Economy Continues to Grow, But at a Very Modest Pace According to Fannie Mae's Economics & Mortgage Market Analysis Group

Housing Bottom Proves Elusive

WASHINGTON, September 15, 2010 - Soft consumer spending coupled with ongoing labor market duress have
precipitated downgraded growth expectations for the remainder of 2010 and
most of 2011, according to the September 2010 Economic Outlook released today
by Fannie Mae's (OTC Bulletin Board: FNMA) Economics & Mortgage Market
Analysis Group. For all of 2010, the group expects growth to come in at 2.2
percent, before gradually strengthening modestly to 2.5 percent in 2011.
Demand for housing also continues to struggle despite home price declines and
drops in interest rates to generational lows, reflecting household concerns
about personal finances and weak employment prospects.

"We continue to see a supply and demand imbalance in the housing sector
with very low levels of sales activity. This is further delaying housing's
return to normalcy," said Fannie Mae Chief Economist Doug Duncan. "At this
point in the post-recession cycle, housing is usually contributing to
economic growth. In our current environment, slow housing growth is
detracting from overall economic growth. Very low mortgage rates are spurring
refinance activity, but we don't expect low rates to boost purchase activity
as long as the labor market remains weak."

For an audio synopsis of the September 2010 Economic Outlook, listen to
the podcast on the Economics & Mortgage Market Analysis
(www.fanniemae.com/media/economics/index.jhtml?p=Media&s=Economics+%26+Mortgage+Market+Analysis)
site at www.fanniemae.com. Visit the site to read the full September
2010 Economic Outlook, including the Economic Developments commentary,
Economic Forecast, and Housing Forecast.

Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's
Economics & Mortgage Market Analysis (EMMA) group included in these materials
should not be construed as indicating Fannie Mae's business prospects or
expected results, are based on a number of assumptions, and are subject to
change without notice. How this information affects Fannie Mae will depend on
many factors. Although the EMMA group bases its opinions, analyses,
estimates, forecasts, and other views on information it considers reliable,
it does not guarantee that the information provided in these materials is
accurate, current, or suitable for any particular purpose. Changes in the
assumptions or the information underlying these views could produce
materially different results. The analyses, opinions, estimates, forecasts,
and other views published by the EMMA group represent the views of that group
as of the date indicated and do not necessarily represent the views of Fannie
Mae or its management.

Fannie Mae exists 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
enhance the liquidity of the mortgage market by providing funds to mortgage
bankers and other lenders so that they may lend to home buyers. Our job is to
help those who house America.

Pete Bakel of Fannie Mae, +1-202-752-2034