Government-controlled Fannie Mae did not overpay Bank of America (NYSE: BAC) when it offered more than $500 million for troubled mortgages on the banking giant's books, an audit by the Federal Housing Finance Agency ruled in a report released today. Fannie Mae ended up paying $421 million for "mortgage service rights" to 384,000 loans owned or guaranteed by Fannie Mae, which it transferred to specialty servicers who work with at-risk borrowers. Click here to open a PDF of the FHFA report.

However, the audit found that Fannie Mae paid more than it was legally required to in acquiring mortgages from 13 lenders from 2008 to 2011.

While finding that the amount Fannie Mae paid B of A was consistent with amounts it paid to other mortgage services, the audit also found that in transferring mortgage service rights, Fannie Mae "had routinely paid more than the contractually specified fee for terminations without cause."

The FHFA concluded that Fannie Mae had only paid more than market value for the loans in order to ensure a smooth transition of the assets. It wanted to transfer loan servicing to more experienced firms like Ocwen Financial and Nationstar Mortgage, which Fannie Mae felt was better able to minimize losses and deal with distressed borrowers.

Fool contributor John Divine owns shares in none of the companies mentioned above. You can follow him on Twitter @divinebizkid and on Motley Fool CAPS @TMFDivine.

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