The Office of Federal Housing Enterprise Oversight and outside counsel for Freddie Mac are investigating what is being described as a servicing "transaction" between the mortgage giant and one of its former top strategic alliance partners, Bank of America.At MortgageWire's deadline on Wednesday it was unclear what the investigation entailed. Both OFHEO and Freddie Mac confirmed that a transaction between Freddie and BoA is under review. A source described it as "one transaction" that took place in 2000 but declined to discuss the size of the deal. A Freddie Mac spokesman said the government-sponsored enterprise's audit committee brought the transaction to the attention of its outside counsel, Baker Botts LLP. "We don't think the issue is important enough to impact our restated financial statements," the Freddie spokesman said. "It won't affect our 2003 results either." In early 2003 BoA ended its strategic alliance with Freddie. Under an SA arrangement, a seller/servicer promises to sell most of its conventional production to a GSE in return for a lower "guarantee fee." A lower g-fee arrangement can allow a mortgage banking firm to have greater servicing fee income.

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