Daniel Mudd becomes Fannie Mae CEO Interim CEO selected by board

June 2, 2005

Inman News

Fannie Mae's board of directors has named Daniel H. Mudd as president and chief executive officer of the company, a move hailed by industry figures as a source of direction and certainty for the embattled mortgage giant.

Mudd has been serving as Fannie Mae's interim CEO since the board named him to the position on Dec. 21, 2004. Stephen B. Ashley will continue in his role as chairman of the mortgage giant's board, the company said today when it announced the change, which is effective immediately.

"I am pleased to announce that the board of directors has unanimously selected Dan Mudd to lead Fannie Mae as the company's next chief executive officer," Ashley said in a statement.

"After an extensive, nationwide search, and careful and deliberate consideration, the board recognized that the CEO we wanted was the interim CEO we had," Ashley said.

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Noting that Mudd has a strong background in financial services, Ashley cited the new CEO's leadership of the government-sponsored enterprise over the difficult last six months of transition.

Fannie Mae in December 2004 replaced Franklin Raines, its chairman and CEO, who announced he was taking early retirement, and Fannie Mae's chief financial officer, Timothy Howard, resigned Dec. 21. The two left in the wake of an SEC directive to make accounting corrections that could knock out some $9 billion of Fannie Mae's past profit.

Mudd became interim CEO and a search was launched for Raines' successor.

Legislation is currently in progress to create a new regulator for Fannie Mae and its fellow government-sponsored enterprise, Freddie Mac. The legislation passed in committee last week, a move applauded by both Fannie Mae and the American Bankers Association.

The head of Office Federal Housing Enterprise Oversight, which oversees Fannie Mae, congratulated the board.

"Mr. Mudd has played a key role in the transformation of Fannie Mae and I look forward to continuing the development of a strong, constructive relationship between Fannie Mae and OFHEO," said Stephen Blumenthal, acting director of OFHEO.

Industry buzz had suggested that Fannie Mae would look outside the agency for Raines' successor. For that reason, the announcement came as a surprise to Don Faught, past president of the Bay East Association of Realtors in Pleasanton, Calif.

"I didn't know they were going to look outside, so I'm surprised," Faught said.

Faught was pleased with the news.

"Now we're going to have a more clear direction of which way we are going to move," Faught said. "He has already been interim chair, so we already have a sense of who he is and his philosophy."

Also, the move lends much-needed certainty to the conditions surrounding Fannie Mae, Faught said.

"We've been waiting for someone to be named, and it has taken longer than we thought it's going to," Faught said. "There were so many directions they were thinking of going. There was a proposal on the table that Fannie Mae might be put under the direction of the Treasury Department. This is good news because now something affecting Fannie Mae is settled."

A senior vice president of the Mortgage Bankers Association was also pleased.

"We think it's an excellent selection. We know Mr. Mudd, we've worked with him in the past, he knows the company. He is aware of the difficult challenges they still face. He's a straight shooter and we think he'll make a strong CEO," said Kurt Pfotenhauer, senior vice president, government affairs, for the Mortgage Brokers Association.

Anne Biddell, a Hayward, Calif., Realtor with 22 years of experience, said the selection would make little difference to her day-to-day business.

"I don't know that that is going to affect us very much. Things are going to continue the way they have been," Biddell said. "The market is hot and looks like it will continue that way."

Fannie Mae's stock was at $58.94 a share at 4:02 p.m. Eastern time today, down 28 cents a share, or .47 percent.

Copyright 2005 Inman News

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