Fannie Mae Announces Fourth Subordinated Benchmark Notes Offering; New Issue 5-Year Subordinated Benchmark Notes Due January 2, 2007.

Business Editors

WASHINGTON--(BUSINESS WIRE)--Dec. 3, 2001

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                            5-Year
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Pricing Date                December 5, 2001
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Settlement Date             December 7, 2001
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Term to Maturity            5 years
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Maturity Date               January 2, 2007
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Amount                      $1.0-1.5 Billion USD
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Payment Dates               Each January 2nd and July 2nd; beginning
                            January 2, 2002
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CUSIP                       31359MLU5
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Listing                     Luxembourg Stock Exchange
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Credit Rating               Moody's Aa2/ Standard & Poor's AA-/
                            Fitch AA (Fannie Mae Senior Debt Credit
                            Rating:  Aaa/AAA/AAA)
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Credit Suisse First Boston Corporation, J.P. Morgan Securities Inc. and Morgan Stanley & Co. Incorporated are the joint-lead managers. The co-managers include: Bear, Stearns & Co. Inc.; Goldman, Sachs & Co.; Lehman Brothers Inc.; Merrill Lynch & Co.; Salomon Smith Barney Inc. and The Williams Capital Group, L.P.

The designated selling group is Deutsche Banc Alex. Brown Inc.; First Tennessee Bank National Association; Myerberg & Company, L.P., and UBS Warburg LLC.

With this issue, Fannie Mae will have fulfilled its commitment to bring one new issue or reopening of Subordinated Benchmark Notes(R) to market in each quarter in 2001. Fannie Mae will have come to market on four occasions during 2001, with three new issues and one reopening.

Beginning in 2002, Fannie Mae will issue Subordinated Benchmark Notes at least semi-annually. The company expects to issue $12-15 billion over the three-year period ending in December 2003.

As previously stated, 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 June 30, 2001, Fannie Mae's core capital totaled $22.978 billion. Fannie Mae's critical capital on June 30, 2001 was $11.297 billion, so that on that date the company's core capital exceeded the first trigger of 125 percent of critical capital by $8.857 billion. The minimum capital level for Fannie Mae on June 30 was $22.177 billion, which was $801 million below the company's core capital.

Capital levels as of June 30, 2001, are the latest capital numbers to be announced by the Office of Federal Housing Enterprise Oversight (OFHEO). 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, Subordinated Benchmark Notes are not guaranteed by the United States government.

This announcement is neither an offer to sell nor a solicitation of offers to buy any of these securities. Any such offering will be made only by an offering circular and supplement thereto.

Fannie Mae's Universal Debt Facility Offering Circular is used for all of our debt securities settling upon original issuance on or after February 1, 2001. This offering document may be accessed via Fannie Mae's Web site at http:/www.fanniemae.com/markets/debt/offering_circulars.html.

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 more than $3.0 trillion of mortgage financing for more than 40 million families.

More information about Fannie Mae can be found on the Internet at http://www.fanniemae.com.

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 "Fannie Mae." In order to facilitate clarity and avoid confusion, news organizations are asked to refer to the company exclusively as "Fannie Mae."