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Neither a monetary penalty nor an admission fraud would be included in the settlement under the proposed agreement with the Securities and Exchange Commission, the Times reported, citing several people briefed on the case.
The SEC abandoned hopes of assessing a fine because of the precarious financial positions of the two companies, the newspaper said, citing sources who spoke on condition of anonymity because the deal was not yet final.
The two companies did not view the government's case as particularly strong, but they said they moved to settle to spare time and resources, the Times said, citing one person close to the talks.
The negotiations have been going on since at least early summer, and a deal may not come until later this year, the newspaper said, citing its sources.
Fannie Mae, Freddie Mac and the SEC all declined to comment, the report said.
A settlement would represent the most significant acknowledgment yet by the mortgage finance giants that they played a central role in the housing boom and bust, the New York Times said.