Fannie Mae and Freddie Mac’s regulator is renegotiating their financing plan with the Treasury Department and may seek an increase to their $400 billion federal lifeline before Dec. 31, according to people familiar with the talks.

Federal officials are also debating whether to lower dividend payments on their Treasury borrowings, according to these people. The pair have used $111.6 billion of their $400 billion in backup financing in less than a year..