Home mortgage loan giant Fannie Mae announced that it expects the tab on a review of its accounting, as well as the preparation of up-to-date financial statements for the first time since the end of 2004, to run upwards of $1 billion this year.

The company is in the midst of recovering from an accounting scandal that resulted in it paying a $400-million civil fine in a settlement with federal regulators in May. In 2003, Sister agency Freddie Mac paid $125 million to settle charges that it misstated its own earnings by nearly $5 billion.

The Office of Federal Housing Enterprise Oversight also announced that it would roll out stronger rules for the two government-charted agencies -- tightening how Fannie and Freddie heads oversee accounting, executive compensation and corporate governance practices.

One proposal addresses the problems that the government has had in recovering compensation from former executives at the agencies who were pushed out in the wake of the accounting scandals. The new rule would require the companies to include provisions in future employment contracts about returning bonuses and salaries if executives are fired “for cause.”

Another piece of guidance would require the board of directors to look beyond maximizing shareholder value in the short-term, and instead better address internal controls and organization, such as requiring the role of board chairman to be an independent board member, and not the chief executive as it has in the past.

Both Fannie and Freddie have 150 days to tell the office how the guidance will affect their business.

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