A Fannie Mae employee falsified signatures and doctored figures that may have been used to improve earnings, the mortgage lender’s regulator Armando Falcon said yesterday after testifying before Congress.

Mr. Falcon, director of the Office of Federal Housing Enterprise Oversight or Ofheo, said his agency identified problems in preparing journal entries on amortization, including the falsified signatures.

Also, Fannie Mae has for 21 years improperly designated some mortgages as “held for investment,” which don’t have to be accounted for at their market value, Mr. Falcon said. The securities were originally designated as “held for sale,” which are accounted for at their market value, Mr. Falcon said.

“There was a breakdown in the integrity in the process by which financial statements were produced,” Mr. Falcon said. “The fact that Fannie Mae operated a faulty and inaccurate system for more than two decades revealed serious system weaknesses.”

Mr. Falcon, speaking to reporters after his testimony, declined to detail the motives for the falsification of signatures and said Ofheo is investigating the extent of involvement of other Fannie Mae staff.

“It was one employee signature that was being falsified,” Mr. Falcon said. “It did take place over the course of several years.”

A Fannie Mae spokesman, Brian Faith, declined immediate comment.

Providing some details on what Ofheo investigators have already found, Falcon spoke before the subcommittee on capital markets, insurance and government sponsored enterprises, a panel within the House Financial Services Committee. Rep. Richard Baker, a Republican from Louisiana, is chairman of the subcommittee and the sponsor of a bill introduced on Tuesday to create a more powerful regulator for Fannie Mae and Freddie Mac.

Mr. Falcon said that one Fannie Mae employee expressed a “willingness to prepare any entry asked of the employee and, in fact, did prepare such entries.”

Mr. Falcon’s testimony came on the same day as Federal Reserve Chairman Alan Greenspan told Congress he supports a new regulator for Fannie Mae and Freddie Mac if it has the power to rein in their growth.

In testimony to the Senate Banking Committee yesterday, Mr. Greenspan said the size of Fannie Mae’s and Freddie Mac’s portfolios, a combined $1.55 trillion, poses a risk to the global financial system. It would be difficult, if not impossible, to bail out the lenders, known as government-sponsored enterprises, should one get into financial trouble.

“If we fail to strengthen GSE regulation, we increase the possibility of insolvency and crisis,” Greenspan said. “We put at risk our ability to preserve safe and sound financial markets in the United States, a key ingredient of support for homeownership.”

Fannie Mae’s shares rose $1.76, or 3.4%, to $54.04 in New York Stock Exchange composite trading at 1:48 p.m. The stock had fallen 24.4% this year as of yesterday’s close. Freddie Mac climbed $1.46, or 2.4%, to $63.22, after declining 14.4% this year.

Fannie Mae’s board in December fired Chairman and Chief Executive Officer Franklin Raines after the Securities and Exchange Commission ruled that the Washington-based company made mistakes in accounting for contracts designed to protect its $905 billion mortgage portfolio from swings in interest rates.

The government-chartered company, which is the biggest source of money for American mortgages, said the errors may require it to restate earnings by at least $8.4 billion.