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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 27, 2008

Federal National Mortgage Association

(Exact name of registrant as specified in its charter)


Federally chartered corporation (State or other jurisdiction of incorporation)	000-50231 (Commission File Number)	52-0883107 (IRS Employer Identification Number)

3900 Wisconsin Avenue, NW Washington, DC (Address of principal executive offices)		20016 (Zip Code)

Registrant’s telephone number, including area code: 202-752-7000
(Former Name or Former Address, if Changed Since Last Report):

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

		o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

		o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

		o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

		o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

The information in this report, including the exhibits submitted herewith, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of Section 18, nor shall it be deemed incorporated by reference into any disclosure document relating to Fannie Mae except to the extent, if any, expressly set forth by specific reference in that document.

Item 2.02 Results of Operation and Financial Condition

On February 27, 2008, Fannie Mae (formally known as the Federal National Mortgage Association) issued a news release reporting its filing of its Form 10-K for the year ended December 31, 2007 and its financial results for the periods covered by the Form 10-K. A copy of the press release, in the form in which it was issued but with additional and clarifying language relating to Fannie Mae’s subprime private-label securities, is furnished as Exhibit 99.1 to this report. Exhibit 99.1 is incorporated herein by reference.

Item 7.01 Regulation FD Disclosure

On February 27, 2008, Fannie Mae is posting to its Web site a 2007 10-K Investor Summary presentation consisting primarily of summary historical financial information about the company excerpted from Fannie Mae’s 2007 Form 10-K and information about the company’s credit book of business. The presentation, a copy of which is furnished as Exhibit 99.2 to this report, is incorporated herein by reference. Fannie Mae's Web site is at www.fanniemae.com. Information appearing on our Web site is not incorporated into this report.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits. The exhibit index filed herewith is incorporated herein by reference.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.


	FEDERAL NATIONAL MORTGAGE ASSOCIATION

	By	/s/ Stephen M. Swad
		Stephen M. Swad
		Executive Vice President and Chief Financial Officer

Date: February 27, 2008

EXHIBIT INDEX

The following exhibits are submitted herewith:


Exhibit Number		Description of Exhibit

	99.1	News release, dated February 27, 2008

	99.2	2007 10-K Investor Summary Presentation, dated February 27, 2008

exv99w1

Exhibit 99.1



news release Media Hotline : 1-888-326-6694 Consumer Resource Center: 1-800-732-6643


Contact :	Chuck Greener	Janis Smith
	202-752-2616	202-752-6673

Number:	4282a

Date:	February 27, 2008

Fannie Mae Reports 2007 Financial Results

WASHINGTON, DC — Fannie Mae (FNM/NYSE) today reported fourth quarter and full-year 2007 results and filed its annual report on
Form 10-K with the Securities and Exchange Commission (SEC).

2007 Overview

•		Net loss of $2.1 billion, or ($2.63) per diluted share, vs. net income of $4.1 billion, or $3.65 per diluted share in 2006.

•		Credit-related expenses, including incremental additions to the allowance for loan losses and the reserve for guaranty losses of $5.0 billion, vs. $783 million in 2006.

•		Guaranty fee income of $5.1 billion in 2007, a 19.3 percent increase, from $4.3 billion in 2006. Fannie Mae’s single-family guaranty book grew 15 percent to $2.6 trillion.

•		Net interest income of $4.6 billion in 2007, a $2.2 billion decrease driven by higher relative borrowing costs.

•		Derivatives fair value losses of $4.1 billion, vs. $1.5 billion in 2006, due to the impact of declining yields on the interest rate swaps used to hedge net assets.

•		Combined loss allowance of $3.4 billion at Dec. 31, compared with $859 million on Dec. 31, 2006.

•		Core capital of $45.4 billion at year end, compared with $42.0 billion at the end of 2006.

•		Completion of the remediation of material weaknesses in accounting systems and controls, and all 81 requirements of the Consent Order.

“We are working through the toughest housing and mortgage markets in a generation,” said President and Chief Executive Officer Daniel H. Mudd. “Our results for 2007 reflect the challenging conditions in the market we serve. While we are pleased that demand for our mortgage guaranty businesses has surged as we respond to the market’s urgent need for liquidity and stability, this positive trend has been far outweighed by the negative financial impacts of rising mortgage defaults, falling home prices, and extraordinary disruptions in the credit markets.”

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Fannie Mae 2007 Results
Page Two

“While our business has always been cyclical, Fannie Mae’s credit loss experience in this cycle reflects the significant decline in home prices in a number of large regional markets and the growing number of borrowers struggling with their mortgages,” Mudd said. “Our strategy for moving through another tough year is to protect and conserve our capital base, and control credit losses. We have also increased our credit loss reserves. Finally, we will also provide liquidity to the market by growing our guaranty business as we build a very strong credit book. These steps will help us do our part to maintain a liquid, stable and affordable mortgage market — and also position us well when the market recovers.”

In the fourth quarter of 2007, the company had a net loss of $3.6 billion. The largest drivers of the fourth quarter results were derivative fair value losses of $3.2 billion, largely a result of the impact of declining yields on the interest rate swaps used to hedge our net assets; a $2.0 billion increase in combined credit loss reserves in light of delinquency, default and severity trends; and an approximately $600 million other-than-temporary impairment loss on certain investments in the company’s mortgage portfolio and liquid investment portfolio, recognized because the company no longer had the intent to hold these securities until the decline in fair value recovered. The securities were redesignated to trading on January 1, 2008, when we adopted the fair value option. The company also reported a near doubling of its single-family guaranty market share from a year ago, and a 26.4 percent increase in its total guaranty fee income (single-family and multifamily guaranty businesses), in the fourth quarter of 2007 compared with the fourth quarter of 2006.

“Market dynamics, including declining interest rates and credit market illiquidity, had a pronounced impact on our bottom line in the fourth quarter of 2007,” Executive Vice President and Chief Financial Officer Stephen M. Swad said. “A substantial portion of losses in ‘07 came from mark-to-market valuation declines you would expect in a mortgage and credit market this volatile.”

“To bolster our capital, we issued $7.8 billion of preferred stock, net of fees, in the fourth quarter, and we will continue to evaluate further avenues to conserve our capital and reduce the impact of market disruptions on our capital base,” Swad said.

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Fannie Mae 2007 Results
Page Three

“In addition, we have completed the 81 requirements of the Consent Order, and we are in ongoing discussions with the Office of Federal Housing Enterprise Oversight, our regulator, regarding the 30 percent capital surplus requirement,” he said. Swad added that all of the company’s internal control material weaknesses dating from its 2004 restatement have now been fully remediated.

“Today’s filing closes a period of rebuilding at Fannie Mae, both to re-do our accounting and internal controls, and to strengthen the enterprise for the future,” Mudd said. “At the same time, Fannie Mae’s management and employees are fully focused on meeting the challenges of a troubled housing and mortgage market — and pursuing the long-term opportunities that our business and our mission present to us.”

Summary of Financial Results for 2007

Fannie Mae’s financial results for 2007 were dramatically different for the first half of the year as compared to the second half of the year. Beginning in the second half of 2007, results were severely affected by the disruption in the mortgage and credit markets, and continued weakness in the housing markets. The company’s financial results for the first and second quarters — including net income of $2.9 billion — were more than offset by a $5.0 billion net loss for the third and fourth quarters in the face of significant increases in serious delinquency rates and foreclosures, home price declines, widening credit spreads, shifts in interest rates and illiquidity in the capital markets.

The following factors had the most significant adverse effect on the company’s 2007 financial results:

•

An increase of $2.8 billion in provision for credit losses, excluding the component of the provision attributable to fair value losses recorded in connection with the purchase of delinquent loans from mortgage backed securities (MBS) trusts;

•

An increase of $5.1 billion in market-based valuation losses, including derivatives fair value losses on interest rate swaps, losses on certain guaranty contracts, fair value losses on delinquent loans purchased from MBS trusts, and losses on trading securities; and

•

A decrease of $2.2 billion in net interest income.

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Fannie Mae 2007 Results
Page Four

The effect of these adverse factors more than offset the favorable impact of an increase of $821 million in guaranty fee income. Below is a further description of these and other factors affecting Fannie Mae’s financial results in the fourth quarter of 2007 and the full year:

•

Derivatives fair value losses were $3.2 billion in the fourth quarter of 2007, compared with $668 million in the fourth quarter of 2006. Total derivatives fair value losses in 2007 were $4.1 billion, compared with $1.5 billion in 2006, and $5.5 billion in the second half of 2007, which was driven by a 131-basis point decline in the five-year swap rate during that period. Fannie Mae’s interest rate swaps and options, which it uses to protect the fair value of its net assets against fluctuations in short- and long-term interest rates, typically have wide swings in fair value from quarter to quarter as interest rates and other market factors fluctuate.

•

Credit-related expenses were $3.0 billion in the fourth quarter and $5.0 billion for all of 2007, compared with $326 million for the fourth quarter, and $783 million for the full year 2006. Half of the 2007 credit-related expenses, or $2.5 billion, was due to an increase in Fannie Mae’s combined loss reserves, as both the incidence and severity of loan charge-offs rose in regions of the country experiencing rapid home price declines and/or weak economic conditions. Another significant driver of credit-related expenses, fair value losses on delinquent loans purchased from MBS trusts, increased to $1.4 billion in 2007 from $204 million in 2006. Fourth-quarter 2007 losses for this item were $559 million compared with $51 million in the same period of 2006. These losses, which are included in Fannie Mae’s credit-related expenses as a component of the provision for loan losses, reflect the difference between the carrying value of these delinquent loans and their estimated fair market value. Fannie Mae purchases the delinquent loans in most cases so that it can modify the loan in an effort to prevent a foreclosure.

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Fannie Mae 2007 Results
Page Five

•

Losses on certain guaranty contracts increased $1.0 billon in 2007 to $1.4 billion, and fourth quarter losses were $386 million versus $258 million in the same period of 2006. The increase reflects credit spreads widening further than the company’s guaranty price increases. Losses on certain guaranty contracts are taken at the origination of the contract, and the loss comes back (or “accretes”) into guaranty fee income over the life of the guaranty.

•

Net interest income declined 15.5 percent to $1.1 billion in the fourth quarter of 2007 compared to the fourth quarter of 2006, and by 32.2 percent for the year, from $6.8 billion to $4.6 billion. The decline was driven by higher debt costs and the reclassification of trust management income (or float income) out of interest income to a separate line item on the income statement.

•

Net investment losses were $1.1 billion in the fourth quarter of 2007, compared to a net investment gain of $75 million in the fourth quarter of 2006, and for the full year 2007 the net investment loss was $1.2 billion. A primary driver of the 2007 loss was a $620 million other-than-temporary impairment loss on certain investments in our mortgage portfolio and liquid investment portfolio. We recognized the impairment because we no longer had the intent to hold these securities until the decline in fair value recovered. We reclassified these investments as trading effective January 1, 2008 with our adoption of SFAS 159. In addition, we recognized $145 million in impairments on subprime mortgage-related securities in the fourth quarter. [See Page 67 of Fannie Mae’s 10-K for additional information.]

Despite the market challenges, a number of positive factors affected Fannie Mae’s business in 2007, including:

•

The mortgage credit book of business grew 14.3 percent to $2.9 trillion, up from $2.5 trillion as of December 31, 2006, reflecting substantial growth in the company’s guaranty business.

•

Market share of single-family mortgage–related securities issuance increased to 48.5 percent in the fourth quarter, from 24.6 percent in the fourth quarter of 2006. Total Fannie Mae MBS outstanding (held in portfolio and by third-parties) increased to $2.3 trillion at the end of 2007, from $2.0 trillion a year earlier.

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Fannie Mae 2007 Results
Page Six

•

Guaranty fee income grew 19.3 percent to $5.1 billion in 2007, from $4.3 billion in 2006. Guaranty fee income grew 26.4 percent to $1.6 billion in the fourth quarter of 2007, compared to $1.3 billion in the fourth quarter of 2006. These increases reflect the significant increase in demand for Fannie Mae’s mortgage credit guaranty as well as higher guaranty fee rates.

•

Multifamily guaranty book grew 22.5 percent to $149 billion.

•

Administrative expenses in 2007 fell $407 million to $2.7 billion. Beginning in January 2007, the company undertook a thorough review of costs as part of a broad reengineering initiative to increase productivity and lower administrative costs. As a result of this effort, the company reduced total administrative expenses by more than $400 million in 2007 as compared with 2006, primarily through a reduction in employee and contract resources.

Fannie Mae Consolidated Financial Results


	Full Year						Fourth Quarter
(dollars in millions)	2007 FY			2006 FY			2007			2006
Net Interest Income	$	4,581		$	6,752		$	1,136			1,345
Guaranty Fee Income		5,071			4,250			1,621			1,282
Trust Management Income		588			111			128			111
Fee and Other Income		751			672			205			105

Net Revenues		10,991			11,785			3,090			2,843
Losses on Certain Guaranty Contracts		(1,424	)		(439	)		(396	)		(258	)
Investment Gains (losses), net		(1,232	)		(683	)		(1,130	)		75
Derivatives Fair Value Losses, net		(4,113	)		(1,522	)		(3,222	)		(668	)
Losses from Partnership Investments		(1,005	)		(865	)		(478	)		(286	)
Administrative Expenses		(2,669	)		(3,076	)		(651	)		(827	)
Credit-Related Expenses		(5,012	)		(783	)		(2,973	)		(326	)
Other Non-Interest Expense, net		(662	)		(204	)		(420	)		(164	)

Income (loss) Before Federal Taxes and Extraordinary Gains (losses)		(5,126	)		4,213			(6,170	)		389
Benefit (provision) for Federal Income Taxes		3,091			(166	)		2,623			214
Extraordinary Gains (losses), net of tax		(15	)		12			(12	)		1

Net Income (loss)	$	(2,050	)		4,059			(3,559	)	$	604

Diluted Earnings (loss) per common share	$	(2.63	)	$	3.65		$	(3.80	)	$	0.49

Stockholders Equity and Core Capital

Stockholders’ equity was $44.0 billion as of December 31, 2007, reflecting an increase of $2.5 billion, or 6 percent, from the December 31, 2006 level of $41.5 billion.

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Fannie Mae 2007 Results
Page Seven

Core capital was $45.4 billion as of December 31, 2007, compared to $42.0 billion as of December 31, 2006. To maintain sufficient capital levels, Fannie Mae undertook several capital management actions in the fourth quarter of 2007. These capital management actions included the issuance of $7.8 billion in preferred stock, net of fees, managing the size of the balance sheet, and reducing the company’s common stock dividend beginning with the first quarter of 2008. In addition, the company made other changes to business practices to reduce losses and expenses. Issuances of preferred stock in 2007 resulted in a material change in the mix and relative cost of Fannie Mae’s core capital.

Fair Value of Net Assets

Fannie Mae also reported a $7.9 billion decline in the fair value of net assets, from $43.7 billion at year-end 2006, to $35.8 billion at year-end 2007. Excluding $5.5 billion in net capital transactions, fair value declined by $13.4 billion. This decline was primarily attributable to a decrease in the fair value of net guaranty assets and the widening of option-adjusted spreads on net portfolio assets, as extraordinary illiquidity and concern about home price declines and credit disruptions in the market drove down the value of mortgage assets generally in 2007, especially in the fourth quarter. Fannie Mae expects periodic fluctuations in the fair value of net assets due to its business activities as well as changes in market conditions, interest rates, relative spreads between mortgage assets and debt, and implied volatility. As a long-term investor in mortgages, Fannie Mae expects a significant portion of the value relating to changes in option-adjusted spreads to return as the securities it holds mature at par.

2008 Outlook

With this filing, Fannie Mae has revised its projections for home prices. The company previously said it expected home prices to decline nationwide by 4 to 5 percent in 2008, with a total peak-to-trough decline of 10 to 12 percent. The company now expects home prices to decline nationwide by 5 to 7 percent in 2008, with a total peak-to-trough decline of 13 to 17 percent, which includes significant expected regional home price declines in 2008.

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Fannie Mae 2007 Results
Page Eight

Fannie Mae has also revised its estimate of credit losses. The company said previously that it expected its credit loss ratio for 2008 would range between 8 to 10 basis points. Since Fannie Mae provided these expectations, however, housing and mortgage market conditions have deteriorated further, including more rapid home price declines in the fourth quarter of 2007 than previously projected. The company now expects a credit loss ratio in 2008 of 11 to 15 basis points, factoring in a significant increase in loan default and severity rates, and a significant increase in acquisitions of foreclosed (“real-estate owned,” or REO) properties, as well as a 5 to 7 percent nationwide decline in home prices.

Fannie Mae management uses the credit loss ratio to evaluate credit loss performance and assess the credit quality of our existing guaranty book of business. Thus, the credit loss ratio does not include fair value losses on loans purchased from MBS trusts. Management also notes that providing credit loss estimates for 2008 is uniquely challenging, given the extreme uncertainty around key factors such as the effect of the disruption in the credit and mortgage markets on home prices; overall economic conditions, including the potential for a national recession; the effects of government intervention and economic stimulus, including recent and future Federal Reserve interest rate reductions; and patterns of consumer behavior that deviate from historical patterns.

During 2008, the single-family guaranty book of business is expected to grow at a faster rate than the rate of overall growth in U.S. residential mortgage debt outstanding.

2007 Business Segment Results

Fannie Mae’s business is organized into three complementary business segments:

The Single-Family Credit Guaranty business works with lender customers to securitize single-family mortgage loans into Fannie Mae MBS and to facilitate the purchase of single-family mortgage loans for the company’s portfolio.

The Capital Markets group manages the company’s investment activity in mortgage loans and mortgage-related securities, and has responsibility for managing the company’s assets and liabilities and its liquidity and capital positions.

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Fannie Mae 2007 Results
Page Nine

The Housing and Community Development (HCD) business works with lender customers to securitize multifamily mortgage loans into Fannie Mae MBS and to facilitate the purchase of multifamily mortgage loans for the company’s portfolio. The HCD business also helps to expand the supply of affordable housing by investing in rental and for-sale housing projects, including rental housing that is eligible for federal low-income housing tax credits (LIHTC).

Business Segment Summary Financial Information


	2007			2006
	(Dollars in millions)
Net revenues:⁽¹⁾
Single-Family Credit Guaranty	$	7,039		$	6,073
Housing and Community Development		424			510
Capital Markets		3,528			5,202

Total	$	10,991		$	11,785


Net income (loss):
Single-Family Credit Guaranty	$	(858	)	$	2,044
Housing and Community Development		157			338
Capital Markets		(1,349	)		1,677

Total	$	(2,050	)	$	4,059


⁽¹⁾		Includes net interest income, guaranty fee income, trust management income and fee and other income.

Fannie Mae’s Single-Family Credit Guaranty business recorded a loss of $858 million in 2007, compared with net income of $2.0 billion in 2006. Guaranty fee income increased $1.0 billion, or 21.5 percent, from 2006. This was due to an increase in the Single-Family guaranty credit book of business of 14.9 percent to $2.6 trillion, and an increase in the average effective guaranty fee rate. Revenue increases were offset by a $4.2 billion increase in credit-related expenses and a $956 million increase in losses on certain guaranty contracts.

Net income for the HCD business decreased $181 million to $157 million in 2007, although fee and other income increased 16.6 percent to $323 million and trust management income increased to $35 million. The primary drivers of the net decrease were the $140 million increase in losses from partnership investments and the $92 million decrease in guaranty fee income.

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Fannie Mae 2007 Results
Page Ten

The Capital Markets Group recorded a loss of $1.3 billion in 2007, compared with net income of $1.7 billion in 2006. The decline was driven primarily by fair value losses on interest rate swaps, as well as continued compression in the net interest yield, which largely was attributable to the increase in short-term and long-term debt costs as maturing debt issued at lower rates was replaced with new debt at higher rates. Capital Markets results also reflect an increase in net derivatives losses to $4.1 billion, as declining yields caused declines in the fair value of the interest rate swaps we use to hedge our net assets.

Credit-Related Expenses

Credit-related expenses consist of the provision for credit losses and foreclosed property expense, as shown in the table below.

Table 11: Credit-Related Expenses


	For the Year Ended December 31,
	2007		2006		2005
	(Dollars in millions)
Provision attributable to guaranty book of business	$	3,200	$	385	$	190
Provision attributable to SOP 03-3 fair value losses		1,364		204		251

Total provision for credit losses		4,564		589		441
Foreclosed property expense (income)		448		194		(13	)

Credit-related expenses	$	5,012	$	783	$	428

(A detailed explanation of the components of credit-related expenses begins on Page 72 of Fannie Mae’s 10-K.)

As noted below in Table 17, Fannie Mae’s realized credit losses were $1.3 billion in 2007, compared with $517 million in 2006, reflecting higher charge-offs and foreclosed property expense in the second half of 2007. The company’s 2007 credit loss ratio, or realized credit losses as a percent of its average guaranty book of business, was 5.3 basis points, or 0.053 percent, compared with 2.2 basis points, or 0.022 percent, in 2006.

Table 17: Credit Loss Performance Metrics


	For the Year Ended December 31,
	2007						2006⁽¹⁾						2005⁽¹⁾
	Amount			Ratio⁽²⁾			Amount			Ratio⁽²⁾			Amount			Ratio⁽²⁾
	(Dollars in millions)
Charge-offs, net of recoveries	$	2,032		8.0		bp	$	454		2.0		bp	$	462		2.1		bp
Foreclosed property expense (income)		448			1.8			194			0.8			(13	)		(0.1	)
Less: SOP 03-3 fair value losses⁽³⁾		(1,364	)		(5.4	)		(204	)		(0.9	)		(251	)		(1.1	)
Plus: Impact of SOP 03-3 on charge-offs and foreclosed property expense⁽⁴⁾		223			0.9			73			0.3			40			0.2

Credit losses⁽⁵⁾	$	1,339		5.3		bp	$	517		2.2		bp	$	238		1.1		bp

See footnotes to Table 17 on page 80 in Fannie Mae’s 2007 10-K.

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Fannie Mae 2007 Results
Page Eleven

Fannie Mae management uses the credit loss ratio to evaluate credit loss performance and assess the credit quality of our existing guaranty book of business. Thus, the credit loss ratio does not include fair value losses on loans purchased from MBS trusts. If such losses were included in the ratio, it would have been 9.8 basis points in 2007, compared with 2.8 basis points in 2006.

Subprime and Alt-A Securities

Fannie Mae holds private-label mortgage securities (PLS) and Fannie Mae-guaranteed securities backed by subprime or Alt-A mortgage assets. Of the total $73.9 billion of such securities on its books, $41.4 billion are backed by subprime mortgage assets and $32.5 billion are backed by Alt-A loans.

About $14.4 billion, or 35 percent, of the company’s subprime mortgage securities are classified as trading assets, and as such are marked to market through the “Investment Losses, Net” line item on the income statement.

The company recorded a loss of approximately $1.0 billion in 2007 on these trading-classified subprime securities, reflecting a decline in the estimated fair value of the securities. The remaining subprime securities on the company’s books, which total $27.0 billion and are classified as available-for-sale, have an unrealized loss as of December 31, 2007, of about $2.3 billion.

About $4.6 billion, or 16 percent, of the company’s Alt-A PLS are classified as trading assets. The company recorded a loss of approximately $350 million in 2007 on these trading-classified Alt-A PLS, reflecting a decline in the estimated fair value of the securities. The remaining Alt-A-backed PLS on the company’s books, which total $27.9 billion and are classified as available-for-sale (AFS), have an unrealized loss as of December 31, 2007, of about $931 million.

The unrealized losses on the subprime and Alt-A securities classified as AFS, totaling about $3.3 billion, reflect the estimate of the current market values of these securities, based on prices obtained from third-party pricing services, and are included on an after-tax basis in Accumulated Other Comprehensive Loss. These securities continue to perform and Fannie Mae is receiving principal and interest payments on all of them.

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Fannie Mae 2007 Results
Page Twelve

As of February 22, 2008, all of Fannie Mae’s private-label mortgage-related securities backed by Alt-A mortgage loans were rated AAA and none had been downgraded. However, since the end of 2007 through February 22, 2008, approximately $1.3 billion, or 4 percent of the company’s Alt-A private label mortgage-related securities had been placed under review for possible credit downgrade or on negative watch.

As of February 22, 2008, the credit ratings of several subprime private-label mortgage-related securities held in Fannie Mae’s portfolio (with an aggregate unpaid principal balance of $8.4 billion as of December 31, 2007) were downgraded below AAA and $63 million or 0.2 percent of the company’s total subprime securities had ratings below investment grade. Of the $8.4 billion that have been downgraded, $6.2 billion are on negative watch for further downgrade. In addition, approximately $10.2 billion or 32 percent of our subprime private-label mortgage-related securities had been placed under review for possible credit downgrade or were on negative watch as of February 22, 2008.

To date, these downgrades have not had a material effect on our earnings or financial condition. Although we consider recent external rating agency actions or changes in a security’s external credit rating as one criterion in our assessment of other-than-temporary impairment, a rating action alone is not necessarily indicative of other-than-temporary impairment. As discussed in “Critical Accounting Policies and Estimates – Other-than-temporary Impairment,” we also consider various other factors in assessing whether an impairment is other-than-temporary. We will continue to analyze the performance of these securities based on a variety of economic conditions, including extreme stress scenarios, to assess the collectability of principal and interest.

Conference Call

Fannie Mae will host a conference call for the investment community this afternoon at 1:00 p.m., Eastern Time. Mary Lou Christy, Senior Vice President, Investor Relations, will host the call. Daniel H. Mudd, President and Chief Executive Officer, and Stephen M. Swad, Executive Vice President and Chief Financial Officer, will address investors and analysts and will be available for a question and answer session along with other members of senior management.

The dial-in number for the call is 1-888-428-4278 or, for international callers, 1-651-291-5354. The confirmation code is 911428. Please dial in 5 to 10 minutes prior to the start of the call. A replay of the call will be available for two weeks starting at 7:00 p.m. Eastern Time on February 27th, through midnight Eastern Time on March 12th.

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Fannie Mae 2007 Results
Page Thirteen

The replay number for the call is 1-800-475-6701 or, for international callers, 1-320-365-3844. The confirmation code is 911428. The conference call will also be Web cast at www.fanniemae.com and will be available for 30 days after the call.

# # #

Certain statements in this press release, including those relating to our future performance, our income, credit losses, administrative expenses and other losses; our current view of industry trends and our expectations for our industry; our future plans; and our future business activities, may be considered forward-looking statements within the meaning of the federal securities laws. Although Fannie Mae believes that the expectations set forth in these statements are based upon reasonable assumptions, Fannie Mae’s future operations and its actual performance may differ materially from what is indicated in any forward-looking statements. Additional information that could cause actual results to differ materially from these statements are detailed in Fannie Mae’s annual report on SEC Form 10-K for the year ended December 31, 2007, including the “Risk Factors” section, and in its reports on SEC Form 8-K.

The 10-K, and all other Fannie Mae forms filed with the SEC, can also be obtained on the company’s web site at www.fanniemae.com/ir/sec/.

Fannie Mae is a shareholder-owned company with a public mission. We exist to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal charter and operates in America’s secondary mortgage market to ensure that mortgage bankers and other lenders have enough funds to lend to home buyers at low rates. In 2008, we mark our 70th year of service to America’s housing market. Our job is to help to those who house America.

Annex I

FANNIE MAE

Consolidated Balance Sheets
(Dollars in millions, except share amounts)


	As of December 31,
	2007			2006

ASSETS
Cash and cash equivalents (includes cash equivalents pledged as collateral that may be sold or repledged of $215 as of December 31, 2006)	$	3,941		$	3,239
Restricted cash		561			733
Federal funds sold and securities purchased under agreements to resell		49,041			12,681
Investments in securities:
Trading, at fair value (includes Fannie Mae MBS of $40,458 and $11,070 as of December 31, 2007 and 2006, respectively)		63,956			11,514
Available-for-sale, at fair value (includes Fannie Mae MBS of $138,943 and $185,608 as of December 31, 2007 and 2006, respectively)		293,557			378,598

Total investments in securities		357,513			390,112

Mortgage loans:
Loans held for sale, at lower of cost or market		7,008			4,868
Loans held for investment, at amortized cost		397,214			379,027
Allowance for loan losses		(698	)		(340	)

Total loans held for investment, net of allowance		396,516			378,687

Total mortgage loans		403,524			383,555
Advances to lenders		12,377			6,163
Accrued interest receivable		3,812			3,672
Acquired property, net		3,602			2,141
Derivative assets at fair value		2,797			4,931
Guaranty assets		9,666			7,692
Deferred tax assets		12,967			8,505
Partnership investments		11,000			10,571
Other assets		11,746			9,941

Total assets	$	882,547		$	843,936


LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Accrued interest payable	$	7,512		$	7,847
Federal funds purchased and securities sold under agreements to repurchase		869			700
Short-term debt		234,160			165,810
Long-term debt		562,139			601,236
Derivative liabilities at fair value		3,417			1,184
Reserve for guaranty losses (includes $211 and $46 as of December 31, 2007 and 2006, respectively, related to Fannie Mae MBS included in Investments in securities)		2,693			519
Guaranty obligations (includes $661 and $390 as of December 31, 2007 and 2006, respectively, related to Fannie Mae MBS included in Investments in securities)		15,393			11,145
Partnership liabilities		3,824			3,695
Other liabilities		8,422			10,158

Total liabilities		838,429			802,294

Minority interests in consolidated subsidiaries		107			136
Commitments and contingencies (see Note 20)		—			—
Stockholders’ Equity:
Preferred stock, 700,000,000 and 200,000,000 shares authorized as of December 31, 2007 and 2006, respectively; 466,375,000 and 132,175,000 shares issued and outstanding as of December 31, 2007 and 2006, respectively		16,913			9,108
Common stock, no par value, no maximum authorization—1,129,090,420 shares issued as of December 31, 2007 and 2006; 974,104,578 shares and 972,110,681 shares outstanding as of December 31, 2007 and 2006, respectively		593			593
Additional paid-in capital		1,831			1,942
Retained earnings		33,548			37,955
Accumulated other comprehensive loss		(1,362	)		(445	)
Treasury stock, at cost, 154,985,842 shares and 156,979,739 shares as of December 31, 2007 and 2006, respectively		(7,512	)		(7,647	)

Total stockholders’ equity		44,011			41,506

Total liabilities and stockholders’ equity	$	882,547		$	843,936

See Notes to Consolidated Financial Statements.

FANNIE MAE

Consolidated Statements of Operations
(Dollars and shares in millions, except per share amounts)


	For the Year Ended
	December 31,
	2007			2006			2005

Interest income:
Trading securities	$	2,051		$	688		$	1,244
Available-for-sale securities		19,442			21,359			22,509
Mortgage loans		22,218			20,804			20,688
Other		1,055			776			403

Total interest income		44,766			43,627			44,844

Interest expense:
Short-term debt		8,999			7,736			6,562
Long-term debt		31,186			29,139			26,777

Total interest expense		40,185			36,875			33,339

Net interest income		4,581			6,752			11,505

Guaranty fee income (includes imputed interest of $1,278, $1,081 and $803 for 2007, 2006 and 2005, respectively)		5,071			4,250			4,006
Losses on certain guaranty contracts		(1,424	)		(439	)		(146	)
Trust management income		588			111			—
Investment losses, net		(1,232	)		(683	)		(1,334	)
Derivatives fair value losses, net		(4,113	)		(1,522	)		(4,196	)
Debt extinguishment gains (losses), net		(47	)		201			(68	)
Losses from partnership investments		(1,005	)		(865	)		(849	)
Fee and other income		751			672			1,445

Non-interest income (loss)		(1,411	)		1,725			(1,142	)

Administrative expenses:
Salaries and employee benefits		1,370			1,219			959
Professional services		851			1,393			792
Occupancy expenses		263			263			221
Other administrative expenses		185			201			143

Total administrative expenses		2,669			3,076			2,115
Minority interest in earnings (losses) of consolidated subsidiaries		(21	)		10			(2	)
Provision for credit losses		4,564			589			441
Foreclosed property expense (income)		448			194			(13	)
Other expenses		636			395			251

Total expenses		8,296			4,264			2,792

Income (loss) before federal income taxes and extraordinary gains (losses)		(5,126	)		4,213			7,571
Provision (benefit) for federal income taxes		(3,091	)		166			1,277

Income (loss) before extraordinary gains (losses)		(2,035	)		4,047			6,294
Extraordinary gains (losses), net of tax effect		(15	)		12			53

Net income (loss)	$	(2,050	)	$	4,059		$	6,347

Preferred stock dividends and issuance costs at redemption		(513	)		(511	)		(486	)

Net income (loss) available to common stockholders	$	(2,563	)	$	3,548		$	5,861

Basic earnings (loss) per share:
Earnings (losses) before extraordinary gains (losses)	$	(2.62	)	$	3.64		$	5.99
Extraordinary gains (losses), net of tax effect		(0.01	)		0.01			0.05

Basic earnings (loss) per share	$	(2.63	)	$	3.65		$	6.04

Diluted earnings (loss) per share:
Earnings (losses) before extraordinary gains (losses)	$	(2.62	)	$	3.64		$	5.96
Extraordinary gains (losses), net of tax effect		(0.01	)		0.01			0.05

Diluted earnings (loss) per share	$	(2.63	)	$	3.65		$	6.01

Cash dividends per common share	$	1.90		$	1.18		$	1.04
Weighted-average common shares outstanding:
Basic		973			971			970
Diluted		973			972			998

See Notes to Consolidated Financial Statements.

FANNIE MAE

Consolidated Statements of Cash Flows
(Dollars in millions)


	For the Year Ended December 31,
	2007			2006			2005

Cash flows provided by operating activities:
Net income (loss)	$	(2,050	)	$	4,059		$	6,347
Reconciliation of net income (loss) to net cash provided by operating activities:
Amortization of investment cost basis adjustments		(391	)		(324	)		(56	)
Amortization of debt cost basis adjustments		9,775			8,587			7,179
Provision for credit losses		4,564			589			441
Valuation losses		612			707			1,394
Debt extinguishment (gains) losses, net		47			(201	)		68
Debt foreign currency transaction (gains) losses, net		190			230			(625	)
Losses on certain guaranty contracts		1,424			439			146
Losses from partnership investments		1,005			865			849
Current and deferred federal income taxes		(3,465	)		(609	)		79
Extraordinary (gains) losses, net of tax effect		15			(12	)		(53	)
Derivatives fair value adjustments		4,289			561			826
Purchases of loans held for sale		(34,047	)		(28,356	)		(26,562	)
Proceeds from repayments of loans held for sale		594			606			1,307
Proceeds from sales of loans held for sale		—			—			51
Net decrease in trading securities, excluding non-cash transfers		62,699			47,343			86,637
Net change in:
Guaranty assets		(5	)		(278	)		(1,143	)
Guaranty obligations		(630	)		(857	)		(124	)
Other, net		(1,677	)		(1,680	)		1,380

Net cash provided by operating activities		42,949			31,669			78,141
Cash flows (used in) provided by investing activities:
Purchases of available-for-sale securities		(126,200	)		(218,620	)		(117,826	)
Proceeds from maturities of available-for-sale securities		123,462			163,863			169,734
Proceeds from sales of available-for-sale securities		76,055			84,348			117,713
Purchases of loans held for investment		(76,549	)		(62,770	)		(57,840	)
Proceeds from repayments of loans held for investment		56,617			70,548			99,943
Advances to lenders		(79,186	)		(47,957	)		(69,505	)
Net proceeds from disposition of acquired property		1,129			2,642			3,725
Contributions to partnership investments		(3,059	)		(2,341	)		(1,829	)
Proceeds from partnership investments		1,043			295			329
Net change in federal funds sold and securities purchased under agreements to resell		(38,926	)		(3,781	)		(5,040	)

Net cash (used in) provided by investing activities		(65,614	)		(13,773	)		139,404
Cash flows provided by (used in) financing activities:
Proceeds from issuance of short-term debt		1,743,852			2,196,078			2,578,152
Payments to redeem short-term debt		(1,687,570	)		(2,221,719	)		(2,750,912	)
Proceeds from issuance of long-term debt		193,238			179,371			156,336
Payments to redeem long-term debt		(232,978	)		(169,578	)		(197,914	)
Repurchase of common and preferred stock		(1,105	)		(3	)		—
Proceeds from issuance of common and preferred stock		8,846			22			29
Payment of cash dividends on common and preferred stock		(2,483	)		(1,650	)		(1,376	)
Net change in federal funds purchased and securities sold under agreements to repurchase		1,561			(5	)		(1,695	)
Excess tax benefits from stock-based compensation		6			7			—

Net cash provided by (used in) financing activities		23,367			(17,477	)		(217,380	)
Net increase in cash and cash equivalents		702			419			165
Cash and cash equivalents at beginning of period		3,239			2,820			2,655

Cash and cash equivalents at end of period	$	3,941		$	3,239		$	2,820

Cash paid during the period for:
Interest	$	40,645		$	34,488		$	32,491
Income taxes		1,888			768			1,197
Non-cash activities:
Securitization-related transfers from mortgage loans held for sale to investments in securities	$	27,707		$	25,924		$	23,769
Net transfers of loans held for sale to loans held for investment		4,271			1,961			3,208
Net deconsolidation transfers from mortgage loans held for sale to investments in securities		(260	)		79			5,086
Transfers from advances to lenders to investments in securities		71,801			45,216			69,605
Net consolidation-related transfers from investments in securities to mortgage loans held for investment		(7,365	)		12,747			(11,568	)
Net mortgage loans acquired by assuming debt		2,756			9,810			18,790
Transfers from mortgage loans to acquired property, net		3,025			2,962			3,699

See Notes to Consolidated Financial Statements.

FANNIE MAE

Consolidated Statements of Changes in Stockholders’ Equity
(Dollars and shares in millions, except per share amounts)


																	Accumulated
											Additional						Other						Total
	Shares Outstanding					Preferred			Common		Paid-In			Retained			Comprehensive			Treasury			Stockholders’
	Preferred			Common		Stock			Stock		Capital			Earnings			Income (Loss)⁽¹⁾			Stock			Equity

Balance as of January 1, 2005		132			969	$	9,108		$	593	$	1,982		$	30,705		$	4,387		$	(7,873	)	$	38,902
Comprehensive income:
Net income		—			—		—			—		—			6,347			—			—			6,347
Other comprehensive income, net of tax effect:
Unrealized losses on available-for-sale securities (net of tax of $2,238)		—			—		—			—		—			—			(4,156	)		—			(4,156	)
Reclassification adjustment for gains included in net income (net of tax of $233)		—			—		—			—		—			—			(432	)		—			(432	)
Unrealized gains on guaranty assets and guaranty fee buy-ups (net of tax of $39)		—			—		—			—		—			—			72			—			72
Net cash flow hedging losses (net of tax of $2)		—			—		—			—		—			—			(4	)		—			(4	)
Minimum pension liability (net of tax of $1)		—			—		—			—		—			—			2			—			2

Total comprehensive income																								1,829
Common stock dividends ($1.04 per share)		—			—		—			—		—			(1,011	)		—			—			(1,011	)
Preferred stock dividends		—			—		—			—		—			(486	)		—			—			(486	)
Treasury stock issued for stock options and benefit plans		—			2		—			—		(69	)		—			—			137			68

Balance as of December 31, 2005		132			971		9,108			593		1,913			35,555			(131	)		(7,736	)		39,302
Comprehensive income:
Net income		—			—		—			—		—			4,059			—			—			4,059
Other comprehensive income, net of tax effect:
Unrealized losses on available-for-sale securities (net of tax of $73)		—			—		—			—		—			—			(135	)		—			(135	)
Reclassification adjustment for gains included in net income (net of tax of $77)		—			—		—			—		—			—			(143	)		—			(143	)
Unrealized gains on guaranty assets and guaranty fee buy-ups (net of tax of $23)		—			—		—			—		—			—			43			—			43
Net cash flow hedging losses (net of tax of $2)		—			—		—			—		—			—			(3	)		—			(3	)
Minimum pension liability (net of tax of $2)		—			—		—			—		—			—			4			—			4

Total comprehensive income																								3,825
Adjustment to apply SFAS 158 (net of tax of $55)		—			—		—			—		—			—			(80	)		—			(80	)
Common stock dividends ($1.18 per share)		—			—		—			—		—			(1,148	)		—			—			(1,148	)
Preferred stock dividends		—			—		—			—		—			(511	)		—			—			(511	)
Treasury stock issued for stock options and benefit plans		—			1		—			—		29			—			—			89			118

Balance as of December 31, 2006		132			972		9,108			593		1,942			37,955			(445	)		(7,647	)		41,506
Cumulative effect from the adoption of FIN 48, net of tax		—			—		—			—		—			4			—			—			4

Balance as of January 1, 2007, adjusted		132			972		9,108			593		1,942			37,959			(445	)		(7,647	)		41,510
Comprehensive loss:
Net loss		—			—		—			—		—			(2,050	)		—			—			(2,050	)
Other comprehensive loss, net of tax effect:
Unrealized losses on available-for-sale securities (net of tax of $293)		—			—		—			—		—			—			(544	)		—			(544	)
Reclassification adjustment for gains included in net income (net of tax of $282)		—			—		—			—		—			—			(523	)		—			(523	)
Unrealized gains on guaranty assets and guaranty fee buy-ups (net of tax of $13)		—			—		—			—		—			—			25			—			25
Net cash flow hedging losses (net of tax of $2)		—			—		—			—		—			—			(3	)		—			(3	)
Prior service cost and actuarial gains, net of amortization for defined benefit plans (net of tax of $73)		—			—		—			—		—			—			128			—			128

Total comprehensive loss																								(2,967	)
Common stock dividends ($1.90 per share)		—			—		—			—		—			(1,858	)		—			—			(1,858	)
Preferred stock dividends		—			—		—			—		—			(503	)		—			—			(503	)
Preferred stock issued		356			—		8,905			—		(94	)		—			—			—			8,811
Preferred stock redeemed		(22	)		—		(1,100	)		—		—			—			—			—			(1,100	)
Treasury stock issued for stock options and benefit plans		—			2		—			—		(17	)		—			—			135			118

Balance as of December 31, 2007		466			974	$	16,913		$	593	$	1,831		$	33,548		$	(1,362	)	$	(7,512	)	$	44,011


⁽¹⁾		Accumulated Other Comprehensive Income (Loss) is comprised of $1,644 million, $577 million and $300 million in net unrealized losses on available-for-sale securities, net of tax, and $282 million, $132 million and $169 million in net unrealized gains on all other components, net of tax, as of December 31, 2007, 2006 and 2005, respectively.

See Notes to Consolidated Financial Statements.


Non-GAAP Supplemental Consolidated Fair Value Balance Sheets⁽¹⁾


	As of December 31, 2007								As of December 31, 2006
	GAAP								GAAP
	Carrying		Fair Value			Estimated			Carrying		Fair Value			Estimated
	Value		Adjustment⁽¹⁾			Fair Value			Value		Adjustment⁽¹⁾			Fair Value
	(Dollars in millions)

Assets:
Cash and cash equivalents	$	4,502	$	—		$	4,502	⁽²⁾	$	3,972	$	—		$	3,972	⁽²⁾
Federal funds sold and securities purchased under agreements to resell		49,041		—			49,041	⁽²⁾		12,681		—			12,681	⁽²⁾
Trading securities		63,956		—			63,956	⁽²⁾		11,514		—			11,514	⁽²⁾
Available-for-sale securities		293,557		—			293,557	⁽²⁾		378,598		—			378,598	⁽²⁾
Mortgage loans:
Mortgage loans held for sale		7,008		75			7,083	⁽³⁾		4,868		9			4,877	⁽³⁾
Mortgage loans held for investment, net of allowance for loan losses		396,516		70			396,586	⁽³⁾		378,687		(2,918	)		375,769	⁽³⁾
Guaranty assets of mortgage loans held in portfolio		—		3,983			3,983	⁽³⁾⁽⁴⁾		—		3,669			3,669	⁽³⁾⁽⁴⁾
Guaranty obligations of mortgage loans held in portfolio		—		(4,747	)		(4,747	)⁽³⁾⁽⁴⁾		—		(2,831	)		(2,831	)⁽³⁾⁽⁴⁾

Total mortgage loans		403,524		(619	)		402,905	⁽²⁾⁽³⁾		383,555		(2,071	)		381,484	⁽²⁾⁽³⁾
Advances to lenders		12,377		(328	)		12,049	⁽²⁾		6,163		(152	)		6,011	⁽²⁾
Derivative assets at fair value		2,797		—			2,797	⁽²⁾		4,931		—			4,931	⁽²⁾
Guaranty assets and buy-ups		10,610		3,648			14,258	⁽²⁾⁽⁴⁾		8,523		3,737			12,260	⁽²⁾⁽⁴⁾

Total financial assets		840,364		2,701			843,065	⁽²⁾		809,937		1,514			811,451	⁽²⁾
Master servicing assets and credit enhancements		1,783		2,844			4,627	⁽⁴⁾⁽⁵⁾		1,624		1,063			2,687	⁽⁴⁾⁽⁵⁾
Other assets		40,400		5,418			45,818	⁽⁵⁾⁽⁶⁾		32,375		(150	)		32,225	⁽⁵⁾⁽⁶⁾

Total assets	$	882,547	$	10,963		$	893,510		$	843,936	$	2,427		$	846,363

Liabilities:
Federal funds purchased and securities sold under agreements to repurchase	$	869	$	—		$	869	⁽²⁾	$	700	$	—		$	700	⁽²⁾
Short-term debt		234,160		208			234,368	⁽²⁾		165,810		(63	)		165,747	⁽²⁾
Long-term debt		562,139		18,194			580,333	⁽²⁾		601,236		5,358			606,594	⁽²⁾
Derivative liabilities at fair value		3,417		—			3,417	⁽²⁾		1,184		—			1,184	⁽²⁾
Guaranty obligations		15,393		5,156			20,549	⁽²⁾		11,145		(2,960	)		8,185	⁽²⁾

Total financial liabilities		815,978		23,558			839,536	⁽²⁾		780,075		2,335			782,410	⁽²⁾
Other liabilities		22,451		(4,383	)		18,068	⁽⁷⁾		22,219		(2,101	)		20,118	⁽⁷⁾

Total liabilities		838,429		19,175			857,604			802,294		234			802,528
Minority interests in consolidated subsidiaries		107		—			107			136		—			136
Stockholders’ Equity:
Preferred		16,913		(1,565	)		15,348	⁽⁸⁾		9,108		(90	)		9,018	⁽⁸⁾
Common		27,098		(6,647	)		20,451	⁽⁹⁾		32,398		2,283			34,681	⁽⁹⁾

Total stockholders’ equity/non-GAAP fair value of net assets	$	44,011	$	(8,212	)	$	35,799		$	41,506	$	2,193		$	43,699	⁽¹⁰⁾

Total liabilities and stockholders’ equity	$	882,547	$	10,963		$	893,510		$	843,936	$	2,427		$	846,363

See Explanation and Reconciliation of Non-GAAP Measures to GAAP Measures

Explanation and Reconciliation of Non-GAAP Measures to GAAP Measures


⁽¹⁾		Each of the amounts listed as a “fair value adjustment” represents the difference between the carrying value included in our GAAP consolidated balance sheets and our best judgment of the estimated fair value of the listed item.

⁽²⁾		We determined the estimated fair value of these financial instruments in accordance with the fair value guidelines outlined in SFAS No. 107, Disclosures about Fair Value of Financial Instruments (“SFAS 107”), as described in “Notes to Consolidated Financial Statements—Note 19, Fair Value of Financial Instruments.” In Note 19, we also


		disclose the carrying value and estimated fair value of our total financial assets and total financial liabilities as well as discuss the methodologies and assumptions we use in estimating the fair value of our financial instruments.

⁽³⁾		We have separately presented the estimated fair value of “Mortgage loans held for sale,” “Mortgage loans held for investment, net of allowance for loan losses,” “Guaranty assets of mortgage loans held in portfolio” and “Guaranty obligations of mortgage loans held in portfolio,” which, taken together, represent total mortgage loans reported in our GAAP consolidated balance sheets. In order to present the fair value of our guaranties in these non-GAAP consolidated fair value balance sheets, we have separated (i) the embedded fair value of the guaranty assets, based on the terms of our intra-company guaranty fee allocation arrangement, and the embedded fair value of the obligation from (ii) the fair value of the mortgage loans held for sale and the mortgage loans held for investment. We believe this presentation provides transparency into the components of the fair value of the mortgage loans associated with the activities of our guaranty businesses and the components of the activities of our capital markets business, which is consistent with the way we manage risks and allocate revenues and expenses for segment reporting purposes. While the carrying values and estimated fair values of the individual line items may differ from the amounts presented in Note 19 of the Consolidated Financial Statements, the combined amounts together equal the carrying value and estimated fair value amounts of total mortgage loans in Note 19 of the Consolidated Financial Statements.

⁽⁴⁾		In our GAAP consolidated balance sheets, we report the guaranty assets associated with our outstanding Fannie Mae MBS and other guaranties as a separate line item and include buy-ups, master servicing assets and credit enhancements associated with our guaranty assets in “Other assets.” The GAAP carrying value of our guaranty assets reflects only those guaranty arrangements entered into subsequent to our adoption of FIN No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (an interpretation of FASB Statements No. 5, 57, and 107 and rescission of FIN No. 34) (“FIN 45”), on January 1, 2003. On a GAAP basis, our guaranty assets totaled $9.7 billion and $7.7 billion as of December 31, 2007 and 2006, respectively. The associated buy-ups totaled $944 million and $831 million as of December 31, 2007 and 2006, respectively. In our non-GAAP supplemental consolidated fair value balance sheets, we also disclose the estimated guaranty assets and obligations related to mortgage loans held in our portfolio. The aggregate estimated fair value of the guaranty asset-related components totaled $18.1 billion and $15.8 billion as of December 31, 2007 and 2006, respectively. These components represent the sum of the following line items in this table: (i) Guaranty assets of mortgage loans held in portfolio; (ii) Guaranty obligations of mortgage loans held in portfolio, (iii) Guaranty assets and buy-ups; and (iv) Master servicing assets and credit enhancements.

⁽⁵⁾		The line items “Master servicing assets and credit enhancements” and “Other assets” together consist of the assets presented on the following five line items in our GAAP consolidated balance sheets: (i) Accrued interest receivable; (ii) Acquired property, net; (iii) Deferred tax assets; (iv) Partnership investments; and (v) Other assets. The carrying value of these items in our GAAP consolidated balance sheets together totaled $43.1 billion and $34.8 billion as of December 31, 2007 and December 31, 2006, respectively. We deduct the carrying value of the buy-ups associated with our guaranty obligation, which totaled $944 million and $831 million as of December 31, 2007 and 2006, respectively, from “Other assets” reported in our GAAP consolidated balance sheets because buy-ups are a financial instrument that we combine with guaranty assets in our SFAS 107 disclosure in Note 19. We have estimated the fair value of master servicing assets and credit enhancements based on our fair value methodologies discussed in Note 19.

⁽⁶⁾		With the exception of partnership investments and deferred tax assets, the GAAP carrying values of other assets generally approximate fair value. While we have included partnership investments at their carrying value in each of the non-GAAP supplemental consolidated fair value balance sheets, the fair values of these items are generally different from their GAAP carrying values, potentially materially. Our LIHTC partnership investments included in partnership investments had a carrying value of $8.1 billion and $8.8 billion and an estimated fair value of $9.3 billion and $10.0 billion as of December 31, 2007 and December 31, 2006, respectively. We assume that certain other assets, consisting primarily of prepaid expenses, have no fair value. Our GAAP-basis deferred tax assets are described in “Notes to Consolidated Financial Statements—Note 11, Income Taxes.” We adjust the GAAP-basis deferred income taxes for purposes of each of our non-GAAP supplemental consolidated fair value balance sheets to include estimated income taxes on the difference between our non-GAAP supplemental consolidated fair value balance sheets net assets, including deferred taxes from the GAAP consolidated balance sheets, and our GAAP consolidated balance sheets stockholders’ equity. Because our adjusted deferred income taxes are a net asset in each year, the amounts are included in our non-GAAP fair value balance sheets as a component of other assets.

⁽⁷⁾		The line item “Other liabilities” consists of the liabilities presented on the following four line items in our GAAP consolidated balance sheets: (i) Accrued interest payable; (ii) Reserve for guaranty losses; (iii) Partnership liabilities; and (iv) Other liabilities. The carrying value of these items in our GAAP consolidated balance sheets together totaled $22.5 billion and $22.2 billion as of December 31, 2007 and 2006, respectively. The GAAP carrying values of these other liabilities generally approximate fair value. We assume that certain other liabilities, such as deferred revenues, have no fair value.

⁽⁸⁾		“Preferred stockholders’ equity” is reflected in our non-GAAP supplemental consolidated fair value balance sheets at the estimated fair value amount.

⁽⁹⁾		“Common stockholders’ equity” consists of the stockholders’ equity components presented on the following five line items in our GAAP consolidated balance sheets: (i) Common stock; (ii) Additional paid-in capital; (iii) Retained earnings; (iv) Accumulated other comprehensive loss; and (v) Treasury stock, at cost. “Common stockholders’ equity” is the residual of the excess of the estimated fair value of total assets over the estimated fair value of total liabilities, after taking into consideration preferred stockholders’ equity and minority interest in consolidated subsidiaries.

⁽¹⁰⁾		The previously reported fair value of our net assets was $42.9 billion as of December 31, 2006. This amount reflected our LIHTC partnership investments based on the carrying amount of these investments. We revised the previously reported fair value of our net assets as of December 31, 2006 to reflect the estimated fair value of these investments. This revision increased the fair value of our net assets by $798 million to $43.7 billion as of December 31, 2006.

exv99w2

February 27, 2008 Fannie Mae 2007 10-K Investor Summary Exhibit 99.2

These materials present tables and other information about Fannie Mae, including information contained in Fannie Mae's Annual Report on Form 10-K for the year ended December 31, 2007. These materials should be reviewed together with the 2007 10-K, copies of which are available on the company's Web site at www.fanniemae.com under the "Investor Relations" section of the Web site. More complete information about Fannie Mae, its business, business segments, financial condition and results of operations is contained in its 2007 Forms 10-K, which also includes more detailed explanations and additional information relating to the information contained in this presentation. Footnotes to the included tables have been omitted.

Disclaimer/Safe Harbor This presentation includes forward-looking statements, including statements relating to our future capital position, financial performance and condition, ability to take advantage of business opportunities, market share and credit losses; our strategy; the fair value of our net assets; and our expectations regarding the housing, credit and mortgage markets and our future credit loss ratio. Future results may differ materially from what is indicated in these forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, greater than expected delinquencies and credit losses on the mortgages we hold or guaranty; impairments, delinquencies and losses on subprime and Alt-A mortgage loans that back our private-label mortgage-related securities investments; further declines in home prices in excess of our current expectations; a recession or other economic downturn; a default by one or more of our significant institutional counterparties on its obligations to us; the loss of business volume from any of our key lender customers; widening of credit spreads; and changes in interest rates, as well as others described in the "Risk Factors" sections in Fannie Mae's annual report on Form 10-K for the year ended December 31, 2007, and in its reports on SEC Form 8-K. Other terms used but not defined in this presentation may be defined in our annual report on Form 10-K for the year ended December 31, 2007.

2007 results accurately reflect the most severe housing dislocation in decades. The market did provide opportunities for Fannie Mae, particularly in our guaranty business. Our primary focus is protecting our capital, mitigating losses and taking steps to emerge from the crisis on solid footing. We are well-positioned to continue our vital role and mission, but expect another very tough year. Despite market challenges, have continued to meet key milestones. Met all obligations under Consent Agreement. 1

Consolidated Financial Results 2

Net Interest Income/Yield Net interest income significantly lower as net interest yield declines. Net interest yield increased modestly in Q4 2007 due to lower debt costs. Reclassification of float income to trust management income beginning in November 2006, reduced net interest yield by 7 bps in 2007. Full Year Sequential Quarters 85 bps 57 bps 52 bps 3 58 bps Net Interest Income ($mm) $6,752 $4,581 $1,058 $1,136

Guaranty Fee Income Certain prior period amounts previously included as a component of "fee and other income" have been reclassified to "guaranty fee income" to conform to the current period presentation Accretion of previously recognized losses on certain guaranty contracts increased guaranty fee income by $603 million in 2007 and $329 million in 2006 Growth in guaranty fee income driven primarily by growth in outstanding MBS and an increase in average effective guaranty fee rate. Price increases go into effect on March 1, 2008 - expected to have approximately 10 bps positive impact on new business. 22.2 bps 23.7 bps 22.8 bps Full Year Sequential Quarters 4 28.5 bps Guaranty Fee Income ($mm) $4,250 $5,071 $1,232 $1,621

Net impact of losses on certain guaranty contracts increased to $821 million from $110 million, due to wider market credit spreads. In Q4, 2007, accretion of prior losses on certain guaranty contracts increased, substantially offsetting the impact of new losses on certain guaranty contracts. We expect these trends to continue in 2008. (1) Does not factor in amortization of credit enhancement expense recorded in other expenses Losses on Certain Guaranty Contracts 5

Investment Gains/(Losses), Net 6 Transaction related gains/losses effectively offset in 2007. Increase in losses on trading securities driven by credit spread widening, more than offsetting the positive effects of declining yields. Investment losses, net, increased in 2007. Key drivers included:

Security Impairments At December 31, 2007, the company changed its intent to hold LIP and certain agency securities until they recovered, and accordingly recognized impairment of $620 million. These securities were transferred from available for sale (AFS) to trading on January 1, 2008 with our adoption of the fair value option. We recorded $160 million of other-than-temporary impairment on $1.7 billion of unpaid principal balance of subprime private-label securities classified as AFS because we concluded that we did not have the intent to hold to recovery or it was no longer probable that we would collect all of the contractual principal and interest amounts due. 7

Effect on Earnings of Significant Market-Based Valuation Adjustments Declines in interest rates Credit spreads widening and reduced levels of liquidity in the mortgage and credit markets, causing significant losses Developed work-out option not requiring the purchase of loans from trusts and working on other options Increasing guaranty fee pricing Moving selected agency MBS to trading accounts Evaluating hedge accounting Fair Value Items 8 Principal reasons for fair value declines: Actions to reduce volatility associated with these items:

Credit-Related Expenses/Credit Loss Performance Metrics Credit loss ratio (excluding the impact of SOP 03-3) increased to 5.3 bps from 2.2 bps A key driver of the increase in credit losses and expenses was weakness in the housing markets The company now expects a credit loss ratio in 2008 of 11 to 15 basis points, factoring in a significant increase in loan default and severity rates, and a significant increase in acquisitions of foreclosed properties, as well as a 5 to 7 percent nationwide decline in home prices. The company further expects there may also be significant regional differences in the rate of home price declines in 2008. 9

Losses on Loans Purchased from Trusts/Cure Rates Losses on loans purchased from trusts driven by an increase in number of loans purchased and a decrease in the fair value of loans. Cure rates may decline compared with 2006 rates. Re-performance Rates of Delinquent Single- Family Loans Purchased from MBS Trusts Full Year Sequential Quarter 95% 77% 72% 70% 10 (1) Includes value of primary mortgage insurance

Management Actions on Credit 11 Tightening underwriting standards / reduced participation in riskier segments Tightened eligibility requirements on riskier business Increasing FICOs, lowering LTVs and increasing documentation requirements Limiting maximum financing available in declining markets Significant reduction in Alt-A acquisitions Increased loss mitigation efforts Increased focus on work-outs Encourage servicers to ramp up workouts and outreach programs to delinquent borrowers We purchased credit enhancement on riskier loans We actively monitor our counterparties. Have enhanced collateral requirements. Credit enhancement providers Servicers

Change in Estimated Fair Value of Net Assets (Non-GAAP) 12 Fair value of net assets, excluding capital transactions, declined by $13.4 billion. Key drivers included: $6.5 billion decline in fair value of net guaranty assets, including tax-related assets, driven primarily by the market's anticipation of further deterioration of mortgage credit. Widening of mortgage-to-debt spreads caused a decline of approximately $9.4 billion in the fair value of our net portfolio. Economic earnings of the company and changes in fair value of other assets The estimated fair value of our net assets (non-GAAP) represents the estimated fair value of total assets less the estimated fair value of total liabilities. We reconcile the estimated fair value of our net assets (non-GAAP) to total stockholders' equity (GAAP) in Appendix II (pg 35). (1) We revised the previously reported fair value of our net assets as of December 31, 2006 to conform to the current presentation, in which LIHTC partnership investments are reflected at fair value. The previously reported fair value of our net assets as of December 31, 2006 reflected the carrying amount of these investments. (Dollars in Millions)

2007 Q4 Capital Surplus - Sources and Uses of Excess Capital 13 At year-end 2007, Fannie Mae had a $3.9 billion capital surplus relative to the OFHEO-directed minimum capital requirement. Fannie Mae increased investment in our liquid investments and mortgage portfolio in Q4, consuming some of our capital surplus. Fannie Mae has the ability to manage the size of its liquid investment portfolio (LIP) or mortgage portfolio for additional capital flexibility. Return of Capital Investment Note: Q4 2007 capital surplus is a Fannie Mae estimate, and has not been certified by OFHEO

Capital Position 14 Note: YE 2007 core capital is a Fannie Mae estimate, and has not been certified by OFHEO

APPENDIX I - Credit

Home Price Growth Rate in the U.S. - Fannie Mae Index 15 - -5% to -7% Forecast Based upon the Fannie Mae home price index. Growth rates are from period-end to period-end. 2006 H1 and H2 growth rates are not annualized. Note: Using the Case Shiller weighting method, our forecasted home price decline would be 7-9% (vs. 5-7%).

16 Source: Fannie Mae

New Business - reduced eligibility and increased price Credit loss mitigation Increased focus on workouts Fannie Mae employees on site with most major servicers National REO Disposition Center in Dallas, built during California mid-90's housing recession, continues to use its experience to manage servicer relationships and facilitates workouts Manage counterparty risk positions Strengthening contractual protections Requiring additional collateral from some counterparties New limits on business with some counterparties Increased depth and frequency of monitoring Focus on Minimizing Credit Losses Credit Risk Management 17

Counterparty Exposure 18

Credit Loss Rate/Delinquency Rates Higher credit loss ratio primarily due to worsening decline in home prices, particularly in the Midwest, California, Florida, Nevada, and Arizona, and economic weakness in the Midwest. Our credit loss ratio excludes the impact of SOP 03-3 Fannie Mae expects credit losses to rise to 11-15 bps in 2008, factoring in a significant increase in loan default and severity rates, and a significant increase in acquisitions of foreclosed properties, as well as a 5 to 7 percent nationwide decline in home prices * Note: Credit loss ratio is defined as [Net charge-offs (excluding impact of SOP 03-3) + Foreclosed Property Expense]/Average Guaranty Book of Business 19

Characteristics of Fannie Mae Single-Family Conventional Mortgage Credit Book of Business Product Types* Occupancy* * Data as of December 31, 2007 December 31, 2007 December 31, 2007 Single-Family Conventional Mortgage Credit Book of Business $2.5 Trillion Weighted Average FICO 721 Weighted Average Original LTV 72% Weighted Average MTM LTV 61% 90% Certain data contained in this presentation are based upon information that Fannie Mae receives from third-party sources. Although Fannie Mae generally considers this information reliable, it does not guarantee that it is accurate or suitable for any particular purpose. Fannie Mae has access to detailed loan-level information on approximately 95 percent of our conventional single-family mortgage credit book of business. 20 Long Term and Intermediate Term Fixed Rate 86% Other ARMs 5% IO ARM 5% IO Fixed 3% Negam 1% Primary Residence 90% Second/Vacation Home 4% Investor 6%

Fannie Mae Subprime and Alt-A Exposure Total Exposure of $54.1 Billion Total Exposure of $350.6 Billion * Data as of December 31, 2007 Subprime $324.7B Alt-A 21 PLS Portfolio Investment $32.0 B PLS Wrap $13.8 B Purchased or Guaranteed Loans $8.3 B Purchased or Guaranteed Loans $317.5 B PLS Portfolio Investment $32.5 B PLS Wrap $0.6 B ($9.4 B Held in Portfolio) (None Held in Portfolio)

Fannie Mae Credit Profile by Key Product Features Note: Categories are not mutually exclusive, so numbers are not additive across columns Credit Characteristics of Single-Family Conventional Mortgage Credit Book of Business 22 Certain data contained in this presentation are based upon information that Fannie Mae receives from third-party sources. Although Fannie Mae generally considers this information reliable, it does not guarantee that it is accurate or suitable for any particular purpose. Fannie Mae has access to detailed loan-level information on approximately 95 percent of our conventional single-family mortgage credit book of business.

Single-Family delinquency rates by State and region 23

Fannie Mae Credit Profile by Vintage and Key Product Features Credit Characteristics of Single-Family Conventional Mortgage Credit Book of Business by Vintage 24 Certain data contained in this presentation are based upon information that Fannie Mae receives from third-party sources. Although Fannie Mae generally considers this information reliable, it does not guarantee that it is accurate or suitable for any particular purpose. Fannie Mae has access to detailed loan-level information on approximately 95 percent of our conventional single-family mortgage credit book of business.

Fannie Mae Credit Profile by State Credit Characteristics of Single-Family Conventional Mortgage Credit Book of Business by State 25 Certain data contained in this presentation are based upon information that Fannie Mae receives from third-party sources. Although Fannie Mae generally considers this information reliable, it does not guarantee that it is accurate or suitable for any particular purpose. Fannie Mae has access to detailed loan-level information on approximately 95 percent of our conventional single-family mortgage credit book of business.

Fannie Mae Subprime and Alt-A Exposure - Securities/Wraps As of February 22, 2008, all of our private-label mortgage-related securities backed by Alt-A mortgage loans were rated AAA and none had been downgraded. However, since the end of 2007 through February 22, 2008, approximately $1.3 billion of our Alt-A private label mortgage-related securities had been placed under review for possible credit downgrade or on negative watch. As of February 22, 2008, the credit ratings of several subprime private-label mortgage-related securities held in our portfolio with an aggregate unpaid principal balance of $8.4 billion as of December 31, 2007 were downgraded below AAA of which $63 million or 0.2% of our total subprime securities had ratings below investment grade. Of the $8.4 billion that have been downgraded, $6.2 billion are on negative watch for further downgrade. In addition, approximately $10.2 billion or 32% of our subprime private-label mortgage-related securities had been placed under review for possible credit downgrade or are on negative watch as of February 22, 2008. 26

Home Price Growth/Decline and Fannie Mae Real Estate Owned (REO) in Key States On a national basis, REO net sales price compared with unpaid principal balance of mortgage loan has decreased from 93% in 2005 to 89% in 2006 to 78% in 2007, driving an increase in loss severity. Single-family REO and Home Price Statistics for Selected States 1 Based on Fannie Mae Internal HP Index 27 1

APPENDIX II - Other

2007 Income Statement by Segment 28 (Dollars in Millions) (Dollars in Millions)

2007 Net Revenues/Income by Segment 29 (Dollars in Millions)

Changes in Risk Management Derivative Assets (Liabilities) at Fair Value, Net 30 (2) Reflects net of derivatives assets at fair value and derivative liabilities at fair value, as recorded in our condensed consolidated statement of operations, excluding mortgage commitments. (1) The original fair value at termination and related weighted average life in years at termination for those contracts with original scheduled maturities during or after 2007 and 2006 were $12.5 billion and 15.2 years and $13.9 billion and 9.7 years, respectively. Money spent to purchase option Money spent to terminate swaps Swap Accruals

Fee and Other Income 31 Foreign currency translation losses are offset by corresponding net gains on foreign currency swaps, which are recognized in "Derivatives fair value gains (losses), net".

Note: Credit loss ratio for all periods excludes the impact of SOP 03-3, which requires that loans purchased out of MBS trusts be marked to fair value at the time of acquisition. Selected Financial and Operating Statistics 32 Refer to 2007 10-K, Item 6 for definitions of ratios in above table

Mortgage Securities - Held For Trading *$ amounts in billions **gains/(losses) pre-tax Product UPB 12.31.2007 Fair Value Adoption 01.01.2008 Total Spread Sensitivity (OAS +1 bp) Rate Sensitivity (+ 1 bp) Fixed Rate MBS 21.5 18.3 39.8 (0.014) (0.012) ARM MBS 7.4 0.0 7.4 (0.002) (0.001) Agency CMO 14.2 0.0 14.2 (0.005) (0.003) PLS 10.0 0.0 10.0 (0.002) (0.001) CMBS 11.0 0.0 11.0 (0.007) (0.007) Muni 0.8 0.0 0.8 (0.001) (0.001) Total Assets 64.8 18.3 83.1 (0.031) (0.025) Derivatives 881.0 - 881.0 - 0.048 Net (0.031) 0.023 33

Option Adjusted Spreads (OAS) - Lehman 34 +260 bps YOY Change +82 bps +27 bps +26 bps Source: LehmanLive(r)

35 The following sets forth a reconciliation of the estimated fair value of our net assets (non-GAAP) to total stockholders' equity (GAAP). A more detailed reconciliation is contained in Table 33 of the 2007 Form 10-K. (1) Represents fair value increase of $11.0 billion to total assets of $893.5 billion less a fair value increase of $19.2 billion to total liabilities of $857.6 billion. (2) Represents fair value increase of $2.4 billion to total assets of $846.4 billion, plus a fair value increase of $0.2 billion to total liabilities of $802.5 billion. (Dollars in millions) Estimated Fair Value of Net Assets, net of tax effect (non-GAAP)............................... Fair value adjustments................................. Total Stockholders' Equity (GAAP)...................... As of December 31, 2007 2006 $ 35,799 8,212 $ 44,011 $ 43,699 (2,193) $ 41,506 (1) (2)