Federal National Mortgage Association

Shares of Fannie Mae and Freddie Mac, the two largest U.S. home-loan companies, rose on speculation that the companies' regulator may lift a cap on the amount of home loan assets they can own, helping to ease a funding crunch in the mortgage market. Fannie Mae shares jumped $5.87, or 10%, to $62.50. Freddie Mac rose $4.30, or 7.7%, to $60. Falling home prices and a surge in payment defaults have scared investors away from mortgage debt, including bonds and other securities backed by home loans.

Money has started to be distributed to shareholders hurt by an alleged accounting fraud at Fannie Mae under a $400-million settlement signed last year with the mortgage giant, federal regulators said Monday. The Securities and Exchange Commission said the full amount that will go to shareholders, $357 million, is expected to be distributed by October. It is one of the largest such distributions in recent years, the result of the Sarbanes-Oxley law that followed the 2002 corporate scandals.

The heads of Fannie Mae and Freddie Mac said Tuesday that they were developing new types of loans to help borrowers with high-risk mortgages keep their homes at a time of rising foreclosures. A key federal regulator also urged lenders to step in now and extend flexible terms to struggling homeowners.

Federal Reserve Chairman Ben S. Bernanke urged Congress on Tuesday to bolster regulation of mortgage giants Fannie Mae and Freddie Mac and suggested limiting their massive holdings to guard against any danger their debt poses to the overall economy. Bernanke has previously supported efforts to pare the two mortgage companies' huge portfolios.

Fannie Mae said Tuesday it would withhold $44.4 million in bonuses to former and current executives, including Chief Executive Daniel Mudd. The mortgage finance company will deny the long-term incentive pay to 46 former and current executives, Fannie Mae spokeswoman Janis Smith said. Fannie Mae in December said it overstated earnings from 2001 until mid-2004 by $6.3 billion.

Several leading Republican members of the Senate Banking Committee said Wednesday that they would quiz the regulator of mortgage finance company Fannie Mae about approving more than $14 million in pay for the current chief executive. The pay for CEO Daniel Mudd was "astounding" since the company has not yet emerged from an accounting scandal that has so far forced the company to restate $6.3 billion in earnings from 2001 to mid-2004, Sens. Chuck Hagel of Nebraska, John E.

The federal government filed civil charges Monday against former Fannie Mae chief Franklin Raines and two other former top executives, accusing them of misconduct at the mortgage finance giant that cost shareholders billions of dollars. The Office of Federal Housing Enterprise Oversight, which regulates Fannie Mae, said it was seeking fines and the return of millions in bonus money that the executives earned.

Fannie Mae erased $6.3 billion in profit in a long-awaited restatement Wednesday, capping an accounting scandal that stunned financial markets and brought the ouster of top executives and a record fine against the government-sponsored mortgage company. The correction of its earnings from 2001 through June 30, 2004, ordered by the Securities and Exchange Commission two years ago, was well below Fannie Mae's earlier estimate of $10.8 billion.

The conforming loan limit, perhaps the most intently watched number in the mortgage business, will remain unchanged next year at $417,000. The limit is the legislatively set ceiling on the size of loans that can be purchased or guaranteed by Fannie Mae and Freddie Mac, the two government-sponsored financial institutions that keep local lenders awash in cash for home loans.

Fannie Mae said it expected to spend more than $1 billion this year on the massive review of its accounting and preparing financial statements as the mortgage giant pushed to complete it by year-end. The government-sponsored company, which finances one of every five home loans in the U.S., is emerging from an accounting scandal that brought the ouster of top executives and a record $400-million civil fine in a settlement with federal regulators.