(Reuters) - The regulator for Fannie Mae and Freddie Mac, as well as dozens of investors, on Tuesday lodged objections to Bank of America Corp's proposed $8.5 billion mortgage-backed securities settlement.

In a court filing, the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, called it a "positive" that the settlement calls for improving loan servicing and fixing deficient documentation, and said the support of many large market participants is "encouraging."

Still, the FHFA said it lacks enough information about the accord, and wants to be ready to voice a "substantive" objection "should a now unforeseen issue arise" that hurts Fannie Mae and Freddie Mac.

"The FHFA sounds like it wants to preserve its right to contest refinements that could expose Fannie and Freddie to greater losses," said Kathleen Engel, associate dean at Suffolk University Law School in Boston and co-author of "The Subprime Virus."