$1,098,740,936. Guaranteed REMIC Pass-Through CertiÑcates Fannie Mae REMIC Trust

Transcription

1 Supplement (To Prospectus Supplement dated April 14, 2005) $1,098,740,936 Guaranteed REMIC Pass-Through CertiÑcates Fannie Mae REMIC Trust This is a supplement to the prospectus supplement dated April 14, 2005 (the ""Prospectus Supplement''). If we use a capitalized term in this supplement without deñning it, you will Ñnd the deñnition of that term in the Prospectus Supplement. Notwithstanding anything set forth on page S-21 of the Prospectus Supplement, the Range of WAMs for the Group 4 MBS and Group 5 MBS as of the Issue Date are as follows: Group 4 MBS Range of WAMs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Group 5 MBS Range of WAMs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 213 months to 360 months 5 months to 360 months Carefully consider the risk factors starting on page S-16 of the Prospectus Supplement and on page 10 of the REMIC Prospectus. Unless you understand and are able to tolerate these risks, you should not invest in the certiñcates. The certiñcates, together with any interest thereon, are not guaranteed by the United States and do not constitute a debt or obligation of the United States or any of its agencies or instrumentalities other than Fannie Mae. The certiñcates are exempt from registration under the Securities Act of 1933 and are ""exempted securities'' under the Securities Exchange Act of LEMAN BROTERS The date of this Supplement is May 23, 2005

2 Prospectus Supplement (To REMIC Prospectus dated May 1, 2002) $1,098,740,936 Guaranteed REMIC Pass-Through CertiÑcates Fannie Mae REMIC Trust The CertiÑcates Original Final We, the Federal National Mortgage Association Class Principal Interest Interest CUSIP Distribution Class Group Balance Type Rate Type Number Date (Fannie Mae), will issue the classes of certiñcates listed in the chart on this page. $ BA ÏÏÏÏÏÏ BC ÏÏÏÏÏÏ ,963,066 20,199,731 PAC PAC 4.5% 4.5 FIX FIX 31394DN DN63 November 2014 January 2018 Payments to CertiÑcateholders BD ÏÏÏÏÏÏ 1 29,127,384 PAC 4.5 FIX 31394DN71 August 2021 BE ÏÏÏÏÏÏ 1 40,933,237 PAC 4.5 FIX 31394DN89 June 2025 We will make monthly payments on the certiñcates. You, the investor, will receive ZB ÏÏÏÏÏÏ 1 174,436 NSJ/SUP 4.5 FIX/Z DP38 June 2025 BG ÏÏÏÏÏÏ BZ ÏÏÏÏÏÏ ,376,000 14,226,146 JMP/TAC/AD JMP/SUP/AD FIX FIX/Z 31394DN DP20 June 2025 June 2025 interest accrued on the balance of your certiñ- PF ÏÏÏÏÏÏ 2 128,184,857 TAC/AD (1) FLT 31394D P46 October 2034 PC(2) ÏÏÏ 2 11,531,426 SEG(TAC)/PAC/AD (1) INV DP53 March 2034 cate (except in the case of the accrual classes), PN(2) ÏÏÏ 2 5,223,631 SEG(TAC)/SUP/AD (1) INV DP61 October 2034 and PQ(2) ÏÏÏ 2 8,603,627(3) NTL (1) INV/IO DP79 October 2034 PT ÏÏÏÏÏÏ 2 4,609,086 SEG(TAC)/SUP/AD (1) INV DP87 October 2034 principal to the extent available for payment PL(2) ÏÏÏ 2 64,092,427(3) NTL (1) INV/IO DP95 October 2034 on your class. PA(2) ÏÏÏ 2 11,340,487 SUP/AD 6.0 FIX/Z 31394DQ29 November 2034 PB(2) ÏÏÏ 2 1,625,146 SEQ 6.0 FIX/Z 31394DQ37 June 2035 We may pay principal at rates that vary from time FV ÏÏÏÏÏÏ 3 50,000,000 PT (1) FLT 31394DQ45 June 2035 to time. We may not pay principal to certain FW ÏÏÏÏÏÏ 3 50,000,000 PT (1) FLT 31394DQ52 June 2035 classes for long periods of time. DC ÏÏÏÏÏÏ 3 19,434,938 PAC (1) INV 31394DQ60 June 2035 DJ(2)ÏÏÏÏ 3 4,017,252 SUP (1) INV 31394DQ78 June 2035 The Fannie Mae Guaranty DK(2) ÏÏÏ 3 16,686,807(3) NTL (1) INV/IO 31394DQ86 June 2035 DP ÏÏÏÏÏÏ 3 3,820,538 SUP (1) INV 31394DQ94 June 2035 We will guarantee that required payments of principal and interest on the certiñcates are dis- DM(2) ÏÏ 3 4,771,908 SUP (1) INV 31394DR44 June 2035 XA ÏÏÏÏÏÏ DA ÏÏÏÏÏÏ ,000,000 25,265,420 PT PAC (1) (1) FLT INV 31394DR DR36 June 2035 June 2035 tributed to investors on time. DE(2) ÏÏÏ 3 18,272,497(3) NTL (1) INV/IO 31394DR51 June 2035 DUÏÏÏÏÏÏ 3 5,417,218 SUP (1) INV 31394DR69 June 2035 The Trust and its Assets EL ÏÏÏÏÏÏ 4 138,019,346 PT (1) FLT 31394DR77 June 2035 The trust will own Fannie Mae MBS. SR ÏÏÏÏÏÏ 4 138,019,346(3) NTL (1) INV/IO 31394DR85 June 2035 EY ÏÏÏÏÏÏ 5 200,000,000 PT (1) FLT 31394DR93 June 2035 The mortgage loans underlying the Fannie Mae MBS are Ñrst lien, single-family, Ñxed-rate loans. OI(2) ÏÏÏ 5 10,714,285(3) NTL 7.0 FIX/IO DS43 June 2035 EWÏÏÏÏÏÏ IO(2) ÏÏÏ ,000,000(3) 16,145,151(3) NTL NTL (1) 7.0 INV/IO FIX/IO DS DS35 June 2035 June 2035 OÏÏÏÏÏÏ 5 50,000,000 PAC/AD 3.5 FIX DS50 June 2035 Carefully consider the risk factors OZ ÏÏÏÏÏÏ 5 9,000 PAC/AD 5.0 FIX/Z DS68 June 2035 ZO ÏÏÏÏÏÏ 5 6,499,030 SUP 5.0 FIX/Z DS76 June 2035 starting on page S-16 of this prospectus YA(2) ÏÏÏ 6 16,898,000 PAC 5.5 FIX DS84 December 2024 supplement and on page 10 of the YB(2) ÏÏÏ 6 11,845,000 PAC 5.5 FIX DS92 July 2030 REMIC prospectus. Unless you under- YC(2) ÏÏÏ 6 14,171,000 PAC 5.5 FIX 31394DT26 December 2034 stand and are able to tolerate these YD(2) ÏÏÏ 6 2,030,724 PAC 5.5 FIX 31394DT34 June 2035 FG ÏÏÏÏÏÏ 6 3,272,728 SEG(TAC)/TAC/AD (1) FLT/T 31394DT42 June 2035 risks, you should not invest in the SG ÏÏÏÏÏÏ 6 10,000,000 SEG(TAC)/TAC/AD (1) INV/T 31394DT59 June 2035 certiñcates. VG ÏÏÏÏÏÏ 6 1,252,000 SEG(TAC)/SUP/AD 6.0 FIX 31394DT67 April 2016 ZY ÏÏÏÏÏÏ 6 1,871,066 CPT 6.0 CPT/FIX/Z 31394DT75 June 2035 You should read the REMIC prospectus as YO ÏÏÏÏÏÏ 6 814,220 CPT (4) CPT/PO 31394DT83 June 2035 well as this prospectus supplement. GZ ÏÏÏÏÏÏ 6 983,581 SUP 5.5 FIX/Z 31394DT91 June 2035 YF ÏÏÏÏÏÏ 6 5,000,000 TAC/AD (1) T 31394DU24 February 2035 The certiñcates, together with interest thereon, YT ÏÏÏÏÏÏ 6 5,000,000(3) NTL (1) FLT/T/IO 31394DU32 February 2035 are not guaranteed by the United States and do YS ÏÏÏÏÏÏ 6 833,334 TAC/AD (1) INV 31394DU40 February 2035 not constitute a debt or obligation of the R ÏÏÏÏÏÏ 0 NPR 0 NPR 31394DU57 June 2035 United States or any agency or instrumentality RL ÏÏÏÏÏÏ 0 NPR 0 NPR 31394DU65 June 2035 thereof other than Fannie Mae. (1) Based on LIBOR. (3) Notional balances. These classes are interest only classes. The certiñcates are exempt from registration under the Securities Act of 1933 and are (2) Exchangeable classes. (4) Principal only class. ""exempted securities'' under the Securities If you own certiñcates of certain classes, you can exchange them for the corresponding RCR certiñcates Exchange Act of to be issued at the time of the exchange. The PY, PK, PI, PD, DN, DW, DR, DX, OX, GP, Y, YG and YI Classes are the RCR classes, as further described in this prospectus supplement. The dealer will oåer the certiñcates from time to time in negotiated transactions at varying prices. We expect the settlement date to be May 27, April 14, 2005 LEMAN BROTERS

3 TABLE OF CONTENTS Page AVAILABLE INFORMATION ÏÏÏÏÏÏÏÏÏÏ S- 3 Group 5 Principal Distribution Amount ÏÏ S-30 INCORPORATION BY REFERENCE ÏÏÏ S- 3 ZO Accrual Amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-30 RECENT DEVELOPMENTS ÏÏÏÏÏÏÏÏÏÏÏÏ S- 4 OZ Accrual Amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-30 REFERENCE SEETÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S- 7 Group 5 Cash Flow Distribution ADDITIONAL RISK FACTORSÏÏÏÏÏÏÏÏÏ S-16 Amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-30 DESCRIPTION OF TE Group 6 Principal Distribution Amount ÏÏ S-30 CERTIFICATES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-17 ZY1 Accrual Amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-30 GENERALÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-17 ZY2 Accrual Amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-31 StructureÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-17 ZY3 Accrual Amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-31 Fannie Mae Guaranty ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-18 GZ Accrual Amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-31 Characteristics of CertiÑcatesÏÏÏÏÏÏÏÏÏÏÏ S-18 Group 6 Cash Flow Distribution Authorized Denominations ÏÏÏÏÏÏÏÏÏÏÏÏÏ S-19 Amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-31 Distribution Dates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-19 STRUCTURING ASSUMPTIONS ÏÏÏÏÏÏÏÏÏÏÏÏÏ S-32 Record Date ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-19 Pricing Assumptions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-32 Class Factors ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-19 Prepayment Assumptions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-33 No Optional Termination ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-19 Structuring Ranges and Rates ÏÏÏÏÏÏÏÏÏÏ S-33 COMBINATION AND RECOMBINATIONÏÏÏÏÏÏÏ S-19 Initial EÅective Ranges ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-34 General ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-19 YIELD TABLES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-35 Procedures ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-19 General ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-35 Additional Considerations ÏÏÏÏÏÏÏÏÏÏÏÏÏ S-20 The Fixed Rate Interest Only ClassesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-35 TE MBS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-20 The Principal Only Class ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-36 FINAL DATA STATEMENT ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-21 The Inverse Floating Rate Classes and DISTRIBUTIONS OF INTEREST ÏÏÏÏÏÏÏÏÏÏÏÏÏ S-22 the FG, YF and YT Classes ÏÏÏÏÏÏÏÏÏÏ S-37 Categories of Classes and ComponentsÏÏÏ S-22 WEIGTED AVERAGE LIVES OF TE Components ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-23 CERTIFICATES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-43 General ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-23 DECREMENT TABLES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-44 Interest Accrual Periods ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-23 CARACTERISTICS OF TE R AND Accrual Classes and Components ÏÏÏÏÏÏÏ S-23 RL CLASSES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-54 Notional Classes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-24 CERTAIN ADDITIONAL FEDERAL INCOME TAX CONSEQUENCES ÏÏÏÏÏ S-55 Floating Rate, Inverse Floating Rate and Toggle Classes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-24 REMIC ELECTIONS AND SPECIAL TAX ATTRIBUTES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-55 CALCULATION OF LIBOR ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-24 TAXATION OF BENEFICIAL OWNERS OF DISTRIBUTIONS OF PRINCIPAL ÏÏÏÏÏÏÏÏÏÏÏÏ S-24 REGULAR CERTIFICATES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-55 Categories of Classes and ComponentsÏÏÏ S-24 TAXATION OF BENEFICIAL OWNERS OF Components ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-25 RESIDUAL CERTIFICATES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-56 Principal Distribution Amount ÏÏÏÏÏÏÏÏÏ S-26 TAXATION OF BENEFICIAL OWNERS OF Group 1 Principal Distribution Amount ÏÏ S-26 RCR CERTIFICATES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-56 ZB Accrual Amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-26 General ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-56 BZ Accrual Amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-26 Strip RCR Classes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-57 Group 1 Cash Flow Distribution Combination RCR ClassesÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-58 Amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-27 ExchangesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-58 Group 2 Principal Distribution Amount ÏÏ S-28 TAX RETURN DISCLOSURE REQUIREMENTS ÏÏ S-58 PB Accrual Amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-28 PLAN OF DISTRIBUTION ÏÏÏÏÏÏÏÏÏÏÏÏÏ S-58 PA Accrual Amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-28 General ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-58 Group 2 Cash Flow Distribution Increase in CertiÑcates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-59 Amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-28 LEGAL MATTERS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-59 Group 3 Principal Distribution Amount ÏÏ S-29 SCEDULE 1 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A- 1 Group 4 Principal Distribution Amount ÏÏ S-30 PRINCIPAL BALANCE SCEDULES ÏÏ B- 1 Page S-2

4 AVAILABLE INFORMATION You should purchase the certiñcates only if you have read and understood this prospectus supplement and the following documents (the ""Disclosure Documents''): our Prospectus for Fannie Mae Guaranteed REMIC Pass-Through CertiÑcates dated May 1, 2002 (the ""REMIC Prospectus''); our Prospectus for Fannie Mae Guaranteed Mortgage Pass-Through CertiÑcates (Single- Family Residential Mortgage Loans) dated July 1, 2004 (the ""MBS Prospectus''); and any information incorporated by reference in this prospectus supplement as discussed below under the heading ""Incorporation by Reference.'' You can obtain copies of the Disclosure Documents by writing or calling us at: Fannie Mae MBS elpline 3900 Wisconsin Avenue, N.W., Area 2-3S Washington, D.C (telephone ). In addition, the Disclosure Documents, together with the class factors, are available on our corporate Web site at You also can obtain copies of the Disclosure Documents by writing or calling the dealer at: Lehman Brothers c/o ADP Financial Services Prospectus Department 1155 Long Island Avenue Edgewood, New York (telephone ). INCORPORATION BY REFERENCE In this prospectus supplement, we are incorporating by reference the MBS Prospectus described above. In addition, we are incorporating by reference the documents listed below. This means that we are disclosing information to you by referring you to these documents. These documents are considered part of this prospectus supplement, so you should read this prospectus supplement, and any applicable supplements or amendments, together with these documents. You should rely only on the information provided or incorporated by reference in this prospectus supplement, the REMIC Prospectus and the MBS Prospectus and any applicable supplements or amendments. We incorporate by reference the following documents we have Ñled, or may Ñle, with the Securities and Exchange Commission (""SEC''): our Annual Report on Form 10-K for the Ñscal year ended December 31, 2003 (""Form 10-K''); all other reports we have Ñled pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 since the end of the Ñscal year covered by the Form 10-K until the date of this prospectus supplement, excluding any information ""furnished'' to the SEC on Form 8-K; and all proxy statements that we Ñle with the SEC and all documents that we Ñle with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 subsequent to the date of this prospectus supplement and prior to the completion of the oåering of the certiñcates, excluding any information we ""furnish'' to the SEC on Form 8-K. S-3

5 Any information incorporated by reference in this prospectus supplement is deemed to be modiñed or superseded for purposes of this prospectus supplement to the extent information contained or incorporated by reference in this prospectus supplement modiñes or supersedes such information. In such case, the information will constitute a part of this prospectus supplement only as so modiñed or superseded. We Ñle annual, quarterly and current reports, proxy statements and other information with the SEC. You can obtain copies of the periodic reports we Ñle with the SEC without charge by calling or writing our OÇce of Investor Relations, Fannie Mae, 3900 Wisconsin Avenue, NW, Washington, DC 20016, telephone: (202) The periodic and current reports that we Ñle with the SEC are also available on our Web site. Information appearing on our Web site is not incorporated in this prospectus supplement except as speciñcally stated in this prospectus supplement. In addition, you may read our SEC Ñlings and other information about Fannie Mae at the oçces of the New York Stock Exchange, the Chicago Stock Exchange and the PaciÑc Exchange. Our SEC Ñlings are also available at the SEC's Web site at You also may read and copy any document we Ñle with the SEC by visiting the SEC's Public Reference Room at 450 Fifth Street, NW, Washington, DC Please call the SEC at SEC-0330 for further information about the operation of the Public Reference Room. We are providing the address of the SEC's Web site solely for the information of prospective investors. Information appearing on the SEC's Web site is not incorporated in this prospectus supplement except as speciñcally stated in this prospectus supplement. RECENT DEVELOPMENTS On December 21, 2004, our Board of Directors (the ""Board'') announced the retirement of Chairman and Chief Executive OÇcer Franklin D. Raines and the resignation of Vice Chairman and Chief Financial OÇcer J. Timothy oward. A member of the Board, Stephen B. Ashley, currently is serving as the non-executive chairman of the Board, Vice Chairman and Chief Operating OÇcer Daniel. Mudd currently is serving as interim chief executive oçcer, and Executive Vice President Robert Levin currently is serving as interim chief Ñnancial oçcer. The Board further announced that the Audit Committee of the Board dismissed KPMG LLP as our independent auditor. On January 4, 2005, the Audit Committee of the Board approved the engagement of Deloitte & Touche LLP (""Deloitte'') as our independent auditor. Deloitte will serve as our auditor for each of the Ñscal years 2001, 2002, 2003 and On December 15, 2004, the OÇce of the Chief Accountant of the Securities and Exchange Commission (""SEC'') issued a statement (the ""Statement'') regarding certain accounting issues relating to Fannie Mae, including determinations by the SEC that we should (i) restate our Ñnancial statements to eliminate the use of hedge accounting under Financial Accounting Standard No. 133, Accounting for Derivative Instruments and edging Activities (""FAS 133''), (ii) evaluate the accounting under Financial Accounting Standard No. 91, Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases (""FAS 91'') and restate our Ñnancial statements Ñled with the SEC if the amounts required for correction are material, and (iii) re-evaluate the information prepared under generally accepted accounting principles (""GAAP'') and non-gaap information that we previously provided to investors. On December 16, 2004, we Ñled a Current Report on Form 8-K with the SEC that includes a copy of the Statement. As a result of the SEC's Ñndings, we will restate our Ñnancial results from 2001 through June 30, 2004 to comply fully with the SEC's determination. In a Form 12b-25 Ñled with the SEC on November 15, 2004, we estimated that a loss of hedge accounting under FAS 133 for all derivatives could result in recording into earnings a net cumulative loss on derivative transactions of approximately $9.0 billion as of September 30, (We estimate that as of December 31, 2004, this net cumulative after-tax loss was approximately $8.4 billion.) We also stated that there would be a S-4

6 corresponding decrease to retained earnings and, accordingly, regulatory capital. In a Form 12b-25 Ñled with the SEC on March 17, 2005, we stated that if we do not qualify for hedge accounting for mortgage commitments accounted for as derivatives since our July 1, 2003 adoption of Financial Accounting Standard No. 149, Amendment of Statement 133 on Derivative Instruments and edging Activities (""FAS 149''), we estimate that we would be required to record in earnings a net cumulative after-tax loss related to these commitments of approximately $2.4 billion as of December 31, We are working to determine the eåect of the restatement, including the eåect on each prior reporting period. We expect that the impact will be material to our reported GAAP and core business results for many, if not all, periods and will vary substantially from period to period based on the amount and types of derivatives held and Öuctuations in interest rates and volatility. Our restated Ñnancial statements also will reöect corrections as a result of our misapplication of FAS 91 for each prior reporting period described above. We also will consider the impact, if any, of the SEC's decision on FAS 91 for periods prior to those described above. Accordingly, on December 17, 2004, the Audit Committee of the Board concluded that our previously Ñled interim and audited Ñnancial statements and the independent auditor's reports thereon for the periods from January 2001 through the second quarter of 2004 should no longer be relied upon because such Ñnancial statements were prepared applying accounting practices that did not comply with GAAP. We have not yet Ñled our quarterly reports on Form 10-Q for the quarters ended September 30, 2004 and March 31, 2005 or our annual report on Form 10-K for the year ended December 31, The Ñnancial information regarding our anticipated results of operations for the quarter ended September 30, 2004 that was contained in our Form 12b-25 Ñled on November 15, 2004 and in a Form 8-K Ñled on November 16, 2004 was prepared applying the same policies and practices, and, accordingly, should not be relied upon. The Audit Committee has discussed the matters described above and in a Form 8-K Ñled with the SEC on December 22, 2004 with KPMG LLP, our independent auditor through December 21, On September 20, 2004, the OÇce of Federal ousing Enterprise Oversight (""OFEO'') delivered its report to the Board of its Ñndings to date of the agency's special examination. Among other matters, the OFEO report raised a number of questions and concerns about our accounting policies and practices with respect to FAS 91 and FAS 133. On February 23, 2005, we announced that OFEO notiñed our Board and management of several additional accounting and internal control issues and questions that OFEO identiñed in its ongoing special examination, and directed that these matters be included in the internal reviews by the Board and management and reviewed by Deloitte. OFEO indicated that it has not completed its review of all aspects of these issues, but has identiñed policies that it believes appear to be inconsistent with generally accepted accounting principles as well as internal control deñciencies that raise safety and soundness concerns. The issues and questions include the following areas: securities accounting, loan accounting, consolidations, accounting for commitments, and practices to smooth certain income and expense amounts. OFEO also raised concerns regarding journal entry controls, systems limitations, and database modiñcations, as well as FAS 149 and new developments relating to FAS 91. A summary of the additional questions raised in OFEO's ongoing special examination of Fannie Mae has been Ñled as an exhibit to a Form 8-K that we Ñled with the SEC on February 23, Our Board and management are addressing the issues and questions raised by OFEO. In addition, the Board designated its Special Review Committee to review the Ñndings of OFEO's September 2004 special examination report. This review, led by former Senator Warren Rudman of the law Ñrm of Paul, Weiss, Rifkind, Wharton & Garrison (""Paul Weiss''), is focused on: accounting issues, including accounting policies, procedures and controls regarding FAS 91 and FAS 133; organization, structure and governance, including Board oversight and management responsibilities and resources; and executive compensation. Paul Weiss' work continues as it examines these areas and other issues that may arise in the course of its review, reporting regularly to the Board. We will report to OFEO regarding each of these issues and will continue to work with OFEO to resolve these matters as part of our ongoing internal reviews and restatement process. In light of the foregoing, S-5

7 management has initiated a comprehensive review of accounting routines and controls, the Ñnancial reporting process and the application of GAAP, which will include the issues OFEO has identiñed, as well as issues identiñed by management and/or Deloitte. Management, working with accounting consultants, will develop a view on these issues, which then will be reviewed with the Audit Committee, Deloitte and OFEO. Upon conclusion of this review, our Ñnancial statements will be restated where necessary and submitted to Deloitte for review as part of its audit. We are providing periodic updates to the SEC and the New York Stock Exchange on the restatement. In addition, the SEC and the U.S. Attorney's OÇce for the District of Columbia are conducting ongoing investigations into these matters. OFEO is required to review our capital classiñcation quarterly, and as of September 30, 2004 and December 31, 2004, classiñed us as ""signiñcantly undercapitalized.'' As a result of this classiñcation, we submitted a capital restoration plan to OFEO in January 2005, and on February 23, 2005, we announced that OFEO approved our proposed capital restoration plan. Under the plan, we detail how we expect to meet our minimum capital requirement on an ongoing basis, as well as achieve OFEO's 30 percent surplus capital requirement by September 30, A summary of the capital restoration plan was Ñled as an exhibit to a Form 8-K that we Ñled with the SEC on February 23, On May 19, 2005, OFEO classiñed us as ""adequately capitalized'' as of March 31, OFEO has noted that this classiñcation is subject to revision pending the outcome of ongoing accounting reviews, and that this classiñcation does not amend any existing capital restoration plans currently in place between Fannie Mae and OFEO. Forms 8-K that we Ñle with the SEC prior to the completion of the oåering of the certiñcates are incorporated by reference in this prospectus supplement. This means that we are disclosing information to you by referring you to those documents. You should refer to ""Incorporation by Reference'' above for further details on the information that we incorporate by reference in this prospectus supplement and where to Ñnd it. S-6

8 REFERENCE SEET This reference sheet is not a summary of the transaction and does not contain complete information about the certiñcates. You should purchase the certiñcates only after reading this prospectus supplement and each of the additional disclosure documents listed on page S-3. Assets Underlying Each Group of Classes Group Assets 1 Group 1 MBS 2 Group 2 MBS 3 Group 3 MBS 4 Group 4 MBS 5 Group 5 MBS 6 Group 6 MBS Assumed Characteristics of the Mortgage Loans Underlying the MBS (as of May 1, 2005) Approximate Approximate Original Weighted Average Weighted Approximate Approximate Term to Remaining Term Average Weighted Principal Maturity to Maturity Loan Age Average Balance (in months) (in months) (in months) Coupon Group 1 MBS $180,000, % Group 2 MBS $162,514, % Group 3 MBS $292,727, % Group 4 MBS $138,019, % Group 5 MBS $256,508, % Group 6 MBS $ 68,971, % The actual remaining terms to maturity, weighted average loan ages and interest rates of most of the mortgage loans will diåer from the weighted averages shown above, perhaps signiñcantly. Class Factors The class factors are numbers that, when multiplied by the initial principal balance of a certiñcate, can be used to calculate the current principal balance of that certiñcate (after taking into account principal payments in the same month). We publish the class factors on or shortly after the 11th day of each month. Settlement Date We expect to issue the certiñcates on May 27, Distribution Dates We will make payments on the certiñcates on the 25th day of each calendar month, or on the next business day if the 25th day is not a business day. Book-Entry and Physical CertiÑcates We will issue the book-entry certiñcates through the U.S. Federal Reserve Banks, which will electronically track ownership of the certiñcates and payments on them. We will issue physical certiñcates in registered, certiñcated form. S-7

9 We will issue the classes of certiñcates in the following forms: Fed Book-Entry All classes of certiñcates other than the R and RL Classes Physical R and RL Classes Exchanging CertiÑcates Through Combination and Recombination If you own certain certiñcates, you will be able to exchange them for a proportionate interest in the related RCR certiñcates as shown on Schedule 1. We will issue the RCR certiñcates upon such exchange. You can exchange your certiñcates by notifying us and paying an exchange fee. We use the principal and interest of the certiñcates exchanged to pay principal and interest on the related RCR certiñcates. Schedule 1 lists the available combinations of the certiñcates eligible for exchange and the related RCR certiñcates. Components The ZY and YO Classes are made up of payment components. Each component will have the original principal balance, principal type and interest type as set forth below. Original Principal Balance Principal Type Interest Type ZY1 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1,384,052 SEG(TAC)/SUP/AD FIX/Z ZY2 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 88,832 TAC/AD FIX/Z ZY3 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 398,182 SUP FIX/Z YO1 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 239,642 SEG(TAC)/SUP/AD PO YO2 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 574,578 SUP PO Interest Rates During each interest accrual period, the Ñxed rate classes will bear interest at the applicable annual interest rates listed on the cover of this prospectus supplement or on Schedule 1. During the initial interest accrual period, the Öoating rate, inverse Öoating rate and toggle classes will bear interest at the initial interest rates listed below. During subsequent interest accrual periods, the Öoating rate, inverse Öoating rate and toggle classes will bear interest based on the formulas indicated below, but always subject to the speciñed maximum and minimum interest rates: Initial Maximum Minimum Formula for Interest Interest Interest Calculation of Class Rate Rate Rate Interest Rate(1) PF ÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.25% LIBOR 25 basis points PC ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% 20.25% (3 LIBOR) PN ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% 22% (4 LIBOR) PQ ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% 5.5% LIBOR PT ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% 43.2% ( LIBOR) PL ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% 6.75% LIBOR FV ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.37% LIBOR 37 basis points FW ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.37% LIBOR 37 basis points DC ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% 24.31% ( LIBOR) DJ ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% 16.5% (3 LIBOR) DK ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% 5.5% LIBOR DP ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% % ( LIBOR) XA ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.34% LIBOR 34 basis points DA ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% 24.42% ( LIBOR) S-8

10 Initial Maximum Minimum Formula for Interest Interest Interest Calculation of Class Rate Rate Rate Interest Rate(1) DM ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% 22% (4 LIBOR) DE ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% 5.5% LIBOR DU ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% % ( LIBOR) EL ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.28% LIBOR 28 basis points SR ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% 6.72% LIBOR EY ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.28% LIBOR 28 basis points EW ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% 6.72% LIBOR FG ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% (2) SG ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% (3) YF ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% (4) YT ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% (5) YS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% % ( LIBOR) PK ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% 20.25% (3 LIBOR) PI ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% 6.75% LIBOR PD ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% % ( LIBOR) DN ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% 27.5% (5 LIBOR) DW ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% 33% (6 LIBOR) DR ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% 22% (4 LIBOR) DX ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % % 0.00% 27.5% (5 LIBOR) (1) We will establish LIBOR on the basis of the ""BBA Method.'' (2) The applicable formula for the FG Class for the speciñed periods will be as set forth below: Interest Accrual Periods Interest Rate Formula 1st through 13th ( LIBOR) % 14th through 25th ( LIBOR) % thereafter ( LIBOR) % (3) The applicable formula for the SG Class for the speciñed periods will be as set forth below: Interest Accrual Periods Interest Rate Formula 1st through 13th % (730 LIBOR) 14th through 25th % (730 LIBOR) thereafter % (730 LIBOR) (4) The applicable formula interest rate for the YF Class each month will be as follows: If LIBOR is: Applicable Formula or Rate Less than or equal to 8.0% LIBOR 100 basis points Greater than 8.0% 0.0% (5) The applicable formula interest rate for the YT Class each month will be as follows: If LIBOR is: Applicable Formula or Rate Less than or equal to 8.0% 0.0% Greater than 8.0% 7.0% We will apply interest payments from exchanged REMIC certiñcates to the corresponding RCR certiñcates, on a pro rata basis, following any exchange. S-9

11 Notional Classes A notional class will not receive any principal. Its notional principal balance is the balance used to calculate accrued interest. The notional principal balances will equal the percentages of the outstanding balances speciñed below immediately before the related distribution date: Class PQ ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % of the PN Class PL ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % of the PC, PT and PN Classes PI ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % of the PC, PT and PN Classes DK ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % of the DJ Class DE ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % of the DM Class SR ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 100% of the EL Class EW ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 100% of the EY Class IO ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % of the ZO, OZ and O Classes OI ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % of the O Class OX ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % of the ZO and OZ Classes % of the O Class YT ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 100% of the YF Class YI ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ % of the YA Class Distributions of Principal Group 1 Principal Distribution Amount ZB Accrual Amount 1. If and only if the principal balance of the Group 1 MBS is less than or equal to the Group 1 MBS First SpeciÑed Balance, to the ZB Class. 2. To the BG Class to its Targeted Balance. 3. To the BZ Class to zero. 4. To the BG Class to zero. 5. Thereafter to the ZB Class. BZ Accrual Amount 1. If and only if the principal balance of the Group 1 MBS is less than or equal to the Group 1 MBS Second SpeciÑed Balance and provided that the principal balance of the ZB Class has been reduced to zero on a previous Distribution Date and for so long as both the BG and BZ Classes remain outstanding, to the BG and BZ Classes, in the proportions of 1% and 99%, respectively. 2. To the BG Class to its Targeted Balance. 3. Thereafter to the BZ Class. Group 1 Cash Flow Distribution Amount 1. To Aggregate Group I to its Planned Balance. 2. If and only if the principal balance of the Group 1 MBS is less than or equal to the Group 1 MBS First SpeciÑed Balance, to the ZB Class to zero. S-10

12 3. If and only if the principal balance of the Group 1 MBS is less than or equal to the Group 1 MBS Second SpeciÑed Balance and provided that the principal balance of the ZB Class has been reduced to zero on a previous Distribution Date, as follows: Ñrst, for so long as both the BG and BZ Classes remain outstanding, to the BG and BZ Classes, in the proportions of 1% and 99% respectively; and second, to the BG Class to zero. 4. To the BG Class to its Targeted Balance. 5. To the BZ Class to zero. 6. To the BG Class to zero. 7. To the ZB Class to zero. 8. To Aggregate Group I to zero. For a description of Aggregate Group I, see ""Description of the CertiÑcatesÌDistributions of PrincipalÌGroup 1 Principal Distribution Amount'' in this prospectus supplement. Group 2 Principal Distribution Amount PB Accrual Amount 1. To Aggregate Group II to its Targeted Balance. 2. To the PA Class to zero. 3. To Aggregate Group II to zero. 4. Thereafter to the PB Class. PA Accrual Amount To Aggregate Group II to its Targeted Balance, and thereafter to the PA Class. Group 2 Cash Flow Distribution Amount 1. To Aggregate Group II to its Targeted Balance. 2. To the PA Class to zero. 3. To Aggregate Group II to zero. 4. To the PB Class to zero. For a description of Aggregate Group II, see ""Description of the CertiÑcatesÌDistributions of PrincipalÌGroup 2 Principal Distribution Amount'' in this prospectus supplement. Group 3 Principal Distribution Amount (a) % as follows: (x) % of such amount to the FV and FW Classes, pro rata, to zero, and (y) % of such amount as follows: Ñrst, to the DC Class to its Planned Balance; second, to the DJ and DP Classes, pro rata, to zero; and third, to the DC Class to zero, and S-11

13 (b) % as follows: (x) % of such amount to the XA Class to zero, and (y) % of such amount as follows: Ñrst, to the DA Class to its Planned Balance; second, to the DM and DU Classes, pro rata, to zero; and third, to the DA Class to zero. Group 4 Principal Distribution Amount To the EL Class to zero. Group 5 Principal Distribution Amount ZO Accrual Amount To Aggregate Group III to its Planned Balance, and thereafter to the ZO Class. OZ Accrual Amount To the O Class to zero, and thereafter to the OZ Class. Group 5 Cash Flow Distribution Amount (A) % to the EY Class to zero, and (B) % as follows: Ñrst, to Aggregate Group III to its Planned Balance; second, to the ZO Class to zero; and third, to Aggregate Group III to zero. For a description of Aggregate Group III, see ""Description of the CertiÑcatesÌDistributions of PrincipalÌGroup 5 Principal Distribution Amount'' in this prospectus supplement. S-12

14 Group 6 Principal Distribution Amount ZY1 Accrual Amount To the VG Class to zero, and thereafter to the ZY1 Component. ZY2 Accrual Amount To the YF and YS Classes, pro rata, to zero, and thereafter to the ZY2 Component. ZY3 Accrual Amount To Aggregate Group VI to its Targeted Balance, and thereafter to the ZY3 Component. GZ Accrual Amount To Aggregate Group IV to its Targeted Balance, and thereafter to the GZ Class. Group 6 Cash Flow Distribution Amount 1. To Aggregate Group VII to its Planned Balance. 2. (a) % of the remaining amount as follows: Ñrst, to Aggregate Group IV to its Targeted Balance; second, to the GZ Class to zero; and third, to Aggregate Group IV to zero, and (b) % of such remaining amount as follows: (x) % to the YO2 Component to zero, and (y) % as follows: Ñrst, to Aggregate Group VI to its Targeted Balance; second, to the ZY3 Component to zero; and third, to Aggregate Group VI to zero. 3. To Aggregate Group VII to zero. For a description of Aggregate Groups IV, VI and VII, see ""Description of the CertiÑcatesÌ Distributions of PrincipalÌGroup 6 Principal Distribution Amount'' in this prospectus supplement. We will apply principal payments from exchanged REMIC certiñcates to the corresponding RCR certiñcates, on a pro rata basis, following any exchange. S-13

15 Weighted Average Lives (years)* PSA Prepayment Assumption Group 1 Classes 0% 79% 80% 100% 151% 160% 175% 176% 250% 300% 500% BA ÏÏÏÏÏÏÏÏÏÏÏ BC ÏÏÏÏÏÏÏÏÏÏÏ BD ÏÏÏÏÏÏÏÏÏÏÏ BE ÏÏÏÏÏÏÏÏÏÏÏ BG ÏÏÏÏÏÏÏÏÏÏÏ BZ ÏÏÏÏÏÏÏÏÏÏÏ ZB ÏÏÏÏÏÏÏÏÏÏÏ CPR Prepayment Assumption 5.9% 6.0% BA ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ BC ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ BD ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ BE ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ BG ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ BZ ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ ZB ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ PSA Prepayment Assumption Group 2 Classes 0% 100% 200% 436% 500% 700% 900% PF, PL and PI ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ PC and PK ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ PN, PQ, PT and PDÏÏÏÏÏÏÏÏÏÏÏÏÏÏ PA ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ PB ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ PY ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ PSA Prepayment Assumption Group 3 Classes 0% 100% 215% 250% 400% 500% FV, FW and XA ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ DC and DA ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ DJ, DK, DP, DM, DE, DU, DN, DW, DR and DXÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ PSA Prepayment Assumption Group 4 Classes 0% 100% 300% 514% 700% 900% 1100% EL and SR ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ PSA Prepayment Assumption Group 5 Classes 0% 100% 300% 500% 535% 650% 900% 1100% EY, EW and IO ÏÏÏÏÏÏÏÏÏÏÏ OI and O ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ OZ ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ ZO ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ OX ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ S-14

16 PSA Prepayment Assumption Group 6 Classes 0% 100% 150% 251% 255% 300% 400% 500% YA, Y, YG and YI ÏÏÏÏÏÏÏ YB ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ YC ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ YD ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ FG and SG ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ VG ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ ZY ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ YO ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ GZ ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ YF, YT and YS ÏÏÏÏÏÏÏÏÏÏÏ GP ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ * Determined as speciñed under ""Description of the CertiÑcatesÌWeighted Average Lives of the CertiÑcates'' in this prospectus supplement. S-15

17 ADDITIONAL RISK FACTORS The rate of principal payments on the cer- may have a dramatic eåect on the weighted tiñcates will be aåected by the rate of principal average lives of the Jump and Non-Sticky Jump payments on the underlying mortgage loans. Classes. For an illustration of this sensitivity, The rate at which you receive principal pay- see the related decrement tables for these classes ments on the certiñcates will be sensitive to the in this prospectus supplement. rate of principal payments on the mortgage loans underlying the related MBS, including Any change in principal priority of either prepayments. Because borrowers generally may Jump Class will, and any change in principal prepay their mortgage loans at any time without priority of the Non-Sticky Jump Class may, penalty, the rate of principal payments on the remain in eåect for an extended period. Once a mortgage loans is likely to vary over time. It is change in payment priority of a Jump Class highly unlikely that the mortgage loans will occurs, it will continue in eåect permanently. prepay Once a change in principal priority of the Non- Sticky Jump Class occurs, under many prepay- at any of the prepayment rates we as- ment scenarios the new payment priority will sumed in this prospectus supplement, or continue in eåect for subsequent periods. Moreover, it is possible that under various prepay- at any constant prepayment rate until ment scenarios the change in payment priority maturity. of the Non-Sticky Jump Class will remain in Yields may be lower than expected due to eåect indeñnitely. unexpected rate of principal payments. The ac- Weighted average lives and yields on the tual yield on your certiñcates probably will be certiñcates are aåected by actual characteristics lower than you expect: of the underlying mortgage loans. We have as- if you buy your certiñcates at a premium sumed that the mortgage loans underlying the and principal payments are faster than MBS have certain characteristics. owever, the you expect, or actual mortgage loans probably will have diåerent characteristics from those we assumed. As a if you buy your certiñcates at a discount result, your yields could be lower than you exand principal payments are slower than pect, even if the mortgage loans prepay at the you expect. indicated constant prepayment rates. In addition, Furthermore, in the case of interest only slight diåerences between the assumed certiñcates and certiñcates purchased at a premortgage mortgage loan characteristics and the actual mium, you could lose money on your investment loans could aåect the weighted aver- if prepayments occur at a rapid rate. age lives of the classes of certiñcates. You must make your own decisions Level of Öoating rate index aåects yields on about the various applicable assumptions, certain certiñcates. The yield on any Öoating including prepayment assumptions, when rate, inverse Öoating rate or toggle certiñcate deciding whether to purchase the will be aåected by the level of its interest rate certiñcates. index. If the level of the index diåers from the level you expect, then your actual yield may be Weighted average lives of the Jump and lower than you expect. Non-Sticky Jump Classes are especially sensitive to prepayments under certain scenarios. Slight changes in LIBOR may signiñcantly The weighted average lives of the Jump and aåect the interest rates of the Toggle classes. The Non-Sticky Jump Classes are especially sensi- Toggle classes may be extremely sensitive to tive to the rate of principal payments, including certain changes in monthly LIBOR values. In prepayments, of the related mortgage loans. particular, classes such as the YT Class may This sensitivity to prepayments is not necessa- experience dramatic declines in their interest rily proportional to the changes in prepayment rates and yields as a result of certain changes in rates. In some scenarios, small changes in pre- LIBOR, even if those changes are slight. Morepayment rates of the related mortgage loans over, in the case of the FG and SG Classes, the S-16

18 LIBOR levels triggering those declines will vary over time. For an illustration of this sensitivity, see the related yield tables in this prospectus supplement. Delay classes have lower yields and market values. Since certain classes do not receive interest immediately following each interest accrual period, these classes have lower yields and lower market values than they would if there were no such delay. Reinvestment of certiñcate payments may not achieve same yields as certiñcates. The rate of principal payments of the certiñcates is un- certain. You may be unable to reinvest the payments on the certiñcates at the same yields provided by the certiñcates. Unpredictable timing of last payment affects yields on certiñcates. The actual Ñnal payment of your class is likely to occur earlier, and could occur much earlier, than the Ñnal distribution date listed on the cover page of this prospectus supplement. If you assume that the actual Ñnal payment will occur on the Ñnal distribution date speciñed, your yield could be lower than you expect. Some investors may be unable to buy certain classes. Investors whose investment activi- ties are subject to legal investment laws and regulations, or to review by regulatory authorities, may be unable to buy certain certiñcates. You should obtain legal advice to determine whether you may purchase the certiñcates. Uncertain market for the certiñcates could make them diçcult to sell and cause their values to Öuctuate. We cannot be sure that a market for resale of the certiñcates will develop. Further, if a market develops, it may not continue or be suçciently liquid to allow you to sell your certif- icates. Even if you are able to sell your certiñ- cates, the sale price may not be comparable to similar investments that have a developed market. Moreover, you may not be able to sell small or large amounts of certiñcates at prices compa- rable to those available to other investors. You should purchase certiñcates only if you under- stand and can tolerate the risk that the value of your certiñcates will vary over time and that your certiñcates may not be easily sold. Terrorist activities and related military and political actions by the U.S. government could cause reductions in investor conñdence and sub- stantial market volatility in real estate and secu- rities markets. It is impossible to predict the extent to which terrorist activities may occur or, if they do occur, the extent of the eåect on the certiñcates. Moreover, it is uncertain what ef- fects any past or future terrorist activities or any related military or political actions on the part of the United States government and others will have on the United States and world Ñnancial markets, local, regional and national economies, real estate markets across the United States, or particular business sectors, including those affecting the performance of mortgage loan borrowers. Among other things, reduced investor conñdence could result in substantial volatility in securities markets and a decline in real estate- related investments. In addition, defaults on the mortgage loans could increase, causing early payments of principal to you and, regardless of the performance of the underlying mortgage loans, the liquidity and market value of the certiñcates may be impaired. DESCRIPTION OF TE CERTIFICATES The material under this heading summarizes certain features of the CertiÑcates. You will Ñnd additional information about the CertiÑcates in the other sections of this prospectus supplement, as well as in the additional Disclosure Documents and the Trust Agreement. If we use a capitalized term in this prospectus supplement without deñning it, you will Ñnd the deñnition of that term in the applicable Disclosure Document or in the Trust Agreement. General Structure. We will create the Fannie Mae REMIC Trust speciñed on the cover of this prospectus supplement (the ""Trust'') and a separate trust (the ""Lower Tier REMIC'') pursuant to a trust agreement dated as of May 1, 2005 (the ""Issue Date''). We will issue the Guaranteed REMIC Pass-Through CertiÑcates (the ""REMIC CertiÑcates'') pursuant to that trust agreement. We will S-17

19 issue the Combinable and Recombinable REMIC CertiÑcates (the ""RCR CertiÑcates'' and, together with the REMIC CertiÑcates, the ""CertiÑcates'') pursuant to a separate trust agreement dated as of the Issue Date (together with the trust agreement relating to the REMIC CertiÑcates, the ""Trust Agreement''). We will execute the Trust Agreement in our corporate capacity and as trustee (the ""Trustee''). In general, the term ""Classes'' includes the Classes of REMIC CertiÑcates and RCR CertiÑcates. The Trust and the Lower Tier REMIC each will constitute a ""real estate mortgage investment conduit'' (""REMIC'') under the Internal Revenue Code of 1986, as amended (the ""Code''). The REMIC CertiÑcates (except the R and RL Classes) will be ""regular interests'' in the Trust. The R Class will be the ""residual interest'' in the Trust. The interests in the Lower Tier REMIC other than the RL Class (the ""Lower Tier Regular Interests'') will be the ""regular interests'' in the Lower Tier REMIC. The RL Class will be the ""residual interest'' in the Lower Tier REMIC. The assets of the Trust will consist of the Lower Tier Regular Interests. The assets of the Lower Tier REMIC will consist of six groups of Fannie Mae Guaranteed Mortgage Pass-Through CertiÑcates (the ""Group 1 MBS,'' ""Group 2 MBS,'' ""Group 3 MBS,'' ""Group 4 MBS,'' ""Group 5 MBS'' and ""Group 6 MBS'' and, together, the ""MBS''). Each MBS represents a beneñcial ownership interest in a pool of Ñrst lien, one- to four-family (""single-family''), Ñxed-rate residential mortgage loans (the ""Mortgage Loans'') having the characteristics described in this prospectus supplement. Fannie Mae Guaranty. We guarantee that we will distribute to CertiÑcateholders: required installments of principal and interest on the CertiÑcates on time, and the principal balance of each Class of CertiÑcates no later than its Final Distribution Date, whether or not we have received suçcient payments on the MBS. In addition, we guarantee that we will distribute to each holder of an MBS: scheduled installments of principal and interest on the underlying Mortgage Loans on time, whether or not the related borrowers pay us, and the full principal balance of any foreclosed Mortgage Loan, whether or not we recover it. Our guarantees are not backed by the full faith and credit of the United States. See ""Description of CertiÑcatesÌThe Fannie Mae Guaranty'' in the REMIC Prospectus, and ""Description of the CertiÑcatesÌFannie Mae Guaranty'' in the MBS Prospectus. Characteristics of CertiÑcates. We will issue the CertiÑcates (except the R and RL Classes) in book-entry form on the book-entry system of the U.S. Federal Reserve Banks. Entities whose names appear on the book-entry records of a Federal Reserve Bank as having had CertiÑcates deposited in their accounts are ""olders'' or ""CertiÑcateholders.'' A older is not necessarily the beneñcial owner of a CertiÑcate. BeneÑcial owners ordinarily will hold CertiÑcates through one or more Ñnancial intermediaries, such as banks, brokerage Ñrms and securities clearing organizations. See ""Description of CertiÑcatesÌDenominations and Form'' in the REMIC Prospectus. We will issue the R and RL CertiÑcates in fully registered, certiñcated form. The ""older'' or ""CertiÑcateholder'' of the R or RL CertiÑcate is its registered owner. The R or RL CertiÑcate can be transferred at the corporate trust oçce of the Transfer Agent, or at the oçce of the Transfer Agent in New York, New York. U.S. Bank National Association (""US Bank'') in Boston, Massachusetts will be the initial Transfer Agent. We may impose a service charge for any registration of transfer of the R or S-18