The Economy Hits an Air Pocket According to Fannie Mae's Economic & Mortgage Market Analysis Group

Global Events Affecting Economic Outlook

WASHINGTON, April 19, 2011 - Global events during March, including ongoing political turmoil in the
Middle East and North Africa, the surge in oil prices, and supply disruptions
from the tragedy in Japan, have dampened U.S. economic growth in the first
half of 2011, according to the April 2011 Economic Outlook released today by
Fannie Mae's (OTC Bulletin Board: FNMA) Economics & Mortgage Market Analysis
Group. The slowdown in growth is expected to be temporary, however, with a
modest acceleration in economic growth projected for the second half of the
year. The group forecasts economic growth to average 3.1 percent for 2011, a
downgrade from 3.5 percent projected in the prior forecast.

Home sales were weak in the first part of 2011, with distressed sales
(foreclosure and short sales) continuing to account for more than a third of
total existing home sales. In turn, a rising share of distressed sales and
the winding down of various programs to support the housing market have
caused home price measures to decline.

"Home price expectations have deteriorated during the past several
months, which could cause some potential homebuyers to remain on the
sidelines — and further sharp cutbacks in housing demand would pose a risk
to the fragile housing recovery," said Fannie Mae Chief Economist Doug
Duncan. "We expect a little more decline in house prices at the national
level than we had thought previously, but expect prices to begin stabilizing
later this year."

On the upside, recent employment reports have been very strong, with more
than 230,000 private sector payroll jobs added in each of the last two
months. "We anticipate there will be continued reasonably good news in
employment through the rest of the year," said Duncan. "If that continues, we
expect housing to move in a similar positive direction — hopefully by the
second half of 2011."

For an audio synopsis of the April 2011 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 toread the full April 2011
Economic Outlook, including the Economic Developments Commentary, Economic
Forecast, and Housing Forecast.

Also available via link from the Economic Developments Commentary is the
Multifamily Market Commentary by Kim Betancourt, Director, Multifamily
Economics and Market Research. The Commentary provides information on current
multifamily market conditions with a focus on multifamily mortgage debt
outstanding in 2010.

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.

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Pete Bakel, +1-202-752-2034