The Inspector General of the Federal Housing Finance Agency (FHFA) said in a report released on Tuesday that the regulator did not provide enough oversight of Fannie Mae and Freddie Mac in mortgage repurchases, executive compensation and other transactions.

The report cited Freddie Mac's $1.35 billion settlement of mortgage repurchases with Bank of America, in which it said the FHFA didn't independently test Freddie's loan review process or concerns brought up by a senior examiner. It also said the FHFA didn't scrutinize the Home Affordable Modification Program (HAMP), designed to help borrowers in danger of default or foreclosure, which led to complications.

The FHFA's handling of Fannie and Freddie executive compensation in 2009 and 2010, which awarded six people over $35 million, was also criticized. The FHFA was said to have not tested or validated the way the compensation was calculated, nor did it consider other factors including the enterprises' reliance on taxpayer support. Congress recently proposed legislation that would block compensation of the executives.

Additionally, the FHFA's ability to oversee Fannie and Freddie may be limited by a lack of accredited federal financial examiners on staff, with only 34 percent of its examiners accredited, the report said, although it was in the process of adding more staff. The agency also didn't allocate enough resources in handling consumer complaints, failed to identifying risks that included foreclosure processing abuse, and didn't compel Fannie Mae to create an operational risk management system, despite being required to do so.

However, the report credited the FHA with eliminating golden parachute compensations for executives at Fannie and Freddie who led the enterprises leading up to the housing collapse. The agency has also improved repurchase claim recoveries and made itself less vulnerable to fraud, waste and abuse, the report said.