WASHINGTON – The chief financial officer of money-losing mortgage giant Freddie Mac was found dead in his basement early Wednesday morning in what police said was an apparent suicide.
A law enforcement official familiar with the investigation said it was an apparent hanging. He declined to be identified because the investigation was ongoing.
David Kellermann’s death is the latest in a string of blows to Freddie Mac since it was seized by the government last September. The company, which owns or guarantees about 13 million mortgages, has been criticized for financing risky loans that fueled the real estate bubble and are now defaulting at a record pace.
Freddie Mac lost more than $50 billion last year, and the Treasury Department has pumped in $45 billion to keep the company afloat. Last month, David Moffett, the government-appointed chief executive, resigned apparently frustrated by strict oversight.
Kellermann worked for Freddie Mac for the past 16 years, starting out as a financial analyst and auditor. He was named acting chief financial officer last September when the government ousted former CEO Richard Syron and Kellermann’s predecessor Anthony S. “Buddy” Pizsel.
Neighbors said Kellermann, 41, had lost a noticeable amount of weight under the strain of the new job. Some neighbors said they suggested to Kellermann he should quit to avoid the stress, but Kellermann responded that he wanted to help the company through its problems. The neighbors did not want to be quoted by name because they didn’t want to upset the family.
As the company’s financial chief, Kellermann was working on the company’s first quarter financial report, due at the end of May, with federal regulators closely overseeing the company’s books and signing off on major decisions.
That relationship has been tense at times. Freddie Mac executives recently battled with federal regulators over whether to disclose potential losses on mortgage securities tied to the Obama administration’s housing plan, said a person familiar with the deliberations who was not authorized to discuss the matter publicly.
Federal prosecutors in Virginia have been investigating Freddie Mac’s business practices. But two U.S. law enforcement officials, who spoke on condition of anonymity because they were not authorized to discuss the Freddie Mac investigation, said Kellermann was neither a target nor a subject of the investigation and had not been under law enforcement scrutiny.
Police responded to a 911-call at 4:48 a.m. at the suburban Virginia home Kellermann shared with his wife Donna and 5-year-old daughter Grace.
The Kellermanns live in Hunter Mill Estates, a well-off neighborhood of large single-family homes with manicured lawns in Fairfax County. County records show Kellermann’s home is assessed for about $900,000.
Paul Unger, who lives across the street from the Kellermanns, called the family a “solid, salt-of-the-earth kind of family” that hosted the neighborhood’s Halloween party. “He was just a nice guy … You cannot imagine what kind of pressures he must have been under,” Unger said.
Kellermann, a University of Michigan graduate who went to business school at George Washington University. News of Kellermann’s death came as a shock to employees of the McLean, Va.-based company, with those who knew Kellermann tearing up on Wednesday morning and a quiet mood prevailing. Senior executives at the company heard the news on local radio before going to work.
Freddie Mac canceled a bond offering on Wednesday, as top Freddie Mac officials visited the family’s house to offer condolences. John Koskinen, the company’s interim chief executive, spoke to workers at an 11 a.m. staff meeting mourning Kellermann’s loss, telling employees that they could use the company’s counseling services.
In statement e-mailed to employees and the media, Koskinen called Kellermann “a man of great talents …. His extraordinary work ethic and integrity inspired all who worked with him.”
Treasury Secretary Timothy Geithner said in a statement that “our deepest sympathies are with his family and his colleagues at Freddie Mac during this difficult time.”
Freddie Mac and sibling company Fannie Mae have both come under fire from lawmakers as they plan to pay more than $210 million in bonuses through next year to give workers the incentive to stay in their jobs. Kellermann was in line to receive retention awards totaling $850,000 over the next year.