Guaranteed Stripped Mortgage-Backed Securities Trust Number 394

Prospectus Supplement (To SMBS Prospectus dated December 1, 2007) Guaranteed Stripped Mortgage-Backed Securities Trust Number 394 The SMBS Certificates We, the Federal National Mortgage Association or Fannie Mae, will issue the classes of SMBS certificates listed in the chart on this cover. Payments to Certificateholders We will make monthly payments on the SMBS certificates. You, the investor, will receive interest accrued on the notional principal balance of your SMBS certificate. The Fannie Mae Guaranty We will guarantee that required interest payments on the SMBS certificates are available for distribution to investors on time. The Trust and Its Assets The SMBS trust specified above will consist of the excess yield attributable to certain first lien, single-family, fully amortizing, fixed-rate, conventional mortgage loans currently serviced by Flagstar Capital Markets Corporation on our behalf. The mortgage loans are included in various pools that back previously issued MBS. Class Original Notional Principal Balance(1) Conversion Factor(2) Principal Type(3) Interest Rate Interest Type(3) CUSIP Number 1......... $19,589,471 0.0281818182 NTL 5.5% FIX/IO 3136FGCH8 2......... 16,136,284 0.0227272727 NTL 5.5 FIX/IO 3136F G C J4 3......... 25,006,658 0.0227272727 NTL 5.5 FIX/IO 3136FGCK1 4......... 3,825,214(4) None(5) NTL 5.5 WAC/IO 3136FG C L9 5......... 59,816,127 0.0258333333 NTL 6.0 FIX/IO 3136FGCM7 6......... 10,373,111 0.0078333333 NTL 6.0 FIX/IO 3136FGCN5 7......... 21,694,088 0.0130000000 NTL 6.0 FIX/IO 3136FGCP0 8......... 8,878,015(4) None(5) NTL 6.0 WAC/IO 3136FGCQ8 9......... 10,451,649 0.0192307692 NTL 6.5 FIX/IO 3136FGCR6 10......... 10,758,866 0.0207692308 NTL 6.5 FIX/IO 3136FGCS4 11......... 18,557,158 0.0209230769 NTL 6.5 FIX/IO 3136FGCT2 12......... 13,566,226(4) None(5) NTL 6.5 WAC/IO 3136FGCU9 13......... 9,700,277 0.0271428571 NTL 7.0 FIX/IO 3136FGCV7 14......... 10,058,430(4) None(5) NTL 7.0 WAC/IO 3136FGCW5 15......... 6,957,172(4) None(5) NTL 5.0 WAC/IO 3136FGCX3 16......... 9,171,099(4) None(5) NTL 5.5 WAC/IO 3136FGCY1 17......... 6,226,990(4) None(5) NTL 6.0 WAC/IO 3136FGCZ8 (1) Notional principal balance as of the issue date. Each class is an interest only class. (2) The conversion factor for each applicable class of SMBS certificates is a number which, when multiplied by the aggregate principal balance of the mortgage loans represented in the related mortgage loan group, will equal the notional principal balance of that class. (3) See CLASS DEFINITIONS AND ABBREVIATIONS in Exhibit A to the SMBS prospectus. (4) The notional principal balances of Classes 4, 8, 12, 14, 15, 16 and 17 initially will be as shown above. Thereafter, the notional principal balance of each of these classes will be calculated each month by dividing (i) the applicable monthly excess yield payments attributable to the mortgage loans represented in the related mortgage loan group that are directed to that class by (ii) one-twelfth of the fixed rate of interest borne by that class of SMBS certificates. (5) Because of the method of calculating the notional principal balances of Classes 4, 8, 12, 14, 15, 16 and 17, these classes do not have conversion factors. Carefully consider the risk factors on page S-5 of this prospectus supplement and beginning on page 9 of the SMBS prospectus. Unless you understand and are able to tolerate these risks, you should not invest in the SMBS certificates. You should read the SMBS prospectus as well as this prospectus supplement and the other applicable disclosure documents specified in the SMBS prospectus. The SMBS certificates, together with 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 SMBS certificates are exempt from registration under the Securities Act of 1933 and are exempted securities under the Securities Exchange Act of 1934. If you own SMBS certificates of certain classes, you can exchange them for SMBS certificates of the corresponding combination classes to be delivered at the time of exchange. For a description of the combination classes of SMBS certificates, see Schedule 1 attached to this prospectus supplement and Description of the SMBS Certificates Exchange of Certificates in the SMBS prospectus. The underwriter named below will offer the SMBS certificates from time to time in negotiated transactions at varying prices. We expect the settlement date to be October 30, 2008. Goldman, Sachs & Co. The date of this Prospectus Supplement is October 23, 2008

TABLE OF CONTENTS AVAILABLE INFORMATION.... S- 3 RECENT DEVELOPMENTS... S- 4 ADDITIONAL RISK FACTORS... S- 5 DESCRIPTION OF THE SMBS CERTIFICATES... S- 6 General... S- 6 Excess Yield... S- 6 Representations and Warranties in Connection with Excess Yield... S- 6 Mortgage Loan Groups... S- 7 Reductions in the Notional Principal Balances of Classes (Other than the WAC Classes).... S- 8 Changes in the Notional Principal Balances of the WAC Classes.... S- 8 Calculations.... S- 8 Fannie Mae Guaranty... S- 8 No Optional Termination of the Trust or the Related MBS... S- 9 Interest Payments on the SMBS Certificates... S- 9 Other Authorized Classes of SMBS Certificates Exchanges... S- 9 Procedures and Fees Relating to Exchanges... S- 9 Sensitivity to Prepayments... S- 9 MATERIAL FEDERAL INCOME TAX CONSEQUENCES... S-10 PLAN OF DISTRIBUTION.... S-10 SCHEDULE 1... A- 1 Page S-2

AVAILABLE INFORMATION You should purchase the certificates only if you have read and understood this prospectus supplement and the following documents (the Disclosure Documents ): our Prospectus for Fannie Mae Guaranteed Stripped Mortgage-Backed Securities dated December 1, 2007 (the SMBS Prospectus ); our Prospectus for Fannie Mae Guaranteed Mortgage Pass-Through Certificates (Single- Family Residential Mortgage Loans) dated January 1, 2006 (for all MBS issued prior to June 1, 2007) or dated April 1, 2008 (for all other MBS) (as applicable, the Single-Family MBS Prospectus ); and any information incorporated by reference in this prospectus supplement as discussed below and under the heading Incorporation by Reference in the SMBS Prospectus. The Single-Family MBS Prospectus is incorporated by reference in this prospectus supplement. This means that we are disclosing information in that document by referring you to it. That document is considered part of this prospectus supplement, so you should read this prospectus supplement, and any applicable supplements or amendments, together with that document. You can obtain copies of the Disclosure Documents by writing or calling us at: Fannie Mae MBS Helpline 3900 Wisconsin Avenue, N.W., Area 2H-3S Washington, D.C. 20016 (telephone 1-800-237-8627). In addition, the Disclosure Documents, together with the class factors, are available on our corporate Web site at www.fanniemae.com. You also can obtain copies of the SMBS Prospectus and the Single-Family MBS Prospectus by writing or calling the dealer at: Goldman, Sachs & Co. Prospectus Department 100 Burma Road Jersey City, New Jersey 07305 (telephone 212-902-1171) S-3

RECENT DEVELOPMENTS On September 6, 2008, the Federal Housing Finance Agency, or FHFA, placed Fannie Mae and Freddie Mac into conservatorship. As the conservator, FHFA succeeded to all rights, titles, powers and privileges of Fannie Mae, and of any stockholder, officer, or director of Fannie Mae with respect to Fannie Mae and the assets of Fannie Mae. The conservator selected Herbert M. Allison, former Vice Chairman of Merrill Lynch and Chairman of TIAA-CREF, as the new CEO of Fannie Mae. A copy of the statement issued by FHFA Director James B. Lockhart regarding FHFA s placement of Fannie Mae into conservatorship, the selection of Mr. Allison, and a copy of a Fact Sheet discussing questions and answers about the conservatorship are available on FHFA s website at www.ofheo.gov. On September 7, 2008, the U.S. Department of the Treasury, or U.S. Treasury, announced three additional steps taken by it in connection with the conservatorship. First, the U.S. Treasury entered into a Senior Preferred Stock Purchase Agreement with us pursuant to which the U.S. Treasury will purchase up to an aggregate of $100 billion to maintain a positive net worth on a U.S. GAAP basis. This agreement contains covenants that significantly restrict our operations. In exchange for entering into this agreement, the U.S. Treasury received $1 billion of our senior preferred stock and warrants to purchase 79.9% of our common stock. Second, the U.S. Treasury announced the establishment of a new secured lending credit facility which will be available to Fannie Mae, Freddie Mac, and the Federal Home Loan Banks as a liquidity backstop. Third, the U.S. Treasury announced that it is initiating a temporary program to purchase mortgage-backed securities issued by Fannie Mae and Freddie Mac. The secured lending credit facility and the mortgage-backed securities purchase program are currently scheduled to expire in December 2009. Details regarding these steps are available on the U.S. Treasury s website at www.ustreas.gov. We are continuing to operate as a going concern while in conservatorship and remain liable for all of our obligations, including our guaranty obligations, associated with mortgage-backed securities issued by us. The secured lending credit facility and the Senior Preferred Stock Purchase Agreement described above are intended to enhance our ability to meet our obligations. Under the Federal Housing Finance Regulatory Reform Act of 2008 (the Regulatory Reform Act ), FHFA, as conservator or receiver, has the power to repudiate any contract entered into by Fannie Mae prior to FHFA s appointment as conservator or receiver, as applicable, if FHFA determines, in its sole discretion, that performance of the contract is burdensome and that repudiation of the contract promotes the orderly administration of Fannie Mae s affairs. The Regulatory Reform Act requires FHFA to exercise its right to repudiate any contract within a reasonable period of time after its appointment as conservator or receiver. FHFA as conservator has advised us that it has no intention to repudiate our guaranty obligation under the trust documents because it views repudiation as incompatible with the goals of the conservatorship. In the event that FHFA, as conservator or receiver, were to repudiate our guaranty obligation under the related trust documents, the conservatorship or receivership estate, as applicable, would be liable for actual direct compensatory damages in accordance with the provisions of the Regulatory Reform Act. Any such liability could be satisfied only to the extent of our assets available therefor. In the event of repudiation, the payments of interest to certificateholders would be reduced if payments on the mortgage loans represented in the related mortgage loan groups are not made by the borrowers or advanced by the servicer. Any actual direct compensatory damages for repudiating our guaranty obligation may not be sufficient to offset any shortfalls experienced by certificateholders. Further, in its capacity as conservator or receiver, FHFA has the right to transfer or sell any asset or liability of Fannie Mae without any approval, assignment or consent. Although we have been advised that it has no present intention to do so, if FHFA, as conservator or receiver, were to transfer S-4

our guaranty obligation to another party, certificateholders would have to rely on that party for satisfaction of the guaranty obligation and would be exposed to the credit risk of that party. In addition, certain rights provided to certificateholders under the trust documents may not be enforced against FHFA, or enforcement of such rights may be delayed, during the conservatorship or if we are placed into receivership. The trust documents provide that upon the occurrence of a guarantor event of default, which includes the appointment of a conservator or receiver, certificateholders have the right to replace Fannie Mae as trustee if the requisite percentage of certificateholders consent. The Regulatory Reform Act prevents certificateholders from enforcing their rights to replace Fannie Mae as trustee if the event of default arises solely because a conservator or receiver has been appointed. The Regulatory Reform Act also provides that no person may exercise any right or power to terminate, accelerate or declare an event of default under certain contracts to which Fannie Mae is a party, or obtain possession of or exercise control over any property of Fannie Mae, or affect any contractual rights of Fannie Mae, without the approval of FHFA, as conservator or receiver, for a period of 45 or 90 days following the appointment of FHFA as conservator or receiver, respectively. ADDITIONAL RISK FACTORS Mortgage loan prepayments will reduce your yield. The yields on the SMBS certificates will be extremely sensitive to the prepayment experience of the mortgage loans represented in the related mortgage loan groups. The mortgage loans represented in the mortgage loan groups have been included in various pools that back previously issued MBS. For a discussion of certain prepayment considerations, investors should review the Single-Family MBS Prospectus under the heading RISK FACTORS PREPAYMENT FACTORS. You should carefully consider the associated risks, including the risk that you may not fully recover your initial investment. Changes in the weighted average excess yield rates will affect yields on the WAC Classes. Although the interest rates borne by Classes 4, 8, 12, 14, 15, 16 and 17 (the WAC Classes ) are fixed, the notional principal balance of each of these classes will be recalculated each month as described in footnote (4) on the cover of this prospectus supplement. As a result of this calculation, the notional principal balances of the WAC Classes are expected to vary due to reductions in the principal balances of the mortgage loans represented in the related mortgage loan groups as well as due to changes in the weighted average of the applicable excess yield rates on such mortgage loans. Accordingly, if you purchase an SMBS certificate of a WAC Class, the timing of changes in the weighted average of the excess yield rates of the mortgage loans represented in the related mortgage loan group may significantly affect your yield, even if the weighted average of those respective excess yield rates is consistent with your expectations. In general, the earlier the change in the level of the weighted average excess yield rate, the greater the effect on your yield to maturity. As a result, if the weighted average excess yield rate during any period is lower than you expect, a corresponding increase in that rate during a later period may not fully offset the effect of the earlier rate on your yield. Fannie Mae guaranty is the sole source of credit support. If we were unable to perform our guaranty obligations, you would receive interest payments on your SMBS certificates only to the extent that corresponding excess yield payments on the mortgage loans represented in the related mortgage loan groups were actually made by the borrowers or advanced by the servicer. If that happened, delinquencies and defaults on the mortgage loans would directly affect the amounts that you would receive each month. Moreover, if the continued performance of our duties as servicer under the MBS trust agreement were determined to be no longer permissible under applicable law or if we were to default on certain of our obligations, a successor to us could be named under the MBS trust agreement. In that event, a claim might be made that all or a portion of the excess yield payable on the SMBS certificates should be available as compensation to that successor. If such a claim were successful and we were unable to perform under our guaranty, interest payments to you on the SMBS certificates could be reduced in whole or in part. S-5

DESCRIPTION OF THE SMBS CERTIFICATES The SMBS certificates will be issued pursuant to the trust agreement. Terms used and not otherwise defined in this prospectus supplement have the meanings assigned to them in the SMBS Prospectus. General Excess Yield. The trust assets consist of certain interest amounts (collectively, the Excess Yield ) payable on the mortgage loans represented in the related mortgage loan groups. The mortgage loans, which currently are serviced by Flagstar Capital Markets Corporation ( Flagstar ), have been included in various pools that back previously issued MBS. The Excess Yield is payable at rates (each, an Excess Yield Rate ) that, with respect to any particular mortgage loan, generally will represent in the aggregate the following: the interest rate borne by that mortgage loan less the applicable pass-through rate on the MBS backed by that mortgage loan less the guaranty fee rate applied to that mortgage loan in connection with the MBS less the minimum servicing fee rate for that mortgage loan less the premium amounts for lender-purchased mortgage insurance, if any, required to be paid by Flagstar from interest amounts payable on that mortgage loan (such amounts being converted to an annual rate). The portion of the Excess Yield attributable to any particular mortgage loan may be directed to a single class of SMBS certificates at the applicable Excess Yield Rate or may be divided into multiple components and directed to several classes of SMBS certificates at rates that in the aggregate equal the applicable Excess Yield Rate. As a result, a particular mortgage loan may be represented in a single mortgage loan group or in multiple mortgage loan groups. As long as each mortgage loan is included in an MBS trust, the servicer will be obligated to advance the portion of the Excess Yield attributable to that mortgage loan to the trust whether or not the related borrower makes the regularly scheduled monthly payment. The mortgage loans are being serviced pursuant to the Mortgage Selling and Servicing Contract between Flagstar and us as well as the Fannie Mae Selling and Servicing Guides. The Fannie Mae Selling and Servicing Guides restrict Flagstar s ability to target borrowers for refinance. Flagstar has agreed, among other things, not to specifically target borrowers whose loans are owned or securitized by us to the exclusion of other loans with similar characteristics. Representations and Warranties in Connection with Excess Yield. In connection with the assignment of the Excess Yield by Flagstar to us for transfer to the trust, Flagstar made certain representations and warranties with respect to its ownership of the Excess Yield, its right to assign the Excess Yield and its servicing of the mortgage loans included in the related MBS. In the event of a breach of any of Flagstar s representations and warranties that is not cured within a designated period, we will purchase the affected portion of the Excess Yield from the trust and, on the distribution date immediately following the withdrawal, include in the amount otherwise payable on the affected class or classes of SMBS certificates an amount calculated as follows: for each affected class that has a conversion factor, the product obtained by multiplying (i) the stated principal balance of the related mortgage loan (after giving effect to all principal payments due thereon prior to the month of the current distribution date) S-6

by (ii) the conversion factor for that class as specified on the cover of this prospectus supplement by (iii) the Assumed Price for that class (expressed as a percentage) as set forth in the table below entitled Pre-Tax Yields to Maturity and for each affected class that does not have a conversion factor, the product obtained by multiplying (i) the stated principal balance of the related mortgage loan (after giving effect to all principal payments due thereon prior to the month of the current distribution date) by (ii) a fraction the numerator of which is the allocable portion of the Excess Yield Rate of the related mortgage loan that corresponds to the amount distributable in respect of that class on the current distribution date and the denominator of which is the interest rate for that class by (iii) the Assumed Price for that class (expressed as a percentage) as set forth in the table below entitled Pre-Tax Yields to Maturity. Mortgage Loan Groups. Each class of SMBS certificates listed on the cover of this prospectus supplement relates to a single mortgage loan group having the same numerical designation as that class. As stated above, a particular mortgage loan may be represented in a single mortgage loan group or in multiple mortgage loan groups. The notional principal balance of each class of SMBS certificates (other than the WAC Classes) will be determined by multiplying the applicable conversion factor shown on the cover by the aggregate principal balance of the mortgage loans represented in the related mortgage loan group. For a description of how the notional principal balances of the WAC Classes are calculated, see footnote (4) on the cover of this prospectus supplement. The following table sets forth certain information with respect to the mortgage loans represented in each mortgage loan group as of the issue date. Mortgage Loan Group Weighted Average Coupon or WAC* (%) Approximate Range of Coupons of the Mortgage Loans (%) Weighted Average Remaining Term to Maturity or WAM* (in months) Weighted Average Modified Calculated Loan Age or CAGE** (in months) 1 6.08667 5.3750 6.2500 339 18 2 6.09088 5.3750 6.2500 341 17 3 5.95789 5.1250 6.2500 349 10 4 5.99533 / 6.10756 5.3750 6.2500 343 / 342 15 / 17 5 6.57226 6.3750 6.7500 340 17 6 6.60202 6.3750 6.7500 342 16 7 6.63316 6.3750 6.7500 341 17 8 6.61616 / 6.58120 6.3750 6.7500 340 / 340 18 / 18 9 7.00618 6.8750 7.2500 341 17 10 7.03363 6.8750 7.2500 340 18 11 7.05568 6.8750 7.2500 342 16 12 7.04847 / 7.04903 6.8750 7.2500 342 / 341 16 / 17 13 7.64570 7.3500 9.0000 342 16 14 7.62671 / 7.61095 7.3500 9.0000 343 / 342 16 / 16 15 5.37665 / 5.42677 4.6250 5.7500 171 / 169 9 / 10 S-7

Mortgage Loan Group Weighted Average Coupon or WAC* (%) Approximate Range of Coupons of the Mortgage Loans (%) Weighted Average Remaining Term to Maturity or WAM* (in months) Weighted Average Modified Calculated Loan Age or CAGE** (in months) 16 6.11852 / 6.15618 5.8750 6.2500 168 / 166 15 / 15 17 6.72225 / 6.76727 6.3750 8.5000 183 / 181 17 / 17 * Except as otherwise specified, the amounts shown in the table are weighted by the unpaid principal balances of the mortgage loans in the applicable mortgage loan group. ** The weighted average modified calculated loan age of the mortgage loans in each mortgage loan group as of the issue date is equal to the sum of (i) the number of months elapsed from the month in which the first monthly payment was due on each mortgage loan to the month in which the SMBS certificates are issued plus (ii) one month. Except as otherwise specified, the amounts shown in the table are weighted by the unpaid principal balances of the mortgage loans in the applicable loan group. The figures on the right of this column are weighted by (i) the unpaid principal balances of the mortgage loans in the applicable mortgage loan group and (ii) the applicable Excess Yield Rates of those mortgage loans. Each mortgage loan represented in a mortgage loan group (other than groups 4, 8, 12, 14, 15, 16 and 17) has the identical Excess Yield Rate with respect to that mortgage loan group, and the interest rate on the corresponding class of SMBS certificates will be equal to the applicable Excess Yield Rate multiplied by a fraction, the numerator of which is 1 and the denominator of which is the applicable conversion factor. By contrast, the mortgage loans represented in mortgage loan groups 4, 8, 12, 14, 15, 16 and 17 will have different Excess Yield Rates. As a result, although the interest rates borne by the WAC Classes are fixed, the method by which we calculate the notional principal balances of these classes will cause those notional principal balances to vary from month to month as a result of changes in the weighted average of the Excess Yield Rates on the mortgage loans represented in the related mortgage loan groups. Reductions in the Notional Principal Balances of Classes (Other than the WAC Classes). The mortgage loans represented in the related mortgage loan groups have been included in various pools that back MBS. Principal payments attributable to the mortgage loans represented in a mortgage loan group, including payments resulting from prepayments of the mortgage loans or repurchases of the mortgage loans from an MBS pool, will reduce the aggregate principal balance of the related mortgage loan group by the amount of the principal payments and, in turn, will reduce the notional principal balance of the corresponding class of SMBS certificates by the amount of those payments multiplied by the applicable conversion factor. In general, the notional principal balance of a class of SMBS certificates will be reduced as a result of principal payments at the same time and in the same manner (subject to the application of the related conversion factor) as principal payments reduce the principal balance of the related MBS. As a result, mortgage loans that are prepaid in full or repurchased from the related MBS pool will be treated as having a principal balance of zero for purposes of calculating the notional principal balance of the related class or classes of SMBS certificates. Changes in the Notional Principal Balances of the WAC Classes. The notional principal balances of the WAC Classes will be recalculated each month as described in footnote (4) on the cover of this prospectus supplement. Reductions in the principal balances of the mortgage loans represented in the related mortgage loan groups will tend to reduce the notional principal balances of these classes. However, since the notional principal balances of these classes bear no fixed relation to the principal balances of the related mortgage loans, whether by application of a conversion factor or otherwise, it is possible that the notional principal balance of one or more of these classes may actually increase from time to time. Calculations. All calculations made with respect to the SMBS certificates will be final and binding, absent manifest error. Fannie Mae Guaranty. We guarantee that required payments of interest on the SMBS certificates will be available for distribution on time to the holders. For a description of the required S-8

payments of interest, see Interest Payments on the SMBS Certificates below. Our guaranty is not backed by the full faith and credit of the United States. No Optional Termination of the Trust or the Related MBS. We have no option to effect an early termination of the trust. Further, we will not repurchase the mortgage loans underlying any MBS in a clean-up call. See DESCRIPTION OF THE CERTIFICATES Termination in the Single- Family MBS Prospectus. Interest Payments on the SMBS Certificates We will pay interest on the SMBS certificates at the applicable annual interest rates specified on the cover. We calculate interest based on a 360-day year consisting of twelve 30-day months. We pay interest monthly on each distribution date, beginning in the month after the settlement date. Interest to be paid on each SMBS certificate on a distribution date will consist of one month s interest on the outstanding notional principal balance of that SMBS certificate immediately prior to that distribution date. Interest to be paid on each distribution date will accrue on the SMBS certificates during the calendar month preceding the month in which the distribution date occurs. Other Authorized Classes of SMBS Certificates Exchanges In addition to the classes of SMBS certificates listed on the cover of this prospectus supplement, 3 additional classes of SMBS certificates will be authorized for issuance with respect to the SMBS trust. As contemplated in the SMBS Prospectus, SMBS certificates of one or more classes will be exchangeable for combination SMBS certificates on the book-entry system of the Federal Reserve Banks only in the combinations listed on Schedule 1. You also may exchange all or a portion of the combination SMBS certificates for the related SMBS certificates in the same manner. This process may occur repeatedly. Procedures and Fees Relating to Exchanges A holder wishing to exchange SMBS certificates must notify our Structured Transactions Department at (202) 752-7875 through one of our SMBS Dealer Group dealers no later than two business days before the proposed exchange date. Subject to Fannie Mae s approval, the exchange date can be any business day other than the first eleven calendar days or the last business day of the month. The notice must include the proposed exchange date as well as the outstanding notional principal amounts of both the SMBS certificates to be exchanged and the SMBS certificates to be received. The notice becomes irrevocable on the second business day before the proposed exchange date. Since exchanges in any month will be effective subsequent to the record date for the distribution date in that month, all distributions in the month of exchange will be made in respect of the SMBS certificates surrendered for exchange. The first distribution in respect of the SMBS certificates received in any exchange will take place in the month following the month of exchange. The fee will be $2,000 per class of SMBS certificates surrendered for exchange. Sensitivity to Prepayments The following tables indicate certain relationships between assumed purchase prices of the SMBS certificates, and the yields to maturity on the SMBS certificates, stated on a corporate bond equivalent basis. For purposes of these tables we assumed that: each class of SMBS certificates was sold on the settlement date at the assumed price listed below, which is the percentage of its original notional principal balance, plus accrued interest thereon to the settlement date, the settlement date for the sale of the SMBS certificates is October 30, 2008, all of the mortgage loans represented in the related mortgage loan group have the WACs, WAMs and weighted average modified CAGEs listed in the table beginning on page S-7 of this prospectus supplement (excluding WACs, WAMs and weighted average modified CAGEs having a designation), and S-9

all of the mortgage loans prepay according to the levels of CPR indicated below. Class Pre-Tax Yields to Maturity CPR Prepayment Assumptions Assumed Price 5% 10% 15% 20% 25% 1.................... 22.65625% 17.4% 11.7% 5.8% (0.2)% (6.5)% 2.................... 22.65625% 17.4% 11.7% 5.8% (0.2)% (6.5)% 3.................... 22.65625% 17.5% 11.8% 5.9% (0.1)% (6.4)% 4.................... 22.65625% 17.4% 11.7% 5.8% (0.2)% (6.4)% 5.................... 21.90625% 20.9% 15.1% 9.1% 3.0% (3.3)% 6.................... 21.90625% 20.9% 15.1% 9.2% 3.0% (3.3)% 7.................... 21.90625% 20.9% 15.1% 9.2% 3.0% (3.3)% 8.................... 21.90625% 20.9% 15.1% 9.2% 3.0% (3.3)% 9.................... 20.37500% 25.9% 20.0% 13.9% 7.7% 1.2% 10................... 20.37500% 25.9% 20.0% 13.9% 7.6% 1.2% 11................... 20.37500% 25.9% 20.0% 13.9% 7.7% 1.2% 12................... 20.37500% 25.9% 20.0% 13.9% 7.7% 1.2% 13................... 20.37500% 28.7% 22.7% 16.6% 10.3% 3.8% 14................... 20.37500% 28.7% 22.7% 16.6% 10.3% 3.8% 15................... 16.00000% 18.8% 13.1% 7.2% 1.2% (5.1)% 16................... 16.00000% 22.5% 16.7% 10.7% 4.6% (1.7)% 17................... 16.00000% 27.3% 21.4% 15.4% 9.1% 2.6% C1.................. 22.65625% 17.4% 11.7% 5.8% (0.2)% (6.4)% C2.................. 21.90625% 20.9% 15.1% 9.1% 3.0% (3.3)% C3.................. 20.37500% 25.9% 20.0% 13.9% 7.7% 1.2% We cannot assure you that the purchase prices of the classes of SMBS certificates will be as assumed. In addition, since the characteristics of the mortgage loans represented in the mortgage loan groups will not correspond exactly to those assumed above, the actual yields to maturity are likely to vary from those indicated even if the actual prepayments correspond to the CPR levels. Furthermore, since the calculations in the table are based upon assumed constant levels of CPR over the lives of the SMBS certificates, higher or lower levels at any particular time, even averaging the assumed levels, will produce different yields from the applicable yields set forth in the table. MATERIAL FEDERAL INCOME TAX CONSEQUENCES See MATERIAL FEDERAL INCOME TAX CONSEQUENCES in the SMBS Prospectus for a discussion of certain tax consequences of the purchase, ownership and disposition of the SMBS certificates. PLAN OF DISTRIBUTION We will acquire the Excess Yield from Flagstar in exchange for the SMBS certificates. Flagstar has engaged Goldman, Sachs & Co. (the Underwriter ) as underwriter of the SMBS certificates. Flagstar has agreed to sell the SMBS certificates to the Underwriter and the SMBS certificates will be delivered to the Underwriter as designee of Flagstar. The Underwriter proposes to offer the SMBS certificates directly to the public from time to time in negotiated transactions at varying prices to be determined at the time of sale. The Underwriter may effect such transactions to or through dealers. S-10

Schedule 1 Available Combinations(1) Classes SMBS Certificates Combination SMBS Certificates Original Notional Principal Balances Combination Classes Original Notional Principal Balance Principal Type(2) Interest Rate Interest Type(2) CUSIP Number Recombination 1 1 $19,589,471 C1 $60,732,413 NTL 5.50% FIX/IO 3136FGDA2 2 16,136,284 3 25,006,658 Recombination 2 5 59,816,127 C2 91,883,326 NTL 6.00 FIX/IO 3136FGDB0 6 10,373,111 7 21,694,088 Recombination 3 9 10,451,649 C3 39,767,673 NTL 6.50 FIX/IO 3136FGDC8 10 10,758,866 11 18,557,158 (1) The Classes and Combination Classes of SMBS certificates in each Recombination may be exchanged only in the proportions of original notional principal balances for the related Classes shown in this Schedule 1 (disregarding any retired Classes). For example, if a particular Recombination includes two Classes of SMBS certificates and one Combination Class of SMBS certificates whose original notional principal balances shown in the schedule reflect a 1:1:2 relationship, the same 1:1:2 relationship among the original notional principal balances of those Classes of SMBS certificates and Combination Class of SMBS certificates must be maintained in any exchange. This is true even if the relationship among their current notional principal balances has changed over time. Moreover, if as a result of a proposed exchange a certificateholder would hold an SMBS certificate of a Class in an amount less than the minimum denomination, the certificateholder will be unable to effect the proposed exchange. See Description of the SMBS Certificates Denominations in the SMBS Prospectus. (2) See CLASS DEFINITIONS AND ABBREVIATIONS in Exhibit A to the SMBS Prospectus. A-1

No one is authorized to give information or to make representations in connection with the SMBS certificates other than the information and representations contained in this prospectus supplement and the additional disclosure documents. You must not rely on any unauthorized information or representation. This prospectus supplement and the additional disclosure documents do not constitute an offer or solicitation with regard to the SMBS certificates if it is illegal to make such an offer or solicitation to you under state law. By delivering this prospectus supplement and the additional disclosure documents at any time, no one implies that the information contained herein or therein is correct after the date hereof or thereof. The Securities and Exchange Commission has not approved or disapproved the SMBS certificates or determined if this prospectus supplement is truthful and complete. Any representation to the contrary is a criminal offense. Guaranteed Stripped Mortgage-Backed Securities Trust Number 394 PROSPECTUS SUPPLEMENT TABLE OF CONTENTS Page Table of Contents.................. S- 2 Available Information................ S- 3 Recent Developments............... S- 4 Additional Risk Factors.............. S- 5 Description of the SMBS Certificates.... S- 6 Material Federal Income Tax Consequences... S-10 Plan of Distribution................. S-10 Schedule 1....................... A- 1 Goldman, Sachs & Co. October 23, 2008