Fannie Mae paid nearly $100 million in legal fees for three former executives between 2004 and September 2011, according to the Federal Housing Finance Agency Inspector General.

The money paid for the defense of lawsuits, investigations and administrative actions against former CEO Franklin Raines, former CFO J. Timothy Howard, and former Controller Leanne Spencer. The lawsuits allege the three executives conducted accounting practices that artificially inflated the company’s stock price. The suits were combined into one, which awaits trial in federal court.

For this case, Fannie paid more than $37 million in legal fees since being put in conservatorship in 2008.

Freddie Mac advanced $10.2 million in legal costs from 2008 through October 2011 in several lawsuits.

The mortgage finance giants took a combined $183 billion in bailouts from the Treasury Department as of the end of 2011, according to the FHFA OIG.

House Republicans cleared several bills last year reforming post-conservatorship activities at the government-sponsored enterprises. But a bill from Rep. Randy Neugebauer, R-Texas, that would prohibit taxpayers from funding legal fees at the Fannie and Freddie never made it out of subcommittee.

Neugebauer led an investigation into what executives were charging the GSEs to cover legal expenses after the crisis. Roughly $162 million has been spent defending Fannie, Freddie and former executives in a variety of lawsuits.

In December, the Securities and Exchange Commission filed another suit against six former Fannie and Freddie executives. The GSEs continue to advance the legal expenses in defense of the case.

“FHFA and Fannie Mae believe that their options are limited in paying current legal fees for former officers and directors, which now amount to almost $100 million,” said FHFA Inspector General Steve Linick. “OIG nonetheless believes that FHFA must continue its efforts to both control and scrutinize these legal expenses now and in the future.”

Linick’s office recommends the FHFA work to limit the fees with greater use of insurance and new regulations that would cut legal expenses while the two companies are in conservatorship.

FHFA recently issued a regulation that makes shareholder claims arising out of successful class-action litigation the lowest priority in any reorganization of FHFA’s regulated entities. This, according to the inspector general, gives the regulator the discretion not to pay securities-litigation claims during conservatorships.

The agency said previous indemnification contracts with the executives put the responsibility on the GSEs to pay for their legal expenses. It also argued that Fannie, like Freddie, will never be able to pay back its bailout and thus could not afford the legal expenses in an effort to get the shareholder case stayed. The court denied this effort.

FHFA General Counsel Alfred Pollard said in a letter to the inspector general’s office that the agency would take both recommendations and do what it can.

“FHFA and the Office of General Counsel, in particular, has and will continue its efforts to assure that legal expenses are undertaken in line with the particular situation of Fannie Mae and Freddie Mac operating in conservatorships,” Pollard said.

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