FEDERAL NATIONAL MORTGAGE ASSOCIATION FANNIE MAE
EMPLOYMENT AGREEMENT J. TIMOTHY HOWARD
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<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>w96901exv10w3.htm
<DESCRIPTION>EMPLOYMENT AGREEMENT J. TIMOTHY HOWARD
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<P align="right" style="font-size: 10pt">Exhibit&nbsp;10.3



<P align="center" style="font-size: 10pt">EMPLOYMENT AGREEMENT



<P align="center" style="font-size: 10pt">between



<P align="center" style="font-size: 10pt">FANNIE MAE



<P align="center" style="font-size: 10pt">and



<P align="center" style="font-size: 10pt">J.&nbsp;TIMOTHY HOWARD


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<P align="center" style="font-size: 10pt">TABLE OF CONTENTS


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<TR valign="bottom">
    <TD width="14%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="79%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
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<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><U>Page</U></TD>
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<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">ARTICLE 1</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">DEFINITIONS</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;1.1.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Agreement Term</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;1.2.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Annual Incentive Plan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;1.3.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Award Period</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;1.4.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Base Salary</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;1.5.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Board</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;1.6.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Cause</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;1.7.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Compete</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;1.8.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;1.9.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Effective Date</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;1.10.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Employee</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;1.11.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Employment</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;1.12.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Pension Plan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;1.13.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Existing Agreement</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;1.14.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Failure to Extend</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;1.15.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Good Reason</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;1.16.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">OFHEO</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;1.17.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Option</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;1.18.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Performance Share Award</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;1.19.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Qualifying Termination</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;1.20.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Restricted Stock</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;1.21.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Serious Illness or Disability</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;1.22.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Stock Compensation Plan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;1.23.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Surviving Spouse</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;1.24.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Termination of Employment</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">ARTICLE 2</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">PERIOD OF EMPLOYMENT AND DUTIES</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;2.1.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Period of Employment</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;2.2.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Duties</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">ARTICLE 3</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">COMPENSATION AND BENEFITS</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;3.1.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Base Salary</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;3.2.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Benefits</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">ARTICLE 4</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">TERMINATION OF EMPLOYMENT</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;4.1.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Termination of Employment By the Corporation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;4.2.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Termination of Employment By Employee</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;4.3.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Other Termination of Employment</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;4.4.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Resignation as Member of the Board of Directors</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">ARTICLE 5</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">COMPENSATION AND BENEFITS FOLLOWING TERMINATION</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">OF EMPLOYMENT</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>

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<TR valign="bottom">
    <TD width="14%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="79%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
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    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;5.1.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Voluntary Termination Pursuant to Section 4.2(b)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;5.2.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Termination for Cause</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;5.3.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Qualifying Termination (Other Than by Reason Of Death)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;5.4.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Termination of Employment By Reason of Death</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">ARTICLE 6</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">MISCELLANEOUS</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;6.1.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Noncompetition</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;6.2.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Payment of Certain Expenses</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;6.3.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Assignment by Employee</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;6.4.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">No Funding Required</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;6.5.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Disclosure of Information to the Corporation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;6.6.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Nondisclosure of Confidential Information</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;6.7.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Waiver</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;6.8.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Notice</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;6.9.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Applicable Law</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;6.10.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Taxes</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;6.11.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Benefit</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;6.12.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Entire Agreement</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;6.13.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Arbitration</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;6.14.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Severability</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Section&nbsp;6.15.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Regulatory Approval</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
</TR>

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<P align="center" style="font-size: 10pt"><B>EMPLOYMENT AGREEMENT</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THIS EMPLOYMENT AGREEMENT (this &#147;Agreement&#148;) is between FANNIE MAE (the
&#147;Corporation&#148;) and J. TIMOTHY HOWARD (&#147;Employee&#148;).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the Corporation and Employee are parties to an employment
agreement dated as of July&nbsp;1, 2003, which terminates on June&nbsp;30, 2004 (the
&#147;Existing Agreement&#148;);


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, under the termination provisions of the Existing Agreement, which
were approved by OFHEO, Employee is contractually entitled to certain
compensation and benefits if, among other circumstances, Employee&#146;s employment
is not extended;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, Employee has successfully discharged his responsibilities under
the Existing Agreement and has earned certain vested amounts, as described in
his Existing Agreement, over the course of his employment; and


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS the Corporation and Employee agree that the terms of the agreement
set forth if approved in their entirety to the extent required would provide
compensation and benefits to Employee that are at least as favorable as the
compensation and benefits provided under the Existing Agreement, it being
understood and acknowledged, however, that absent approval by OFHEO of the
provisions set forth below relating to benefits upon termination of employment,
the compensation and benefits described below would not be comparable or
substantially equivalent to those provided under the Existing Agreement and in
the aggregate would be materially less favorable to Employee than those
provided under the Existing Agreement;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE, the Corporation and Employee agree as follows:


<P align="center" style="font-size: 10pt">&nbsp;
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<P align="center" style="font-size: 10pt"><B>ARTICLE 1</B>



<div align="center" style="font-size: 10pt"><B><U>DEFINITIONS</U></B></div>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following terms shall have the meanings set forth below:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.1. <U>Agreement Term</U> means the period of time beginning on
the Effective Date and ending on June&nbsp;30, 2007 or such later date as may be
agreed to pursuant to Section&nbsp;2.1.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.2. <U>Annual Incentive Plan</U> means the Federal National
Mortgage Association Annual Incentive Plan as from time to time amended and in
effect, or any successor plan.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.3. <U>Award Period</U> is defined in the Stock Compensation
Plan.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.4. <U>Base Salary</U> means the dollar amount of Employee&#146;s
annual base compensation as determined by the Board.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.5. <U>Board</U> means the Board of Directors of the Corporation,
acting without the participation of the Vice Chairmen of the Board of
Directors.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.6. <U>Cause</U> is defined in Section&nbsp;4.1(b).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.7. <U>Compete</U> means directly or indirectly to manage,
operate, control, participate in the ownership, management, operation or
control of, be connected as an officer, employee, partner, director, consultant
or otherwise with, or have any financial interest in, (i)&nbsp;any business if a
substantial part of such business involves originating, purchasing, selling,
servicing or otherwise dealing in the residential mortgage market (provided,
that Employee shall not be deemed, directly or indirectly, to Compete solely by
virtue of Employee&#146;s employment by a business that engages in transactions in
the residential mortgage market so long as Employee himself does not
participate directly in the residential mortgage business), (ii)&nbsp;Freddie Mac,
or (iii)&nbsp;any part of the Federal Home Loan Bank System (including any one of
the Federal Home Loan Banks or the Federal Home Loan Banks Office of Finance).
Employee shall not be


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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">deemed to Compete solely by reason of ownership, for personal investment
purposes only, of less than 2% of the voting interests of any business.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.8. <U>Corporation</U> means Fannie Mae.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.9. <U>Effective Date</U> means July&nbsp;1, 2004, subject, however,
to the provisions of Section&nbsp;6.15 (&#147;Regulatory Approval&#148;).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.10. <U>Employee</U> means J. Timothy Howard.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.11. <U>Employment</U> means Employee&#146;s employment by the
Corporation under this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.12. <U>Executive Pension Plan</U> means the Executive Pension
Plan of the Federal National Mortgage Association as from time to time amended
and in effect, or any successor plan.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.13. <U>Existing Agreement</U> is defined in the preamble to this
Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.14. <U>Failure to Extend</U> means notification of Employee by
the Corporation that it does not desire to extend the Agreement Term (or the
term of any successor agreement) or that it desires to do so only on terms in
the aggregate that are materially less favorable to Employee than those
applicable to Employee at the time of said notice. If the Corporation notifies
Employee that it desires to extend the Agreement Term (or the term of any
successor agreement) on terms that are in the aggregate substantially similar
to or more favorable than those applicable to Employee at the time of said
notice, any nonextension shall not be deemed to be a Failure to Extend.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.15. <U>Good Reason</U> means (a)&nbsp;a material reduction by the
Corporation of Employee&#146;s authority or a material change in Employee&#146;s
functions, duties or responsibilities that in any material way would cause
Employee&#146;s position to become less important, (b)&nbsp;a


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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">reduction in Employee&#146;s Base Salary, (c)&nbsp;a requirement by the Corporation
that Employee relocate his office outside of the Washington, D.C. area, or (d)
a breach by the Corporation of any material obligation of the Corporation under
this Agreement, unless, within 30&nbsp;days of the written notice given by Employee
and specifying a circumstance constituting Good Reason, the Corporation
eliminates such circumstance.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.16. <U>OFHEO</U> means the Office of Federal Housing Enterprise
Oversight.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.17. <U>Option</U> is defined in the Stock Compensation Plan.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.18. <U>Performance Share Award</U> is defined in the Stock
Compensation Plan.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.19. <U>Qualifying Termination</U> means Termination of
Employment (i)&nbsp;by the Corporation without Cause, (ii)&nbsp;by Employee for Good
Reason, (iii)&nbsp;upon expiration of the Agreement Term (or the term of any
successor agreement) if there has been a Failure to Extend, (iv)&nbsp;by reason of
Employee&#146;s acceptance of an appointment to a senior position in the U.S.
Federal Government, (v)&nbsp;by reason of Serious Illness or Disability or (vi)&nbsp;by
reason of Employee&#146;s death.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.20. <U>Restricted Stock</U> is defined in the Stock Compensation
Plan.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.21. <U>Serious Illness or Disability</U> means a serious
physical or mental illness or disability which, in the reasonable determination
of the Board, prevents Employee from performing his duties under this Agreement
for a period of at least six months in any twelve-month period.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.22. <U>Stock Compensation Plan</U> means either or both, as the
context requires, of the Fannie Mae Stock Compensation Plan of 1993 and the
Fannie Mae Stock Compensation Plan of 2003, in each case as from time to time
amended and in effect, or any successor plan.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.23. <U>Surviving Spouse</U> is defined in the Executive Pension
Plan.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.24. <U>Termination of Employment</U> means the cessation of
Employment for any reason.


<P align="center" style="font-size: 10pt"><B>ARTICLE 2</B>



<div align="center" style="font-size: 10pt"><B><U>PERIOD OF EMPLOYMENT AND DUTIES</U></B></div>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.1. <U>Period of Employment</U>. The Corporation shall continue
to employ Employee, and Employee shall continue to serve, as Vice Chairman of
the Corporation&#146;s Board of Directors and Chief Financial Officer of the
Corporation, upon the terms and conditions of this Agreement, for the period
July&nbsp;1, 2004 through the last day of the Agreement Term unless there is an
earlier Termination of Employment. The Agreement Term may be extended by
mutual written agreement of the parties entered into at any time prior to the
date the Agreement Term would otherwise expire.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.2. <U>Duties</U>. Employee shall serve the Corporation under
this Agreement as Vice Chairman of the Corporation&#146;s Board of Directors and as
Chief Financial Officer. Employee shall devote his full business time and
attention to the Corporation and shall faithfully and diligently perform such
duties for the Corporation as may be determined from time to time by the
Chairman of the Board of Directors, provided that such duties are reasonable
and customary for a corporate vice chairman and chief financial officer.
Employee shall be subject to the Corporation&#146;s standards of conduct and similar
policies and procedures applicable generally to members of the Board of
Directors or to the Corporation&#146;s executive officers, as the case may be.
Employee may (a)&nbsp;serve on corporate, civic or charitable boards or committees
or (b)&nbsp;manage personal investments, so long as such activities do not
materially interfere with the performance of his responsibilities under this
Agreement and so long as such activities comply with the aforementioned
standards, policies and procedures of the Corporation. During his


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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">Employment, Employee shall be nominated for election to the Corporation&#146;s
Board of Directors and shall be identified as a nominee recommended for
election by the Board, at each annual meeting of the stockholders of the
Corporation.



<P align="center" style="font-size: 10pt"><B>ARTICLE 3</B>



<div align="center" style="font-size: 10pt"><B><U>COMPENSATION AND BENEFITS</U></B></div>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.1. <U>Base Salary</U>. During Employee&#146;s Employment, the
Corporation shall pay to Employee Base Salary of not less than his base salary
at June&nbsp;30, 2004. The Board shall from time to time review Employee&#146;s Base
Salary and may increase (but in no event decrease) such Base Salary by such
amounts as it deems proper.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.2. Benefits.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U>Executive Pension Plan</U>. The parties acknowledge that the
Corporation has previously designated Employee as a participant in the
Executive Pension Plan. Employee&#146;s &#147;Pension Goal&#148; under the Executive Pension
Plan shall at all times be equal to at least 50% of his &#147;High-Three Total
Compensation,&#148; as those terms are defined in the Executive Pension Plan. The
Corporation may amend the Executive Pension Plan from time to time; provided,
however, that no such amendment shall decrease Employee&#146;s Pension Goal or the
vested benefits to which Employee or his Surviving Spouse, if any, would have
been entitled under such Plan, as modified in this Agreement, as in effect on
the Effective Date or, if benefits are improved, as of the date of such
improvement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U>Options</U>. Employee shall be considered for grants of Options
consistent with the compensation philosophy of the Corporation set forth in the
charter of the Compensation Committee of the Board.


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<P align="left" style="font-size: 10pt">(c) <U>Annual Incentive Plan</U>. Employee shall be considered for a
potential award under the Annual Incentive Plan for each year during Employment
consistent with the compensation philosophy of the Corporation set forth in the
charter of the Compensation Committee of the Board.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;<U>Performance Share Awards</U>. Employee shall be considered for
grants of Performance Share Awards consistent with the compensation philosophy
of the Corporation set forth in the charter of the Compensation Committee of
the Board.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;<U>Restricted Stock</U>. Employee shall be considered for grants of
Restricted Stock consistent with the compensation philosophy of the Corporation
set forth in the charter of the Compensation Committee of the Board.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;<U>Life Insurance and Death Benefits</U>. Employee shall receive life
insurance benefits consistent with the Corporation&#146;s life insurance policies
and programs as from time to time in effect.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;<U>Other Benefits</U>. The Corporation shall provide Employee with
the following additional benefits during Employment:



<P align="left" style="margin-left:2%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Corporation shall pay or reimburse Employee for reasonable
expenses incurred by Employee in obtaining tax and investment assistance
and advice, up to $25,000 per calendar year.



<P align="left" style="margin-left:2%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Corporation shall pay or reimburse the legal expenses
incurred by Employee in connection with the negotiation of this
Agreement.



<P align="left" style="margin-left:2%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The Corporation shall provide Employee with access to a car
and driver for transportation relating to the Corporation&#146;s business
purposes.


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<P align="left" style="margin-left:2%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) The Corporation shall pay or reimburse Employee for actual
expenses incurred by Employee for a complete annual physical examination
at a medical facility of his choice.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;<U>General Rights Under Benefit Plans</U>.



<P align="left" style="margin-left:2%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Employee shall at all times during the Employment Term be
entitled to participate in all long- or short-term bonus, stock option,
restricted stock, and other executive compensation plans, and in all
perquisite programs and disability, retirement, stock purchase, thrift
and savings, health, medical, life insurance, expense reimbursement and
similar plans of the Corporation which are from time to time in effect
and in which other senior officers of the Corporation generally are
entitled to participate. Except as otherwise provided in this Agreement,
Employee&#146;s participation in such plans and programs shall be in
accordance with the provisions of such plans and programs applicable from
time to time, it being the intent of the parties hereto that nothing in
this Agreement shall decrease the rights and benefits of Employee under
any such plans and programs as may be in effect from time to time.
Employee&#146;s rights as a participant under any compensation, benefit or
fringe benefit plan or arrangement of the Corporation that is from time
to time in effect and in which other senior officers of the Corporation
generally are entitled to participate shall be subject to this Agreement
and modified to the extent expressly provided herein, but except as so
modified shall be determined under the applicable provisions of such
plans and programs, including, without limitation, the provisions thereof
applicable to retirement; provided, that all such plans and programs and
this Agreement shall be construed and administered to avoid any
duplication of benefits under any such plan or program and this
Agreement.



<P align="left" style="margin-left:2%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Except as specifically set forth in this Agreement, or as
specifically permitted by the terms of any such plan or program, no right
or benefit under any such plan or program shall become vested or
exercisable after Termination of Employment.


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<P align="center" style="font-size: 10pt"><B>ARTICLE 4</B>



<div align="center" style="font-size: 10pt"><U><B>TERMINATION OF EMPLOYMENT</B></U></div>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.1. <U>Termination of Employment By the Corporation</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U>Without Cause</U>. The Corporation shall have the right to
terminate Employee&#146;s Employment without Cause at any time for any reason in the
Corporation&#146;s sole discretion by giving at least 90&nbsp;days&#146; prior written notice
to Employee.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U>For Cause</U>. The Corporation may terminate Employee&#146;s Employment
for Cause. For purposes of this Agreement, termination for &#147;Cause&#148; shall have
the meaning set forth at Section&nbsp;4.1(b)(i) below, and Employee&#146;s Employment
shall not be treated as having been terminated for Cause unless such
termination is accomplished in accordance with Section&nbsp;4.1(b)(ii) below.



<P align="left" style="margin-left:2%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) For purposes of this Agreement, Employee shall be treated as
having been terminated for &#147;Cause&#148; only if Employee has (A)&nbsp;been
convicted of, or pleaded <i>nolo contendere</i> with respect to, a felony, or
(B)&nbsp;participated personally in an act of fraud in the discharge of his
duties under this Agreement that demonstrably discredits the Corporation
and that cannot be cured, or (C)&nbsp;continued for 30&nbsp;days following written
notice from the Corporation to engage in activities that are not
contemplated or permitted by this Agreement and that involve a material
conflict of interest with Employee&#146;s duties and responsibilities under
this Agreement, or (D)&nbsp;continued for 30&nbsp;days following written notice
from the Corporation to fail substantially to perform the material duties
of his office (other than as a result of total or partial incapacity due
to physical or mental illness or disability), or (E)&nbsp;failed to cure,
within 30&nbsp;days following written notice from the Corporation, any
material breach of the material terms of this Agreement or of any written
noncompetition, nondisclosure or nonsolicitation policy or agreement to
which


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<P align="left" style="margin-left:2%; font-size: 10pt">Employee is at the time subject or by which he is at the time bound.
The Corporation&#146;s written notice to Employee referred to in (C), (D)&nbsp;and
(E)&nbsp;above will not be deemed to have been given unless it identifies with
particularity the asserted basis or bases for a for-Cause termination and
requests, with specific reference to this Section&nbsp;4.1(b)(i), that it or
they be corrected or cured.



<P align="left" style="margin-left:2%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Corporation by written notice may terminate Employee&#146;s
employment for Cause at any time following the occurrence of an event
described in Section&nbsp;4.1(b)(i)(A) above. Within 10&nbsp;days following the
occurrence of an act described in Section&nbsp;4.1(b)(i)(B) above, or
following the end of the 30-day correction or cure period described in
any of Section&nbsp;4.1(b)(i)(C), (D)&nbsp;or (E)&nbsp;above, if the basis or bases
asserted by the Board for a for-Cause termination thereunder have not
been corrected or cured, the Board shall give written notice to Employee
setting forth with particularity the asserted basis or bases for a
for-Cause termination and giving Employee a reasonable opportunity,
including reasonable access to information and documents, to appear with
counsel before the Board to contest the asserted basis or bases for such
termination. Employee shall not be treated as having been terminated for
Cause unless, following such opportunity to contest the basis or bases
for termination, the Board determines in writing by the affirmative vote
of a majority of its members that the asserted basis or bases for
termination exist under Section&nbsp;4.1(b)(i)(B) through (E), as applicable,
above and that Employee is therefore terminated for Cause. During the
pendency of any process described in the immediately preceding sentence,
the Corporation may transfer some or all of Employee&#146;s duties and
responsibilities to one or more other persons, but until Employee&#146;s
employment is terminated in accordance with the preceding provisions of


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<P align="left" style="margin-left:2%; font-size: 10pt">this Section&nbsp;4.1(b)(ii) he shall continue during the Agreement Term
to be entitled to all the remuneration and employee benefits to which he
would otherwise be entitled as an active employee under this Agreement.
In any proceeding before the Board described in this Section&nbsp;4.1(b)(ii),
where Employee&#146;s good faith in the performance of his duties is in
question, such good faith shall be presumed unless the preponderance of
the evidence indicates otherwise.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<U>By Reason of Serious Illness or Disability</U>. In the event of
Employee&#146;s Serious Illness or Disability during Employment, the Corporation may
terminate Employee&#146;s Employment by giving Employee at least 60&nbsp;days&#146; advance
written notice specifying the date of termination. If, on or before the date
of termination specified in such notice, Employee recovers and is again able to
perform his duties hereunder, such notice shall be void, and Employee&#146;s
Employment shall not be terminated thereby.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.2. <U>Termination of Employment By Employee</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U>For Good Reason, <i>etc</i></U>. Employee shall have the right to
terminate his Employment for Good Reason, unless the Corporation prior to such
termination shall have cured the asserted basis for the Good Reason claim, by
giving not less than 30&nbsp;days&#146; prior written notice to the Corporation, which
notice must be given within six calendar months after the event giving rise to
the Good Reason. Employee shall also have the right to terminate his
Employment at any time by written notice to the Corporation in the
circumstances described in Section&nbsp;1.19(iv).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Other Than For Good Reason</U>. Employee shall have the right to
terminate his Employment at any time for any reason other than as described in
Section&nbsp;4.2(a) above in his sole discretion by giving not less than 90&nbsp;days&#146;
prior written notice to the Corporation, which notice may not be given after
the Corporation has provided a written notice of termination to


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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">Employee under Section&nbsp;4.1(b). Upon receipt of any such notice from
Employee, the Corporation shall have the option, exercisable by giving Employee
written notice within 30&nbsp;days of such receipt, to designate any date (not
earlier than 30&nbsp;days after the date of Employee&#146;s notice) as the date on which
Employee&#146;s Employment shall cease. The effective date of the Termination of
Employment hereunder shall be the date so designated by the Corporation if
earlier than the date specified by Employee. In no event shall the Termination
of Employment by the Corporation without Cause, by Employee as described in
Section&nbsp;4.2(a) or by reason of a Failure to Extend be deemed to be a
Termination of Employment by Employee pursuant to this Section&nbsp;4.2(b).



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.3. <U>Other Termination of Employment</U>. Employee&#146;s
Employment shall also terminate on Employee&#146;s death.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.4. <U>Resignation as Member of the Board of Directors</U>. A
Termination of Employment shall constitute, unless otherwise requested by the
Board, Employee&#146;s resignation as a member of the Corporation&#146;s Board of
Directors, effective on the date of the Termination of Employment.


<P align="center" style="font-size: 10pt"><B>ARTICLE 5</B>



<div align="center" style="font-size: 10pt"><U><B>COMPENSATION AND BENEFITS FOLLOWING TERMINATION OF EMPLOYMENT</B></U></div>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.1. <U>Voluntary Termination Pursuant to Section&nbsp;4.2(b)</U>. If
the Termination of Employment is a voluntary termination pursuant to Section
4.2(b), Employee shall be entitled to payment of all accrued but unpaid Base
Salary amounts.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.2. <U>Termination for Cause</U>. In the event of a Termination
of Employment for Cause, Employee shall be entitled to payment of all accrued
but unpaid Base Salary amounts. Any award made on or after the Effective Date
under the Annual Incentive Plan that is


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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">outstanding at the time of the Termination of Employment, and all awards,
if any, of Options, Performance Share Awards, and/or Restricted Stock that were
made on or after the Effective Date and that are outstanding at the time of the
Termination of Employment shall be forfeited or canceled without payment.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.3. <U>Qualifying Termination (Other Than by Reason Of
Death)</U>. If there is a Qualifying Termination (other than by reason of
Employee&#146;s death), Employee shall be entitled to prompt payment of all accrued
but unpaid Base Salary amounts and all amounts payable (but unpaid) under the
Annual Incentive Plan with respect to any year ended on or prior to the
Qualifying Termination, plus the following:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U>Continuation of Base Salary</U>. Unless such Qualifying
Termination shall have been by reason of a Qualifying Termination described in
Section&nbsp;1.19(iv):



<P align="left" style="margin-left:2%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Corporation shall pay to Employee in cash, on the normal
payroll schedule applicable to his Base Salary, cash compensation at an
annual rate equal to his Base Salary as in effect at the time of the
Qualifying Termination. Such cash compensation shall continue to be paid
until the later of the expiration of the Agreement Term or the first
anniversary of the date of the Qualifying Termination; provided, that if
the Qualifying Termination is by reason of a Failure to Extend, such cash
compensation shall continue to be paid following the date of the
Termination of Employment only until the first anniversary of the date of
notification by the Corporation constituting the Failure to Extend. The
Corporation may accelerate the payment of any portion or all of any
amount payable under this Section&nbsp;5.3(a)(i).



<P align="left" style="margin-left:2%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Notwithstanding (i)&nbsp;above, if Employee obtains other employment
(including self-employment, but excluding service on boards of directors)
following his


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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Termination of Employment hereunder, any income received by Employee
from such employment shall reduce, on a dollar-for-dollar basis (but not
below zero), the Corporation&#146;s obligation to pay cash compensation to
Employee pursuant to this Section&nbsp;5.3(a). If the Corporation has already
paid any cash compensation under Section&nbsp;5.3(a)(i) to which an offset
would otherwise have applied, Employee shall promptly reimburse the
Corporation the amount of such compensation. In the event of a
Qualifying Termination by reason of Serious Illness or Disability, if
Employee becomes entitled to and receives disability benefits under any
disability payment plan, including disability insurance, the amount of
cash compensation otherwise payable by the Corporation to Employee
pursuant to Section&nbsp;5.3(a) shall be paid at a rate equal to the excess of
(A)&nbsp;the rate at which such cash compensation would otherwise be paid over
(B)&nbsp;the disability benefits for which Employee is eligible under such
plan or insurance to the extent those benefits are attributable to
premium payments made by the Corporation.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U>Annual Incentive Plan</U>. Except in the case of a Qualifying
Termination by reason of a Failure to Extend and except as hereinafter
provided, the Corporation shall pay to Employee at the time of payment of
awards to other participants in the Annual Incentive Plan for the year in which
the Qualifying Termination occurs (even if Employee is not employed by the
Corporation on the last day of such year) a prorated amount equal to (i)&nbsp;the
award that would have been payable to Employee for such year had he remained in
Employment, based on actual results for such year, multiplied by (ii)&nbsp;a
fraction, the numerator of which is the number of days of Employment during
such year and the denominator of which is 365. In the case of a Qualifying
Termination described in Section&nbsp;1.19(iv), the Corporation shall promptly
accelerate the payment of the prorated Annual Incentive Plan payment described
in this Section&nbsp;5.3(b). In the


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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">case of any other Qualifying Termination subject to this Section&nbsp;5.3, the
Corporation in its discretion may accelerate the payment of any portion or all
of such prorated Annual Incentive Plan payment. In any case where payment
under this Section&nbsp;5.3(b) is accelerated, the amount determined under clause
(i)&nbsp;above shall be the award that the Board determines Employee would have
received for the year in which the Qualifying Termination occurs based on the
Board&#146;s determination of the likelihood of the Corporation&#146;s achievement of
targets for such year.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Performance Share Awards</U>. Notwithstanding any provision of the
Stock Compensation Plan to the contrary, in the case of any Qualifying
Termination, the Corporation shall deliver to Employee all amounts payable (but
unpaid) under any Performance Share Award with respect to an Award Cycle that
had ended as of the date of the Termination of Employment plus, with respect to
each Performance Share Award then held by Employee as to which at least 18
months of the related Award Period has elapsed as of the date of the
Termination of Employment, after the end of such Award Period, the product of
(i)&nbsp;the award that would have been payable to Employee for such Award Period
had he remained in Employment, based on actual results for such Award Period,
and (ii)&nbsp;a fraction, the numerator of which is the number of days of Employment
in such Award Period and the denominator of which is the total number of days
in such Award Period. In the case of a Qualifying Termination described in
Section&nbsp;1.19(iv), the Corporation shall promptly accelerate the payment of all
prorated Performance Share Award payments described in this Section&nbsp;5.3(c). In
the case of any other Qualifying Termination subject to this Section&nbsp;5.3, the
Corporation in its discretion may accelerate the payment of any portion or all
of any such payments. In any case where payment under this Section&nbsp;5.3(c) is
accelerated, the amount determined under clause (i)&nbsp;above shall be the award
that the Board determines Employee would have received for the Award Period in


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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">which the Qualifying Termination occurs based on the Board&#146;s determination
of the likelihood of the Corporation&#146;s achievement of targets for such Award
Period.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;<U>Restricted Stock</U>. All Restricted Stock granted to Employee
after July&nbsp;1, 2003 shall continue to vest on the same basis as if Employee had
remained employed through June&nbsp;30, 2007.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;<U>Medical and Dental Coverage</U>. In the case of a Qualifying
Termination by reason of a termination by the Corporation without Cause or by
Employee for Good Reason, to the extent permitted under the Corporation&#146;s
medical and dental plans the Corporation shall continue the medical and dental
coverage elected by Employee for Employee and Employee&#146;s spouse and dependents
(but in the case of employee&#146;s dependents only for so long as they remain
dependents or until age 21 if later), without premium payments by Employee,
until the end of the Agreement Term. If, for any reason, it is not possible
for Employee, Employee&#146;s spouse or the other eligible dependents of Employee to
participate in medical and dental coverage pursuant to the immediately
preceding sentence, the Corporation shall make arrangements to provide
comparable coverage.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.4. <U>Termination of Employment By Reason of Death</U>. If
there is a Termination of Employment by reason of Employee&#146;s death, then in
addition to the payment to Employee&#146;s estate of Employee&#146;s accrued but unpaid
Base Salary:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Annual Incentive Plan</U>. The Corporation shall pay to Employee&#146;s
designated beneficiary or, if none, to Employee&#146;s estate, as soon as is
practicable after the date of Employee&#146;s death, all amounts payable (but
unpaid) under the Annual Incentive Plan with respect to any year ended on or
prior to death plus, for the year of death, a prorated amount equal to (i)&nbsp;the
award that the Board determines Employee (had he lived) would have received for
the


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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">year in which his death occurs based on the Board&#146;s determination of the
likelihood of the Corporation&#146;s achievement of targets for such year,
multiplied by (ii)&nbsp;a fraction, the numerator of which is the number of days of
Employment during such year prior to his death and the denominator of which is
365.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U>Performance Share Awards</U>. The Corporation shall pay to
Employee&#146;s designated beneficiary or, if none, to Employee&#146;s estate, as soon as
is practicable after the date of Employee&#146;s death, all amounts payable (but
unpaid) under any Performance Share Award with respect to an Award Cycle that
had ended on or prior to the date of death, plus an amount with respect to
Performance Share Awards made for each Award Period that had not ended prior to
the date of death and as to which at least 18&nbsp;months had elapsed prior to the
date of death equal to the award that the Board determines Employee (had he
lived) would have received for the Award Period in which his death occurs based
on the Board&#146;s determination of the likelihood of the Corporation&#146;s achievement
of targets for such Award Period, multiplied by a fraction, the numerator of
which is the number of days in the Award Period that had elapsed prior to
Employee&#146;s death and the denominator of which is the total number of days in
the Award Period.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<U>Restricted Stock</U>. All Restricted Stock granted to Employee
after July&nbsp;1, 2003 shall continue to vest on the same basis as if Employee had
remained employed through June&nbsp;30, 2007.


<P align="center" style="font-size: 10pt"><B>ARTICLE 6</B>



<div align="center" style="font-size: 10pt"><U><B>MISCELLANEOUS</B></U></div>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.1. <U>Noncompetition</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Following Termination of Employment for any reason other than for
Cause or by reason of a voluntary termination by Employee pursuant to Section
4.2(b), during the period


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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">from the date of the Termination of Employment to the later of the last
day of the Agreement Term or the first anniversary of the date of the
Termination of Employment Employee shall not, directly or indirectly, (i)
Compete in the United States, (ii)&nbsp;solicit any officer or employee of the
Corporation or any of its affiliates to engage in any conduct prohibited hereby
for Employee or to terminate any existing relationship with the Corporation or
such affiliate or (iii)&nbsp;assist any other person to engage in any activity in
any manner prohibited hereby to Employee. Following Termination of Employment
for Cause or by reason of a voluntary termination by Employee pursuant to
Section&nbsp;4.2(b), Employee shall not, directly or indirectly, engage in any of
the activities described in (i), (ii)&nbsp;or (iii)&nbsp;of the immediately preceding
sentence during the one-year period following the date of the Termination of
Employment. In any case where Employee is contemplating an activity described
in Section&nbsp;6.1(a)(i) above, other than an activity described in Section&nbsp;1.7(ii)
or (iii)&nbsp;or an activity described in Section&nbsp;1.7(i) as it relates to the
secondary mortgage market, the Board, upon the request of Employee for a
waiver, shall determine in good faith whether Employee&#146;s engaging in the
proposed activity would prejudice the interests of the Corporation and shall
not unreasonably withhold its consent to such request for a waiver if it
determines that the proposed activity would not prejudice the interests of the
Corporation.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The need to protect the Corporation against Employee&#146;s competition, as
well as the nature and scope of such protection, has been carefully considered
by the parties hereto in light of the uniqueness of Employee&#146;s talent and his
importance to the Corporation. Accordingly, Employee agrees that, in addition
to any other relief to which the Corporation may be entitled, the Corporation
shall be entitled to seek and obtain injunctive relief (without the requirement
of a bond) from a court of competent jurisdiction for the purpose of
restraining Employee from any actual or threatened breach of the covenant
contained in Section&nbsp;6.1(a).


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;If for any reason a final decision of any court determines that the
restrictions under this Section&nbsp;6.1 are not reasonable or that the
consideration therefore is inadequate, such restrictions shall be interpreted,
modified or rewritten by such court to include as much of the duration, scope
and geographic area identified in this Section&nbsp;6.1 as will render such
restrictions valid and enforceable.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.2. <U>Payment of Certain Expenses</U>. As promptly as permitted
by law the Corporation shall pay or advance to Employee all legal fees and
expenses that Employee may reasonably incur as a result of any contest or
arbitration requested by the Corporation, Employee or others of the validity or
enforceability of, or liability under, any provision of this Agreement
(including any contest initiated by Employee concerning the amount of any
payment due pursuant to this Agreement), plus in each case interest at the
applicable federal rate provided for in Section&nbsp;7872(f)(2)(A) of the Internal
Revenue Code of 1986, as amended, on any payment of legal fees and expenses
that is delayed by more than 10&nbsp;days following delivery by Employee to the
Corporation of a proper request for payment. If as to any such contest or
arbitration Employee does not prevail, and only in such case, within 10&nbsp;days
following written demand from the Corporation Employee shall repay any advance
made by the Corporation pursuant to the immediately preceding sentence with
respect to such contest or arbitration, with interest at the applicable federal
rate provided for in Section&nbsp;7872(f)(2)(A) of the Internal Revenue Code of
1986, as amended, from the date of the Corporation&#146;s payment.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.3. <U>Assignment by Employee</U>. Except as otherwise expressly
provided herein or in the Corporation&#146;s benefit plans, the obligations, rights
and benefits of Employee hereunder are personal to him, and no such obligation,
right or benefit shall be subject to voluntary or involuntary alienation,
assignment, delegation or transfer.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.4. <U>No Funding Required</U>. Nothing in this Agreement shall
be construed as requiring the Corporation to establish a trust or otherwise to
fund any payments to be made under this Agreement, but the Corporation in its
discretion may establish such nonqualified trusts or other arrangements as it
determines to be appropriate to assist it in meeting its obligations under this
Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.5. <U>Disclosure of Information to the Corporation</U>. In the
event Section&nbsp;5.3 becomes applicable, Employee or, in the event of Employee&#146;s
incapacity or death, his personal representative shall make available to the
Corporation on a confidential basis such records, documents and other
information reasonably necessary to enable the Corporation to verify the amount
of income available to offset the payments otherwise due Employee.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.6. <U>Nondisclosure of Confidential Information</U>. Employee
acknowledges that he is bound by the terms of an Agreement on Ideas, Inventions
and Confidential Information dated March&nbsp;16, 2001. Nothing in this Agreement
shall be construed as limiting Employee&#146;s obligations under the aforesaid
Agreement on Ideas, Inventions and Confidential Information or any successor
thereto, which shall be treated for all purposes also as obligations of
Employee under this Agreement. This Agreement in no way limits the ability of
Employee to provide information covered by this Agreement to a government
entity in order to assist the government entity in the fulfillment of its
duties.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.7. <U>Waiver</U>. The failure of either party hereto to insist
upon strict compliance by the other party with any term, covenant or condition
of this Agreement shall not be deemed a waiver of such term, covenant or
condition, nor shall any waiver or relinquishment or failure to insist upon
strict compliance of any right or power hereunder at any one time or more times
be deemed a waiver or relinquishment of such right or power at any other time
or times.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.8. <U>Notice</U>. Any notice required or desired to be given
pursuant to this Agreement shall be sufficient if transmitted in writing by
hand delivery or sent by prepaid courier or by registered or certified mail,
postage prepaid, (i)&nbsp;if notice is to the Corporation, to the Corporation&#146;s
address hereinafter set forth, or (ii)&nbsp;if notice is to Employee, to Employee&#146;s
address in the metropolitan District of Columbia area contained in the records
of the Corporation, or, in either such case, to such other address of a party
as such party may designate in writing and transmit to the other party in such
manner. Any such notice shall be deemed given, if transmitted by hand
delivery, one business day after deposit with a prepaid courier service or, if
sent by registered or certified mail, three business days after deposit in the
United States mail.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.9. <U>Applicable Law</U>. This Agreement shall be governed by
the laws of the District of Columbia without regard to any otherwise applicable
conflict of laws principles.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.10. <U>Taxes</U>. The Corporation shall deduct from all amounts
payable under this Agreement all federal, state, local and other taxes required
by law to be withheld with respect to such amounts.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.11. <U>Benefit</U>. Except as otherwise expressly provided
herein, this Agreement shall inure to the benefit of and be binding upon the
Corporation, its successors and assigns, and upon Employee, his spouse, heirs,
executors and administrators. The Corporation shall require any successor
(whether direct or indirect, by purchase, merger, reorganization,
consolidation, acquisition of property or stock, liquidation or otherwise) to
all or a substantial portion of its assets, by agreement in form and substance
reasonably satisfactory to Employee, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Corporation
would be required to perform this Agreement if no such succession had taken
place.


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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">Regardless of whether such an agreement is executed, this Agreement shall
be binding upon any successor of the Corporation, and such successor shall be
deemed the &#147;Corporation&#148; for purposes of this Agreement.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.12. <U>Entire Agreement</U>. This Agreement contains the entire
understanding and agreement between the parties relating to the terms of
Employee&#146;s employment by the Corporation and, except as otherwise provided in
Section&nbsp;6.15, supersedes all prior written or oral agreements between them,
other than the Agreement on Ideas, Inventions and Confidential Information
dated March&nbsp;16, 2001 and an Indemnification Agreement between the Corporation
and Employee. This Agreement cannot be amended, modified or supplemented in
any respect except by an agreement in writing signed by both parties hereto.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.13. <U>Arbitration</U>. Any controversy or claim arising out of
or relating to this Agreement or the breach of this Agreement shall be settled
by arbitration in the District of Columbia in accordance with the laws of the
District of Columbia. The arbitration shall be conducted in accordance with
the applicable rules of the American Arbitration Association. The costs and
expenses of the arbitrator(s) shall be borne by the Corporation. Except as
otherwise provided in Section&nbsp;6.2, each party shall pay his or its own legal
costs and other expenses (other than the costs and expenses of the
arbitrator(s)) relating to an arbitration. The award of the arbitrator(s)
shall be binding upon the parties. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.14. <U>Severability</U>. Except as otherwise provided in
Section&nbsp;6.15, it is the intent and understanding of each party hereto that, if
any term, restriction, covenant or promise herein is found to be invalid or
otherwise unenforceable, then such term, restriction, covenant or promise shall
not thereby be invalid or unenforceable but shall be deemed modified to the
extent


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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">necessary to make it enforceable and, if it cannot be so modified, shall
be deemed amended to delete therefrom such provision or portion found to be
invalid or unenforceable, such modification or amendment in any event to apply
only with respect to the operation of this Agreement in the particular
jurisdiction in which such finding is made.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.15. <U>Regulatory Approval</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The parties hereto acknowledge and agree that pursuant to Section 309(d)
of the Federal National Mortgage Association Charter Act, as amended by the
Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (as so
amended, the &#147;Act&#148;), 12 U.S.C. 1723a(d), no provision of this Agreement
relating to Employee&#146;s benefits upon termination of employment shall be
effective unless and until such provision has been reviewed and approved by the
Director (the &#147;Director&#148;) of the Office of Federal Housing Enterprise Oversight
(&#147;OFHEO&#148;). The parties therefore agree as follows:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The Corporation shall promptly hereafter submit this Agreement to the
Director for his review and approval of those terms hereof relating to benefits
upon termination of employment and shall seek diligently to obtain such
approval;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;This Agreement shall take effect as of the Effective Date if the
Director&#146;s approval of terms hereof relating to benefits upon termination of
employment is given by January&nbsp;1, 2005. If such approval does not occur by
such date, Employee shall have the benefit of all other terms of this Agreement
until that date and Employee, in his sole discretion, may designate that
failure to obtain approval as a &#147;failure of the Corporation to extend&#148; the
Existing Agreement.


<P align="center" style="font-size: 10pt"><B>&#091;remainder of this page intentionally left blank&#093;</B>



<P align="center" style="font-size: 10pt">-24-
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized representative, and Employee has executed this
Agreement.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="25%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Witness:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>FANNIE MAE</B></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">3900 Wisconsin Avenue, N.W.</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Washington, D.C. 20016</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="37%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="58%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="37%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="58%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#95;&#95;&#95;/s/ Monica Medina&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:&#95;&#95;&#95;/s/ Anne Mulcahy&#95;&#95;&#95;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;Chairman of the Compensation</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;Committee of the Board</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><br></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><br></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date:&#95;&#95;&#95;4/19/04&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Date:&#95;&#95;&#95;4/19/04&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><br></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><br></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Witness:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><br></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><br></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#95;&#95;&#95;/s/ Judith C. Dunn&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#95;&#95;&#95;/s/ J. Timothy Howard&#95;&#95;&#95;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>J. TIMOTHY HOWARD</B></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><br></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><br></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date:&#95;&#95;&#95;5/5/04&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Date:&#95;&#95;&#95;5/5/04&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>




<P align="center" style="font-size: 10pt">-25-
</DIV>


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