A U.S. housing regulator on Thursday said it reached an $885 million settlement with UBS (UBS) over allegations the bank misrepresented mortgage-backed bonds that were sold to Fannie Mae and Freddie Mac between 2004 and 2007.

Edward DeMarco, the acting director of the Federal Housing Finance Agency, said in a statement the resolution provides "greater clarity" and helps preserve the assets of the two companies. Fannie Mae and Freddie Mac were taken over by the government in 2008 and have been kept afloat with taxpayer dollars.

UBS, which did not admit to any liability or wrongdoing in settling the allegations, said on Monday it had reached an agreement in principle with the regulator.

(Reporting by Margaret Chadbourn; editing by Jackie Frank)