CORRECTING and REPLACING Fannie Mae Prices New Issue 5-Year Subordinated Benchmark Notes --R--.

Business Editors

CORRECTION...by Fannie Mae

WASHINGTON--(BUSINESS WIRE)--Aug. 13, 2003

In BW5600 issued August 12, 2003, (DC-FANNIE-MAE) prices new issue 5-Year Subordinated Benchmark Notes, CUSIP should read xxx 31359MSY0 (sted 31359SMY0).

The corrected release reads:

FANNIE MAE PRICES NEW ISSUE 5-YEAR SUBORDINATED BENCHMARK NOTES(R)

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                5-Year Subordinated Benchmark Notes
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Pricing Date    August 12, 2003
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Settlement Date August 15, 2003
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Term            5 years
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Maturity Date   September 2, 2008
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Issue Size      $1.0 Billion
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Payment Dates   Each September 2nd and March 2nd, beginning March 2,
                 2004
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Coupon Rate     4.000%
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Price           99.935
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Yield           4.014%
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                +75 basis points/ 3.250% 08/15/2008 U.S. Treasury
Spread          +37.5 basis points/Fannie Mae 3.250% 08/15/2008 Senior
                 Benchmark Notes
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CUSIP           31359MSY0
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Listing         Luxembourg Stock Exchange
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                Moody's Aa2/ Standard & Poor's AA-/Fitch AA
Credit Rating   (Fannie Mae Senior Debt Credit Rating: Aaa/AAA/AAA);
                NAIC Rating: NAIC-1
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Citigroup Global Markets Inc., Lehman Brothers Inc., and Merrill Lynch & Co. Inc. are the joint lead managers. The co-managers include Bear, Stearns & Co. Inc., Credit Suisse First Boston, FTN Financial Capital Markets, Goldman, Sachs & Co., Morgan Stanley & Co., and Utendahl Capital Partners, L.P. There is no designated selling group.

In 2003, Fannie Mae will issue subordinated debt at least semi-annually. The company expects to issue $10 - $13 billion over the three-year period ending in 2003. Fannie Mae will issue subordinated debt in an amount that, together with core capital, equals or exceeds 4 percent of on-balance-sheet assets, after adjusting for capital required to support the off-balance-sheet mortgage securities business and adding back the allowance for losses.

Fannie Mae's Subordinated Benchmark Notes are distinguished from other types of subordinated debt by the existence of triggers for the deferral of interest payments. The terms of Fannie Mae's Subordinated Benchmark Notes call for interest deferral for up to five years, not to exceed the maturity of the issue, if either of two specific conditions of financial stress occur:

Fannie Mae's core capital is below 125 percent of its critical

capital requirement; or Fannie Mae's core capital is below its

minimum capital requirement and, pursuant to the company's

request, the US Secretary of the Treasury exercises his or her

discretionary authority under Section 304(c) of the Company's

Charter Act to purchase the company's debt obligations.

On March 31, 2003, Fannie Mae's core capital totaled $29.517 billion. Fannie Mae's critical capital on March 31, 2003, was $14.413 billion, so that on that date the company's core capital exceeded the first trigger of 125 percent of critical capital by $11.501 billion. The minimum capital level for Fannie Mae on March 31, 2003, was $28.226 billion, which was $1.291 million below the company's core capital. Capital levels as of March 31, 2003, are the latest capital numbers as announced by the Office of Federal Housing Enterprise Oversight on June 30, 2003. One of several conditions of the second trigger is a request by Fannie Mae that the Treasury purchase its securities. Such a request has never been made in the company's history.

Subordinated Benchmark Notes are unsecured subordinated obligations of Fannie Mae. The notes will rank junior in priority of payment to certain defined senior liabilities, which include senior debt securities and liabilities in respect of guarantees on mortgage-backed securities.

When evaluating Subordinated Benchmark Notes, it is important to recognize that, as in the case of other securities issued by Fannie Mae, the United States government does not guarantee Subordinated Benchmark Notes.

This offering document may be accessed via Fannie Mae's Web site at http://www.fanniemae.com/markets/debt/debt_tools_resources/ offering_circulars.jhtml. (Due to the length of this URL, it may be necessary to copy and paste this hyperlink into your Internet browser's URL address field.)

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 is working to shrink the nation's "homeownership gaps" through a $2 trillion "American Dream Commitment" to increase homeownership rates and serve 18 million targeted American families by the end of the decade. Since 1968, Fannie Mae has provided over $5.2 trillion of mortgage financing for more than 55 million families. More information about Fannie Mae can be found on the Internet at http://www.fanniemae.com.

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 Offering Circular dated January 23, 2003, 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.

Benchmark Notes is a registered mark of Fannie Mae. Unauthorized use of this mark is prohibited.

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
FNM Free National Movement (Bahamas)
FNM Foot and Mouth ." In order to facilitate clarity and avoid confusion, news organizations are asked to refer to the company exclusively as "Fannie Mae."