(Bloomberg News) Daniel Mudd, the former Chief Executive Officer of Fannie Mae, and Richard Syron, ex-CEO of Freddie Mac, were sued by the U.S. Securities and Exchange Commission for understating by hundreds of billions of dollars the subprime loans held by the agencies.

The lawsuits filed today in Manhattan federal court were followed by an SEC statement that it had entered into non- prosecution agreements with each lender. Fannie Mae, the government-sponsored enterprise which issues almost half of all mortgage-backed securities, and Freddie Mac, the McLean, Virginia-based mortgage-finance company, had "agreed to accept responsibility" for their conduct, the SEC said.

In the lawsuits, the SEC said Syron, Mudd and others understated the lenders' exposure to subprime mortgage loans. From 2007 to 2008, Freddie Mac executives said the company's exposure was between $2 billion and $6 billion when it was actually as high as $244 billion, according to one SEC complaint. From 2006 to 2008, Washington-based Fannie Mae executives said the firm's exposure to subprime mortgage and reduced documentation loans was about $4.8 billion when it was nearly 10 times greater, according to the regulator.

"Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was," Robert Khuzami, direct of the SEC's enforcement division, said today in a statement. "These material misstatements occurred during a time of acute investor interest in financial institutions' exposure to subprime loans, and misled the market about the amount of risk on the company's books."

Criticism Of SEC

The lawsuits, which together name six former executives at the government sponsored entities, come amid criticism from judges and lawmakers that the SEC hasn't done enough to hold individuals responsible for misconduct related to the housing crisis and financial market collapse that followed.

The two non-prosecution agreements require Freddie Mac and Fannie Mae to "accept responsibility" for their conduct and to cooperate with the SEC probe of the former executives.

"Under the agreement, without admitting or denying liability, Fannie Mae has offered to accept responsibility for its conduct and to not dispute, contest or contradict a set of factual statements regarding the disclosures," Fannie Mae said today in a securities filing.

Individual Lawsuits

In the individual lawsuits, the SEC is seeking financial penalties, disgorgement and bars on them serving as officers or directors in other companies.