Report critical of pay practices at Fannie Mae, Freddie Mac

Also, the housing regulator Federal Housing Finance Agency (FHFA) has not considered the factors that might have possibly resulted in reduced executive compensation costs, the review report said.

The top six executives at the housing giants were paid $35.4 million over the two years, according to the report that was posted on the agency's website.

The Inspector General said FHFA has not developed written procedures to evaluate the recommended executive compensation levels each year.

"FHFA also does not provide sufficient transparency to the public of the Enterprises' executive compensation program," the Office of Inspector General said in the evaluation report.

The report recommended that FHFA should establish ongoing review and analysis process to determine the compensation levels for the top executives of mortgage finance giants.

The mortgage firms have taken more than $130 billion in direct taxpayer aid since 2008

and the U.S. government indicated in February that total cost could peak at $169 billion by late next year before beginning to shrink as they slowly repay taxpayers.

Fannie Mae and Freddie Mac could not immediately be reached for comment by Reuters outside regular U.S. business hours.

(Reporting by Sakthi Prasad in Bangalore; Editing by Muralikumar Anantharaman)