Fannie, Freddie legal fees: $110 million and counting

Taxpayers continue to pay legal fees at Fannie Mae and Freddie Mac.

WASHINGTON (CNNMoney) -- A watchdog agency said Wednesday that the legal tab for former leaders of mortgage finance giants Fannie Mae and Freddie Mac is at least $110 million.

And taxpayers have paid at least $47 million of it, according to an Office of Inspector General of the Federal Housing Finance Agency report.

And the total bill could be even higher since the inspector general report focused on only one particular legal case against Fannie Mae, and isn't an exhaustive account of the housing giants' legal bills, reportedly more than $160 million, according to a 2011 congressional hearing.

Yet, a whopping $99.4 million has been paid in legal bills to defend a 2004 case against three former Fannie Mae senior executives accused of inflating the firm's publicly traded stock price to maximize their own bonuses. About $37 million of that has been picked up by the taxpayer.

For Freddie Mac, the overall legal tab paid by the taxpayers is $10 million, according to inspector general.

The Federal Housing Finance Agency inherited legal bills when it took Fannie Mae and Freddie Mac under conservatorship in 2008. The bills are for employees long gone but must be paid as a part of benefits packages agreed to by legal contract.

Office of Inspector General of the Federal Housing Finance Agency suggested that the housing agency take steps to limit legal expenses, in the report.

With taxpayer bailouts to the housing finance giants hitting $183 billion through the end of December, lawmakers have questioned the "appropriateness" of legal pay outs, the watchdog said.

"Given the significant amounts of taxpayer money involved and the issue's high visibility, FHFA must continue to scrutinize intensively the enterprises' advances in order to limit costs," the report concluded.

The two companies were essentially taken over by the government in September 2008 when they were placed in conservatorship and given large cash infusions to cover mounting losses on the mortgages they owned and guaranteed.

Other efforts, such as the biggest source of money for the bailouts: the Troubled Assets Relief Program (TARP), had a larger initial price tag but the overwhelming majority of the $474.8 billion it gave out has been returned to Treasury.

Tougher lending standards have allowed the mortgage financiers to profit from more recent loans they purchased, even if they continue to suffer losses on loans made during the housing bubble. The two firms are now financing about two thirds of the mortgages being written in the United States.

In response to the inspector general report, the Federal Housing Finance Agency said it agreed with the watchdog's suggestions about efforts to limit future legal fees, according to a response to the review by FHFA attorney Alfred Pollard.

The report noted that more legal bills are coming down the road, since the U.S. Securities and Exchange Commission just filed a lawsuit against six former senior officers at Fannie Mae and Freddie Mac.