FANNIE MAE

                                                  $500,000,000 5.74% Debentures
                                                            Due June 9, 1998
                                                          Series SM-1998-AC
                                                       CUSIP NO. 31359MDD2

          This Pricing Supplement relates to the issue of Debentures described below (the "Debentures") and should be read in conjunction with the Offering Circular dated April 3, 1996 (the "Offering Circular") relating to the Debentures of the Federal National Mortgage Association (the "Corporation" or "Fannie Mae") and the Supplement thereto dated July 31, 1997. Unless otherwise defined herein, capitalized terms used herein have the meanings given to them in the Offering Circular.

          THE DEBENTURES, TOGETHER WITH INTEREST THEREON, ARE NOT GUARANTEED BY THE UNITED STATES AND DO NOT CONSTITUTE A DEBT OR OBLIGATION OF THE UNITED STATES OR OF ANY AGENCY OR INSTRUMENTALITY THEREOF OTHER THAN THE CORPORATION.

Certain Securities Terms

1.     Original Principal Amount:   $500,000,000.00

2.     Issue Date (expected Settlement Date):  December 11, 1997

3.     Maturity Date:   June 9, 1998

4.     Subject to Redemption Prior to Maturity Date
           X    No
                 Yes; in whole or in part, at the option of the Corporation, at any time (and from
                  time to time) on or after                 at a redemption price of 100%
                  of the principal amount redeemed, plus accrued interest thereon to the date of
                  redemption

5.     Interest

        a.     Interest rate per annum:  5.74%

        b.     Frequency of Interest Payments:   At Maturity

        c.     Interest Payment Date: June 9, 1998
 
 
 
 
 
 
 
 

Offering

1.     Method of Distribution:   Selling Group

2.     Commission to member(s) of the Debenture Selling Group: .0375% of the original
        principal amount of the Debentures confirmed and delivered to them.

3.     Offering Price: 100% of the original principal amount, plus accrued interest, if any,
        from December 11, 1997.
 

United States Taxation

          In the opinion of Arnold & Porter, special tax counsel to the Corporation, the following paragraph, when read in conjunction with the discussion under "United States Taxation" in the Offering Circular and the discussion under "United States Taxation" in the Supplement dated July 31, 1997 to the Offering Circular (the "Supplement"), correctly describes the principal aspects of the current United States federal tax treatment of investors who purchase the Debentures described in this Pricing Supplement. Those discussions do not purport to deal with all tax consequences applicable to all categories of investors, some of which may be subject to special rules.

Recent Tax Legislation

          The U.S. Congress enacted the tax legislation discussed under "Pending Tax Legislation" in the Supplement, and President Clinton signed the bill into law on August 5, 1997. That legislation, the Taxpayer Relief Act of 1997, modified the federal income taxation of capital gains. The maximum tax rate on capital gains received by individuals from the sale or disposition of investments (other than collectibles) held for more than 18 months is 20 percent. If an individual holds an investment for more than one year, but not for more than 18 months, the maximum rate is 28 percent. Finally, the top capital gains tax rate for individuals will drop to 18 percent for assets purchased after January 1, 2000, and held for more than five years. Investors should consult their own tax advisors for more information or for the capital gains rate applicable to a specific Debenture they own.