The Economy Strengthens According to Fannie Mae's Economics & Mortgage Market Analysis Group

Near-term Outlook Brightens but Downside Risks Increase; Home Sales Trending Up In the Second Quarter

WASHINGTON, May 17, 2010 - Improving labor market conditions and a strong increase in consumer
spending led to solid economic growth according to the May 2010 Economic
Outlook released today by Fannie Mae's (NYSE: FNM) Economics & Mortgage
Market Analysis Group. The economy is expected to grow at a 3.5 percent pace
for the year but concerns over European sovereign debt and possible long-term
effects of the Gulf of Mexico oil spill bring uncertainty to the overall 2010
forecast. A welcome surge in home sales points to the positive impact of the
homebuyer tax credit, although the increase will likely be temporary as
incentives wind down.

"Strong momentum coming out of the first quarter puts us in the direction
of a self-sustaining economic recovery," said Fannie Mae Chief Economist Doug
Duncan. "Consumer spending grew at the fastest pace in three years and the
job market posted gains across the board. Home sales grew in March, and will
likely increase further in coming months, presumably from buyers rushing to
sign contracts before the tax credit deadline at the end of April. We
continue to project a pullback in home sales starting in July as the tax
credit will likely pull sales forward into the second quarter," said Duncan.
"The pace of employment growth and confidence in the labor market will be key
factors for a pick up in home sales by the end of the year."

The Economic Outlook includes the Economic Developments commentary,
Economic Forecast, and Housing Forecast — which detail movement of interest
rates, the housing market, the mortgage market, and the overall economic
climate. To read the full May 2010 Economic Outlook, visit the Economics &
Mortgage Market Analysis site at www.fanniemae.com.

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. 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