Item 1.01 Entry Into a Material Definitive Agreement. Letter Agreement with Treasury



On January 14, 2021, Fannie Mae (formally known as the Federal National Mortgage
Association), through the Federal Housing Finance Agency ("FHFA"), acting on
Fannie Mae's behalf in its capacity as conservator, and the United States
Department of the Treasury ("Treasury") entered into a letter agreement (the
"Letter Agreement"). The Letter Agreement modifies certain provisions of the
Amended and Restated Senior Preferred Stock Purchase Agreement, as amended
(which we refer to as the "SPSPA"), between Fannie Mae and Treasury, as well as
the terms of the Variable Liquidation Preference Senior Preferred Stock, Series
2008-2 (which we refer to as the "senior preferred stock"), that Fannie Mae
issued to Treasury in connection with the execution of the SPSPA in 2008. We
describe the terms of the SPSPA and the senior preferred stock in our annual
report on Form 10-K for the year ended December 31, 2019 (the "2019 Form 10-K"),
under the heading "Business - Conservatorship, Treasury Agreements and Housing
Finance Reform - Treasury Agreements."

Senior Preferred Stock

The modifications related to the terms of the senior preferred stock include:



•Modification to Dividend Provisions-Increase in Applicable Capital Reserve
Amount. The terms of the senior preferred stock provide for dividends each
quarter in the amount, if any, by which our net worth as of the end of the
immediately preceding fiscal quarter exceeds an applicable capital reserve
amount. The Letter Agreement modifies the dividend provisions of the senior
preferred stock to increase the applicable capital reserve amount, starting with
the quarterly dividend period ending on December 31, 2020, from $25 billion to
the amount of adjusted total capital necessary for us to meet the capital
requirements and buffers set forth in the final enterprise capital rule
published by FHFA in the Federal Register on December 17, 2020 (the "enterprise
regulatory capital framework").

•Modification to Dividend Provisions-Change in Dividend Amount following Capital
Reserve End Date. The Letter Agreement modifies the dividend provisions of the
senior preferred stock to create a new method for calculating the quarterly
dividend amount payable to Treasury. This new dividend calculation method will
not be applicable until the first dividend period following the "capital reserve
end date," which is defined as the last day of the second consecutive fiscal
quarter during which we have maintained capital equal to, or in excess of, all
of the capital requirements and buffers under the enterprise regulatory capital
framework.

•Beginning with the first dividend period following the capital reserve end
date, the applicable quarterly dividend amount will be the lesser of:
(1)  a 10% annual rate on the then-current liquidation preference of the senior
preferred stock, and

(2) an amount equal to the incremental increase in our net worth during the immediately prior fiscal quarter.



However, the applicable quarterly dividend amount will immediately increase to a
12% annual rate on the then-current liquidation preference of the senior
preferred stock if we fail to timely pay dividends in cash to Treasury. This
increased dividend amount will continue until the dividend period following the
date we have paid, in cash, full cumulative dividends to Treasury (including any
unpaid dividends), at which point the applicable quarterly dividend amount will
revert to the prior calculation method.

•Modification to Liquidation Preference Provisions-Increase in Liquidation
Preference. The Letter Agreement provides that on the last day of each quarterly
dividend period through the capital reserve end

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date, the liquidation preference of the senior preferred stock will be increased by an amount equal to the increase in our net worth, if any, during the immediately prior fiscal quarter.



•Modification to Mandatory Pay Down of Liquidation Preference Provisions-Ability
to Retain Limited Proceeds from Issuances of Common Stock. Prior to the changes
effected by the Letter Agreement, under the terms of the senior preferred stock,
we were required to promptly use the cash proceeds received from any issuances
of capital stock to pay down the liquidation preference of the senior preferred
stock. The Letter Agreement modifies the terms of the senior preferred stock by
excluding from this requirement any aggregate gross cash proceeds we receive
from issuances of common stock up to $70 billion.

Senior Preferred Stock Purchase Agreement

The modifications related to the SPSPA include:



•Periodic Commitment Fee. The Letter Agreement amends the SPSPA to provide that
(1) through and continuing until the capital reserve end date, the periodic
commitment fee payable to Treasury to compensate Treasury for its ongoing
support under the SPSPA shall not be set, accrue, or be payable, and (2) not
later than the capital reserve end date, we and Treasury, in consultation with
the Chair of the Federal Reserve, will agree to set the amount of the periodic
commitment fee.

•Exit from Conservatorship without Prior Treasury Permission under Specified
Circumstances. Prior to the changes effected by the Letter Agreement, we and
FHFA agreed not to terminate or seek to terminate the conservatorship, other
than through a receivership, without the prior written consent of Treasury. The
Letter Agreement amends the SPSPA to provide that FHFA can terminate our
conservatorship without the prior consent of Treasury if several conditions are
met, including (1) all currently pending significant litigation relating to the
conservatorship and the August 2012 amendment to the SPSPA has been resolved,
and (2) for two or more consecutive quarters, our common equity tier 1 capital
(as defined in the enterprise regulatory capital framework), together with any
stockholder equity that would result from a firm commitment public underwritten
offering of common stock which is fully consummated concurrent with the
termination of conservatorship using broker-dealers acceptable to Treasury,
equals or exceeds at least 3% of our adjusted total assets (as defined in the
enterprise regulatory capital framework).

•Ability to Issue Common Stock without Prior Treasury Permission under Specified
Circumstances. Prior to the changes effected by the Letter Agreement, we were
prohibited under the SPSPA from issuing stock without the prior consent of
Treasury, except for stock issuances made (1) to Treasury, or (2) pursuant to
obligations that existed at the time we entered conservatorship. The Letter
Agreement amends the SPSPA to provide that we may issue, without the prior
consent of Treasury, common stock ranking pari passu or junior to the common
stock issued to Treasury in connection with the exercise of its warrant,
provided that (1) Treasury has already exercised its warrant in full, and (2)
all currently pending significant litigation relating to the conservatorship and
the August 2012 amendment to the SPSPA has been resolved.

•Retained Mortgage Portfolio Cap and Indebtedness Cap. The cap on our mortgage
assets will decrease from its current $250 billion level to $225 billion on
December 31, 2022. We are currently managing our business to a $225 billion cap
pursuant to instructions from FHFA. Since the SPSPA requires us to calculate our
indebtedness cap based on the size of our mortgage assets cap, this reduction in
our mortgage assets cap will cause our SPSPA indebtedness cap to decline from
$300 billion to $270 billion.

•Compliance with Enterprise Regulatory Capital Framework as Finalized in 2020. A
new covenant was added to the SPSPA requiring us to comply with the terms of the
enterprise regulatory capital framework as

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published by FHFA in the Federal Register on December 17, 2020, disregarding any subsequent amendments or modifications.

•New Business Restrictions. The Letter Agreement adds new restrictive covenants to the SPSPA that impact both our Single-Family and Multifamily business activities, with varying implementation dates:



•Multifamily Volume Cap. Effective immediately, we may not acquire more than $80
billion in multifamily mortgage assets calculated in any 52-week period. This
new multifamily volume cap must be adjusted up or down by FHFA at the end of
each calendar year based on changes to the consumer price index. Additionally,
at least 50% of our multifamily acquisitions in any calendar year must be
classified as mission-driven at the time of acquisition, consistent with FHFA
guidelines.

•Requirement to Provide Equitable Access for Single-Family Acquisitions. Effective immediately, we:

(1) may not vary our pricing or acquisition terms for single-family loans based on the business characteristics of the seller, including the seller's size, charter type, or volume of business with us; and



(2)  must offer to purchase at all times, for equivalent cash consideration and
on substantially the same terms, any single-family mortgage loan that (i) is of
a class of loans that we then offer to acquire for inclusion in our
mortgage-backed securities or for other non-cash consideration, (ii) is offered
by a seller that has been approved to do business with us, and (iii) has been
originated and sold in compliance with our underwriting standards.

•Single Counterparty Volume Cap on Single-Family Acquisitions for Cash. Beginning on January 1, 2022, we may not acquire more than $1.5 billion in single-family loans for cash consideration from any single seller (including its affiliates) during any period comprising four calendar quarters.



•Limit on Specified Higher-Risk Single-Family Acquisitions. Effective
immediately, we may not acquire a single-family mortgage loan if, following the
acquisition, more than 3% of our single-family loans that result from a
refinancing, or 6% of our single family loans that do not result from a
refinancing, in each case, that we have acquired during the preceding 52-week
period, would have two or more of the following higher-risk characteristics at
origination:

(1)  a combined loan-to-value ratio greater than 90%;

(2)  a debt-to-income ratio greater than 45%; and

(3)  a FICO credit score (or equivalent credit score) less than 680.

•Limit on Acquisitions of Single-Family Mortgage Loans Backed by Second Homes
and Investment Properties. Effective immediately, we must limit our acquisitions
of single-family mortgage loans secured by either second homes or investment
properties to not more than 7% of the single-family mortgage loans we have
acquired during the preceding 52-week period.

•Single-Family Loan Eligibility Requirements Program. Beginning on or prior to
July 1, 2021, we must implement a program reasonably designed to ensure that the
single-family loans we acquire are limited to:

(1) qualified mortgages, as defined by designated regulations;

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(2)  loans exempt from the CFPB's ability-to-repay requirement;

(3)  loans secured by an investment property;

(4) refinancing loans with streamlined underwriting originated in accordance with our eligibility criteria for high loan-to-value refinancings;

(5) loans originated with temporary underwriting flexibilities during times of exigent circumstances, as determined in consultation with FHFA;

(6) loans secured by manufactured housing; and

(7) such other loans that FHFA may designate that were eligible for purchase by us as of the date of the Letter Agreement.



We are assessing the operational and business impacts of these new covenants and
our compliance with the new restrictions on our business activities described
above.

Treasury Proposal

The Letter Agreement includes a commitment for us and Treasury to work toward
developing a proposal to restructure Treasury's investment in us and dividend
amount in a manner that (1) facilitates an orderly exit from conservatorship,
(2) ensures that Treasury is appropriately compensated, and (3) permits us to
raise third-party capital and make distributions as appropriate. The Letter
Agreement states that Treasury, in consultation with FHFA, should endeavor to
transmit this proposal to both Houses of Congress by September 30, 2021.

The description of the Letter Agreement in this report is qualified in its entirety by reference to the full text of the agreement, which is filed as

E xhibit 10.1 to this report and incorporated herein by reference.

Material Relationships with Treasury

Treasury beneficially owns more than 5% of the outstanding shares of our common
stock by virtue of the warrant we issued to Treasury on September 7, 2008.
Discussions of Treasury's beneficial ownership of our common stock and our
transactions with Treasury are contained in our annual report on Form 10-K for
the year ended December 31, 2019 ("2019 Form 10-K") under the heading "  Certain
Relationships and Related Transactions, and Director Independence-Transactions
with Related Persons-Transactions with Treasury  " and are incorporated herein
by reference. Our 2019 Form 10-K also contains a description of Fannie Mae's
amended and restated senior preferred stock purchase agreement with Treasury
(the "senior preferred stock purchase agreement"), the senior preferred stock
and the warrant under the heading "Business-Conservatorship, Treasury Agreements
and Housing Finance Reform-Treasury Agreements."

Item 9.01 Financial Statements and Exhibits. (d) Exhibits. The following exhibits are being submitted with this report: Exhibit Number

               Description of Exhibit
10.1                           Letter Agreement between the United States

Department of the Treasury


                             and the Federal National Mortgage Association,

acting through the Federal


                             Housing Finance Agency as its duly appointed

conservator, dated January


                             14, 2021
104                          Cover Page Interactive Data File - the cover

page XBRL tags are embedded


                             within the Inline XBRL document included as Exhibit 101

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