The US government is looking at plans for a possible takeover of the country's two largest mortgage financing firms amid the ongoing crisis in the mortgage sector, the New York Times reported Friday.

The paper cited people who had been briefed about the plans in reporting that the Fannie Mae and Freddi Mac companies could be placed under a conservatorship to try to ward off their own possible collapse in the mortgage industry's crisis.

However, the officials stressed that action by the administration was not imminent because the two firms were not thought to be in a crisis. But with worries rising about Fannie Mae and Freddie Mac, the government was now discussing contingency plans.

The two firms' losses over the past few months were put at 11 billion dollars, but they now faced even larger losses amid ongoing mortgage foreclosures and declining housing prices.

The Times report said that markets were worried that Fannie Mae and Freddie Mac might themselves default on their debts if the problems in the real estate market continued.

It said that under conservatorship, the two firms' shares would be worth little or nothing, with taxpayers then footing the bill for losses on mortgages which they own or guarantee. The losses "could be staggering," the Times report said.

It cited government officials as saying that the Bush administration was also considering possible legislation to offer a government guarantee on the 5 trillion dollars of debts owned or guaranteed by the two firms.