Mortgage giant Fannie Mae knew about allegations of improper foreclosure practices by law firms in 2003 but did not act to stop them, a government watchdog says.

Similar allegations are the subject of a probe by state attorneys general into how lenders and law firms ignored proper procedures to handle a crush of foreclosure paperwork.

An unnamed shareholder warned Fannie Mae of alleged foreclosure abuses in 2003, the inspector general for the agency that regulates Fannie says in a report being released Tuesday.

Fannie Mae responded by hiring a law firm to investigate the claims in 2005. The law firm reported in 2006 that it had found foreclosure attorneys in Florida "routinely filing false pleadings and affidavits."

Fannie officials said they told a government official about the law firm's findings in 2006. That unnamed official, who now works for Fannie's regulator, the Federal Housing Finance Agency, said he couldn't recall the conversation, the report says.

Fannie began using a network of attorneys in 1997 to help handle foreclosures, evictions and bankruptcies. In 2008, the network grew to 140 law firms. And the number of foreclosures in Fannie's portfolio reached historic highs. Foreclosures more than doubled from 2007 to 2008. They grew 50% in 2009.

The U.S. Supreme Court on Monday refused to hear the appeal of an Ohio judge wanting to display a poster of the Ten Commandments in his courtroom.

The display has been covered with a drape since a federal judge ordered Richland County Common Pleas Judge James DeWeese to remove it in October 2009. DeWeese also had posted a label above it bearing the word "Censored."

DeWeese that he is disappointed but knew his effort to get the Supreme Court to hear the case was a long shot, the Mansfield News Journal reported.

"I will probably eventually take the display down," he told the newspaper.

DeWeese hung the poster in his Mansfield courtroom in 2006 after the U.S. Supreme Court let stand lower-court rulings that another Ten Commandment poster he hung in 2000 violated separation between church and state.

The American Civil Liberties Union of Ohio Foundation sued, and the 6th U.S. Circuit Court of Appeals in Cincinnati ruled the display endorsed religious views and was unconstitutional.