The news comes just three weeks after the Office of Federal Housing Enterprise Oversight released a report based on an eight-month investigation concluding that the government-sponsored enterprise had manipulated earnings and engaged in dubious accounting practices. Fannie Mae CEO Franklin D. Raines and CFO J. Timothy Howard are also named in the lawsuits that have been officially filed.

With legal troubles looming, Fannie Mae is still in hot water with the government. As a result of its investigation, OFHEO had the company sign off on instituting a series of changes to its internal practices, including the increasing of its capital reserves to 30% of its holdings from 18%. Fannie Mae has cooperated fully with OFHEO during the entire process; however, the company notes that its agreement to adhere to the new regulations constitutes neither an admission nor denial of guilt.

Additionally, Raines, Howard and director of Fannie Mae's board of directors Ann Korologos testified last week before the US House of Representatives Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises with regard to issues raised in OFHEO's report.

"As to the two major allegations in the report, first, the report alleges that in 1998, the company willfully violated [Generally Accepted Accounting Principles] in order to maximize executive bonuses," Raines said at the committee hearing. "This is a serious allegation, and we strongly disagree with it. Second, the report alleges that we misapplied GAAP with respect to the two accounting standards, FAS 91 and FAS 133. We believe we applied those standards in accordance with GAAP, and our independent auditor, KPMG, reviewed our application of those standards and concurred."