WASHINGTON, July 7 (Reuters) - Perry Capital LLC said on Sunday it was filing a lawsuit on behalf of several institutional investment funds to challenge the bailout terms set by the U.S. Treasury for government-owned mortgage firms Fannie Mae and Freddie Mac.

The lawsuit alleges that the Treasury and the regulator for Fannie Mae and Freddie Mac violated a 2008 law that put the two mortgage companies into conservatorship as they faced insolvency at the height of the U.S. financial crisis.

The Treasury Department changed the bailout terms last year, forcing Fannie Mae and Freddie Mac to hand over most of their profits to the government, replacing a requirement that the companies pay quarterly dividends of 10 percent on the government's nearly 80 percent stake.

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