Special Examination of Fannie Mae…
According to the research Market Segmentation theory calls for dividing markets into smaller categories on some rational basis such as different needs, wants, attributes, beliefs, values, dimensions, etc. Market Segmentation is a very important part of any company’s marketing strategy which enables it to figure out the existence of different groups in the market and cater to their specific requirements.
There is a continuous argument in the audit circle on whether earnings management is another form of fraud. Fraudulent financial reporting engages deliberate misstatements or exclusion of figures or dissemination in financial statements as a part of a design to “manage earnings.” An external auditor should pay great attention to ‘earnings management ‘and the ‘quality of earnings and how earnings management is associated to and may be tantamount to fraud.
Accounting Fraud, earnings manipulation, and creative accounting Introduction Overtime, there have been high profile cases detailing fraudulent financial reporting such as those at Enron and WorldCom. This has heightened concerns on the credibility of the U.S.
This led to a weekly wage that was approximately 20 percent lower than the wages received during the 1970s to workers with the same level of education (Beaudry & Green, 2000), and there has been an analogous pattern in the hourly wages with no recuperation until 2004 (Morissette & Johnson, 2005).
To define “earnings management” one can say that this term refers to legitimate and illegitimate actions by management, exerting a negative influence on the entity’s earnings. Thus, it is appropriate to define this term under the following conditions: both legitimate managerial activities on the one hand and the spectrum of fraudulent financial reporting on the other hand.
The forces of demand and supply depending on the sector and professional skills determine wage earning in Australia. In most cases the wage rate should not be above the equilibrium forces of supply and demand, unemployment sets in. The law is also very categorical in terms of the amount of salary earned depending on the level of education and qualification.
Though it is the dream of nearly all rock and roll musicians to realize at least the partial level of success that the classic rock musicians achieved, this was not only a dream for the members of the band Fleetwood Mac but a reality. Whereas few bands are able to stay together, stay relevant, and continue to produce marketable music that continues to engage the population, Fleetwood Mac had no such issues.