Stock News - 05/11/2011 Notice

Notice: Mandatory Conversion of 8.75% Non-Cumulative Mandatory Convertible Preferred Stock, Series 2008-1

CUSIP: 313586745

In accordance with its terms, Fannie Mae's 8.75% Non-Cumulative Mandatory Convertible Preferred Stock, Series 2008-1 (the "Convertible Preferred") will automatically convert into shares of Fannie Mae common stock at 5:00 p.m. on May 13, 2011 (the "Conversion Time"). At that time, Fannie Mae will issue 1.8182 shares of common stock per share of Convertible Preferred.

No fractional shares of common stock will be issued upon conversion. Holders entitled to receive a fractional share of common stock will receive a cash payment based on the last quoted bid price of the common stock for each trading day from May 5, 2011 through May 11, 2011. The average of the last quoted bid prices of Fannie Mae common stock for this period, as reported by the OTC Bulletin Board, was $0.38 per share.

The conversion of the Convertible Preferred will happen automatically at the Conversion Time. No action is required to be taken by holders of the Convertible Preferred. The new common stock will be registered in the name of the holder of the Convertible Preferred as shown on the books and records of Fannie Mae at the time of conversion.

Holders seeking additional information about the terms of the Convertible Preferred should review the Offering Circular for the Convertible Preferred available on Fannie Mae's website at https://www.fanniemae.com/portal/about-us/investor-relations/stock-information.html.

Page last revised: 05/11/11