Dynex Capital, Inc. Responds to Turmoil in Agency Mortgage-Backed Securities Market.

GLEN ALLEN, Va. -- Dynex Capital, Inc. (NYSE:DX) responded to yesterday's turmoil in the agency mortgage-backed securities market. The Company had previously indicated that it intends to invest in agency MBS as part of its 2008 investment strategy. The Company reported that it has not yet added any new agency MBS investments to its balance sheet since the end of 2007, and consequently continues to have extremely low amounts of recourse leverage with only $4.6 million in repurchase agreements currently outstanding and more than ample liquidity including current cash and equivalents of $48.9 million. The Company noted that it has intentionally been cautious in adding leverage to its balance sheet. In part this was due to the concern that there might be further disruptions in the marketplace and in part to ensure that the Company has implemented the necessary infrastructure to manage the risks associated with investing in agency MBS.

Thomas Akin, Chairman and Chief Executive Officer, stated, "We continue to move toward our previously stated objective of investing in agency MBS, and recent spread-widening may provide better opportunities for an entry point. Our balance sheet remains strong, and we have filed for a $1 billion universal shelf to hopefully raise new capital in the near term. We are aware of the volatility in the marketplace today, and we are focused on investing our capital conservatively."

Dynex Capital, Inc. is a specialty finance company that elects to be treated as a real estate investment trust (REIT) for federal income tax purposes. Additional information about Dynex Capital, Inc. is available at www.dynexcapital.com.

Note: This document contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "forecast," "anticipate," "estimate," "project," "plan," "opportunities," and similar expressions identify forward-looking statements that are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. The Company's actual results and timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements as a result of unforeseen external factors. These factors may include, but are not limited to, reinvestment risk and availability of suitable reinvestment opportunities, changes in general economic and market conditions, variability in investment portfolio cash flows, defaults by borrowers, fluctuations in interest rates, fluctuations in property capitalization rates and values of commercial real estate, defaults by third-party servicers, prepayments of investment portfolio assets, other general competitive factors, the impact of regulatory changes, and the impact of Section 404 of the Sarbanes-Oxley Act of 2002. For additional information, see the Company's Annual Report on Form 10-K for the period ended December 31, 2007 and other reports filed with and furnished to the Securities and Exchange Commission.