The D.C.-based Fannie Mae Foundation has canceled plans for a controversial $40 million ad campaign to educate home buyers, temporarily stopped accepting grant applications, and informed some area charities that their grant awards this year will be smaller, the Washington Post reports.

The foundation, one of the D.C. area's largest corporate charities, depends on the federally chartered Fannie Mae for its funding. But with Fannie Mae embroiled in an accounting scandal and government investigations, the charity has been bracing for potential reductions in its funding. Last month, the foundation announced that it had stopped accepting new grant applications, and also said that it was scrapping a longstanding campaign to teach people about home buying.

Some of the foundation's grant recipients, meanwhile, have been informed about reductions in their grant awards. Manna Inc., which builds homes and provides other services for low-income home buyers in the D.C. area, was told that its grant would be reduced by a third, said Manna president George K. Rothman. "It's not going to cripple us; it'll just hurt us," said Rothman. "I think we'll be doing less of what we've been doing before or will have to find other ways to fill in the gaps."

Reducing grants for specific groups is "not a pattern," said foundation spokeswoman Beverly Barnes. "We are looking at each grant individually and making a decision about each grant individually." The foundation decided last summer to discontinue its advertising and direct-mail campaign that publicized the availability of foundation brochures on home buying, she added.

Fannie Mae, a government-chartered company that buys mortgages from lenders to either resell or hold, overstated past earnings by billions of dollars and is under orders from regulators to shore up its capital reserves. The accounting scandal has contributed to a dramatic plunge in Fannie Mae's share price, and that has taken a toll on the foundation, much of whose assets are in the form of Fannie Mae stock. The prospect of the mortgage lender's troubles affecting the foundation has caught the attention of the Department of Housing and Urban Development, which is focusing on "whether Fannie Mae, through the Fannie Mae Foundation and its activities, is operating within its charter," said HUD spokesman Lemar C. Wooley.