The US government plans to put Freddie Mac and Fannie Mae under strict federal control in a further attempt to rescue the two mortgage giants, US media say.
Under the plan, the government-backed private firms would be placed under a legal status known as conservatorship.
Top executives could be removed.
Together the firms hold or guarantee half the country's mortgage debt.
In July, following huge losses by the two companies, Congress approved a plan aimed at offering more liquidity.
The Washington Post, citing senior administration sources, says "conservatorship" status would greatly reduce the value of the two companies' common stock.
Other securities - including company debt and preferred shares - would be guaranteed by the government, the paper added.
Mounting losses
The New York Times reports that senior executives at Freddie Mac and Fannie Mae were informed about the plan on Friday.
The Wall Street Journal said it would include changes in the top management.
There would also be quarterly infusions of cash to keep both firms afloat, the papers say. The total cost to taxpayers is not known but could amount to billions of dollars, they add.
The Associated Press news agency says official confirmation of the plan could come this weekend.
On Friday America's Mortgage Bankers Association reported that at the end of June, about four million homeowners with a mortgage - representing a record 9% - either were behind in their payments or faced repossession.
In the past year, the financial crisis have taken a heavy toll on both Fannie Mae and Freddie Mac.
The country's two largest buyers and backers of mortgages lost a combined $3.1bn between April and June.
Both companies say they have the resources to weather the losses, but their shares have fallen sharply on fears that they could go bankrupt as borrowers default.
The rescue plan passed by Congress in July gave the US government the authority to buy shares and offer liquidity to companies to keep them afloat.
Many analysts believe their collapse would be a major shock to the already fragile global financial system.
(BBC)
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