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Press Release

Fannie Mae to Correct Loan Pay-Off Cashflow Discrepancy for MBS Pools

January 6, 2005

Janis Smith


WASHINGTON, DC – Fannie Mae (FNM/NYSE) today announced that, with respect to 234 loans in 169 Mortgage-Backed Securities (MBS) pools, it will pass-through pay-off proceeds that were delayed due to a servicer's failure to report and remit payment to Fannie Mae. (See Attachment A for a complete list of these MBS pools.) Fannie Mae recently confirmed that the servicer should have previously reported and remitted to Fannie Mae the loan principal pay-offs for the affected pools so that the pay-off proceeds could have been distributed to MBS investors. Fannie Mae will reflect the pay-offs in their January 2005 Pool Factors and pass-through the amount of the prepayments of principal on January 25, 2005 which is the next distribution date for these pools.

Additionally, some of the 169 MBS pools ("the affected MBS pools") have been re-securitized into Fannie Mae REMIC and Mega transactions. With respect to all affected Fannie Mae REMIC transactions, we have determined that the pay-off from the affected MBS pools will reduce the aggregate outstanding principal balance of each REMIC by less than one percent. With respect to most of the affected Fannie Mae Mega pools, the pay-off from the affected MBS pools will reduce each outstanding Mega principal balance by less than one percent. For the 20 outstanding Mega pools for which the pay-offs of the affected MBS pools will reduce the outstanding Mega pool principal balance by one percent or more, we have included pool information in Attachment B. Please contact Fannie Mae Fixed-Income Investor Marketing at 1-800-237-8627 for information regarding these MBS pools and re-securitized transactions.



Fannie Mae is a New York Stock Exchange company and the largest non-bank financial services company in the world. It operates pursuant to a federal charter and is the nation's largest source of financing for home mortgages. 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 at least 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. Since 1968, Fannie Mae has provided $6.3 trillion of mortgage financing for 63 million families.

Fannie Mae voluntarily registered its common stock with the Securities and Exchange Commission (SEC) under Section 12(g) of the Securities Exchange Act of 1934, on March 31, 2003.

This press release does not constitute an offer to sell or the solicitation of an offer to buy securities of Fannie Mae. Nothing in this press release constitutes advice on the merits of buying or selling a particular investment. Any investment decision as to any purchase of securities referred to herein must be made solely on the basis of information contained in Fannie Mae's Single-Family Mortgage-Backed Securities Prospectus dated July 1, 2004, the related prospectus supplement(s), together with any information incorporated in these documents by reference, and that no reliance may be placed on the completeness or accuracy of the information contained in this press release. You should not deal in securities unless you understand their nature and the extent of your exposure to risk. You should be satisfied that they are suitable for you in the light of your circumstances and financial position. If you are in any doubt you should consult an appropriately qualified financial advisor.

Style Usage: Fannie Mae's Board of Directors has authorized the company to operate as "Fannie Mae," and the company's stock is now listed on the NYSE as "FNM." In order to facilitate clarity and avoid confusion, news organizations are asked to refer to the company exclusively as "Fannie Mae."