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Fannie Mae Adjusts Dividend Rates for Its Variable Rate Non-Cumulative Preferred Stock Series G to 4.59 Percent and to 7.085 Percent for Preferred Stock Series O


WEBWIRE

WASHINGTON, DC -- Fannie Mae (FNM/NYSE) today announced the next scheduled dividend rate adjustments for its Variable Rate Non-Cumulative Preferred Stock Series G and Variable Rate Non-Cumulative Preferred Stock Series O. The new rate for Series G will be 4.59 percent per annum. The new rate for Series O will be 7.085 percent per annum.

The new rate for Series G was derived from the current 2-Year Constant Maturity Treasury (CMT) rate minus 0.18 percent. In accordance with the terms of the Series G Preferred Stock, the dividend rate was last reset as of September 30, 2004, and the rate resets as of September 30 every two years until any redemption.

The current 2-Year CMT rate is the one-week average yield on 2-year U.S. Treasury securities at “constant maturity” as estimated from the U.S. Department of the Treasury’s weekly yield curve as published in the most recent (September 25, 2006) publication of the Federal Reserve Statistical Release of H.15 (519) Selected Interest Rates.

The new Series G dividend rate will be in effect from and including September 30, 2006 to but excluding, September 30, 2008. Holders of record of Series G preferred shares will be entitled to quarterly dividends when and if declared by the Board of Directors of Fannie Mae.

The initial dividend rate for the Series G preferred shares was 6.023 percent. Five million seven hundred and fifty thousand (5,750,000) shares with a stated value of $50 per share were issued and are currently outstanding.

For more information about the Series G preferred shares, interested parties should refer to the offering circular for the Series G preferred shares dated August 3, 2000, which includes the applicable Certificate of Designation of Terms. The offering circular is available on Fannie Mae’s Web site.

The new rate for Series O Preferred Stock is the sum of the ten-year Constant Maturity Treasury (10-year CMT) rate plus 2.375 percent. The 10-Year CMT is the one-week average yield on 10-year United States Treasury securities at “constant maturity” as estimated from the United States Department of Treasury’s weekly yield curve and published in the latest (September 25, 2006) Federal Reserve Statistical Release of H.15 (519) Selected Interest Rates.

In accordance with the terms of the Series O Preferred Stock, the dividend rate was initially set as of December 29, 2004, and the rate resets quarterly until any redemption.

The new dividend rate for Series O will be in effect from and including September 30, 2006, to but excluding, December 31, 2006. Holders of record of Series O preferred shares will be entitled to quarterly dividends when and if declared by the Board of Directors of Fannie Mae.

The initial dividend rate for the Series O preferred shares was 7.000 percent. Fifty million (50,000,000) shares with a stated value of $50.00 per share were issued and are currently outstanding.

For more information about the Series O preferred shares, interested parties should refer to the Certificate of Designation of Terms of Non-Cumulative Preferred Stock Series O. This document is available on Fannie Mae’s Web site.

Fannie Mae is a New York Stock Exchange Company. It operates pursuant to a federal charter. Fannie Mae has pledged through its American Dream Commitment to expand access to homeownership for millions of first-time home buyers; help raise the minority homeownership rate to 55 percent; make homeownership and rental housing a success for millions of families at risk of losing their homes; and expand the supply of affordable housing where it is needed most.

Consumer Resource Center
1-800-7FANNIE (1-800-732-6643)



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