Prepayment Speeds Affecting Certain New Issuance MBS Pools

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MBS News and Announcements

Prepayment Speeds Affecting Certain New Issuance MBS Pools

Fannie Mae has identified issues with respect to the MBS pools in the following attachment. We are reviewing the matter and have determined that principal balances for loans that had been fully liquidated in the month prior to the month of pool issuance (the "liquidated loan balances") as well as partial curtailments made in that prior month (the "prior curtailment amounts") were inadvertently included in, and constituted greater than one percent of, the original principal balance for those pools. As a result, the first payment of principal on those pools to certificateholders included (or in the case of first payments yet to be made, will include) the full amount of the liquidated loan balances and the prior curtailment amounts, in addition to the other principal payments required to be distributed to certificateholders under the terms of the related MBS certificates. These larger first payments of principal to certificateholders caused (or will cause) any calculated prepayment speeds of the related MBS certificates for the month of MBS issuance to be faster than they would have been had the liquidated loan balances and prior curtailment amounts not been included in the original principal balances for those pools. To the extent the MBS pools listed in the attachment were resecuritized into structured transactions such as REMICs, any calculated prepayment speeds for certain classes of those resulting securities also may be impacted. We will update this MBS Highlights Page, as well as the prospectus supplements and PoolTalk pages for the listed pools, as soon as we have confirmed the related liquidated loan balances and prior curtailment amounts.

We are modifying our pooling procedures with the goal of preventing similar occurrences of this issue in the future. We will continue our analysis of the issue and provide any additional material information obtained from this review.

If you are an investor in any of the Fannie Mae securities listed on the attachment and you have further questions, please contact Fannie Mae's Fixed-Income Securities Marketing Help Line at 1-800-237-8627.

Last Revised: 07/14/09