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Date:June 14, 2001

Fannie Mae Chief Credit Officer Says Fannie Mae Credit Outlook Remains Excellent

WASHINGTON, DC -- Fannie Mae's Chief Credit Officer, Adolfo Marzol, said that the company's credit outlook remains excellent and that credit costs should have no negative impact on the company's net income growth in 2001.

"Fannie Mae's credit performance continues to be excellent and the company remains optimistic about future credit losses. Although credit could be a serious problem for many financial institutions in 2001, it should not be for Fannie Mae," said Marzol. "The company's credit losses during the second half of 2000 amounted to barely one percent of our total revenues. This equates to a ratio of revenue to credit losses of about 100:1," he said. "Fannie Mae looks out over the next 3-5 years with confidence in its ability to deliver good credit results even in a weaker economic environment."

Since 1997, Fannie Mae's mortgage portfolio and outstanding Mortgage-Backed Securities have risen from $800 billion to close to $1.4 trillion, yet over that same period credit losses have fallen from close to $100 million per quarter to less than $30 million per quarter. From 1997 to 2000, Fannie Mae's credit loss rate fell from 4 basis points to under 1 basis point.

Fannie Mae's exceptional performance managing credit risk can be attributed to several factors. The two biggest reasons are the advancement in automated underwriting through Desktop Underwriter® and improved loss-mitigation strategies and tools.

Marzol said that the combination of loss mitigation tools and widespread use of credit enhancements is highly effective for credit risk management. In 2000, the loans Fannie Mae owned or guaranteed produced $435 million in gross credit losses. Barely a fifth of those losses - or just $89 million - ended up being absorbed by the company.

As part of the company's monthly summary released yesterday, Fannie Mae also reported that in April 2001, serious delinquencies on Fannie Mae's single-family loans as a percent of the number of loans were 0.43 percent and the multifamily delinquency rate as a percent of loan dollars was 0.04 percent.

Marzol said that the credit profile on Fannie Mae's book of business remains excellent. The average loan that Fannie Mae owns or guarantees has a market value of equity equal to more than 40 percent of the property value. Fannie Mae also has mortgage insurance on loans with less than 20 percent initial down payments, and mortgage pool insurance on many other loans.

This release includes forward-looking statements based on management's estimates of trends and economic factors in the markets in which Fannie Mae is active as well as the company's business plans. Such estimates and plans may change without notice and future results may vary from expected results if there are significant changes in economic, regulatory, or legislative conditions affecting Fannie Mae or its competitors. Investors should review the most recent Information Statement dated March 30, 2001 and supplement dated May 15, 2001 (available at www.fanniemae.com) for a discussion of these factors.

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

Shareholder information about Fannie Mae is available 24 hours a day. Please call us toll free at 1-800-FNM-2-YOU (1-800-366-2968) or access our Web site.

Desktop Underwriter 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."

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