Freddie Mac has dropped its $1.3 billion lawsuit against Deloitte & Touche that accused the accounting firm of negligence regarding the auditing of certain mortgage loans the GSE purchased from now-defunct mortgage lender Taylor Bean & Whitaker, according to media reports.

Both parties agreed to dismiss the suit without prejudice. The case was scheduled to go to trial on February 22.

A spokesperson from Freddie Mac confirmed to DS News that the settlement was made on mutually agreeable terms. A spokesperson from Deloitte said in an email that the firm did not have a comment on the suit being dropped.

Freddie Mac sued Deloitte for $1.3 billion in a Florida court in September 2014 with regards to fraudulent mortgage loans the GSE purchased from Taylor Bean & Whitaker, according to reports. Freddie Mac says it would not have purchased those mortgage loans from Taylor Bean if Deloitte, which audited Freddie Mac from 2002 to 2009, had paid attention to red flags which indicated fraud.

Freddie Mac claims that Deloitte's negligence cost the GSE $1.3 billion. Both Freddie Mac and Fannie Mae were taken over by the government in September 2008 at the height of the financial crisis. At that time, the GSEs needed a combined $188 billion bailout from the government to stay afloat.

In March 2015, reports surfaced that Freddie Mac was seeking punitive damages in addition to the original $1.3 billion in the lawsuit. An amended complaint filed by Freddie Mac’s lawyers accused Deloitte of “gross negligence” with regards to the purchased mortgage loans.

Deloitte made a bid to have the lawsuit thrown out last year, claiming that Freddie Mac failed to prove gross negligence and that the GSE did not present enough evidence to warrant demanding punitive damages. In May 2015, a Federal judge in Florida rejected Deloitte’s arguments and refused to dismiss the lawsuit.

Taylor Bean, which was once the largest non-bank mortgage servicer in the nation, filed for bankruptcy in 2009 after the housing market collapsed. In 2011, Taylor Bean's chairman, Lee Farkas, was sentenced to 30 years in prison for fraud.