Exhibit 10.2
UNITED STATES DISTRICT COURT
DISTRICT OF COLUMBIA

SECURITIES AND EXCHANGE
COMMISSION,
100 F Street, NE
Washington, DC 20549,
Plaintiff,
     v.
FEDERAL NATIONAL MORTGAGE
ASSOCIATION,
3900 Wisconsin Avenue, NW
Washington, DC 20016
Defendant.
 

CONSENT OF DEFENDANT FEDERAL NATIONAL MORTGAGE ASSOCIATION
     1. Defendant Federal National Mortgage Association (“Defendant”) waives
service of a summons and the Complaint in this action, enters a general
appearance, and admits the Court’s jurisdiction over Defendant and over the
subject matter of this action.
     2. Without admitting or denying the allegations of the Complaint (except as
to personal and subject matter jurisdiction, which Defendant admits), Defendant
hereby consents to the entry of the final Judgment in the form attached hereto
(the “Final Judgment”) and incorporated by reference herein, which, among other
things:

  (a)   permanently restrains and enjoins Defendant from violation of Sections
10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934
(“Exchange Act”) [15 U.S.C. §§ 78j(b); 78m(a); 78m(b)(2)(A); and 78m(b)(2)(B)],
and Rules 10b-5, 12b-20, 13a-1, 13a-11, and 13a-13

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      [17 C.F.R. §§ 240.10b-5; 240.12b-20; 240.13a-1; 240.13a-11; and
240.13a-13] promulgated thereunder, and Sections 17(a)(2) and (3) of the
Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77q(a)(2) and (3)];

  (b)   orders Defendant to pay disgorgement in the amount of $1; and

  (c)   orders Defendant to pay a civil penalty in the amount of $350,000,000
pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and
Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)].

     3. Defendant acknowledges that the civil penalty paid pursuant to the Final
Judgment may be distributed pursuant to the Fair Fund provisions of Section
308(a) of the Sarbanes-Oxley Act of 2002. Regardless of whether any such Fair
Fund distribution is made, the civil penalty shall be treated as a penalty paid
to the government for all purposes, including all tax purposes. To preserve the
deterrent effect of the civil penalty, Defendant agrees that it shall not, after
offset or reduction of any award of compensatory damages in any Related Investor
Action based on Defendant’s payment of disgorgement in this action, argue that
it is entitled to, nor shall it further benefit by, offset or reduction of such
compensatory damages award by the amount of any part of Defendant’s payment of a
civil penalty in this action (“Penalty Offset”). If the court in any Related
Investor Action grants such a Penalty Offset, Defendant agrees that it shall,
within 30 days after entry of a final order granting the Penalty Offset, notify
the Commission’s counsel in this action and pay the amount of the Penalty Offset
to the United States Treasury or to a Fair Fund, as the Commission directs. Such
a payment shall not be deemed an additional civil penalty and shall not be
deemed to change the amount of the civil penalty imposed in this action. For
purposes of this paragraph, a “Related Investor Action”

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means a private damages action brought against Defendant by or on behalf of one
or more investors based on substantially the same facts as alleged in the
Complaint in this action.
     4. Defendant agrees that it shall not seek or accept, directly or
indirectly, reimbursement or indemnification from any source, including but not
limited to payment made pursuant to any insurance policy, with regard to any
civil penalty amounts that Defendant pays pursuant to the Final Judgment,
regardless of whether such penalty amounts or any part thereof are added to a
distribution fund or otherwise used for the benefit of investors. Defendant
further agrees that it shall not claim, assert, or apply for a tax deduction or
tax credit with regard to any federal, state, or local tax for any penalty
amounts that Defendant pays pursuant to the Final Judgment, regardless of
whether such penalty amounts or any part thereof are added to a distribution
fund or otherwise used for the benefit of investors.
     5. Defendant waives the entry of findings of fact and conclusions of law
pursuant to Rule 52 of the Federal Rules of Civil Procedure.
     6. Defendant waives the right, if any, to a jury trial and to appeal from
the entry of the Final Judgment.
     7. Defendant enters into this Consent voluntarily and represents that no
threats, offers, promises, or inducements of any kind have been made by the
Commission or any member, officer, employee, agent, or representative of the
Commission to induce Defendant to enter into this Consent.
     8. Defendant agrees that this Consent shall be incorporated into the Final
Judgment with the same force and effect as if fully set forth therein.

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     9. Defendant will not oppose the enforcement of the Final Judgment on the
ground, if any exists, that it fails to comply with Rule 65(d) of the Federal
Rules of Civil Procedure, and hereby waives any objection based thereon.
     10. Defendant waives service of the Final Judgment and agrees that entry of
the Final Judgment by the Court and filing with the Clerk of the Court will
constitute notice to Defendant of its terms and conditions. Defendant further
agrees to provide counsel for the Commission, within thirty days after the Final
Judgment is filed with the Clerk of the Court, with an affidavit or declaration
stating that Defendant has received and read a copy of the Final Judgment.
     11. Consistent with 17 C.F.R. 202.5(f), this Consent resolves only the
claims asserted against Defendant in this civil proceeding. Defendant
acknowledges that no promise or representation has been made by the Commission
or any member, officer, employee, agent, or representative of the Commission
with regard to any criminal liability that may have arisen or may arise from the
facts underlying this action or immunity from any such criminal liability.
Defendant waives any claim of Double Jeopardy based upon the settlement of this
proceeding, including the imposition of any remedy or civil penalty herein.
Defendant further acknowledges that the Court’s entry of a permanent injunction
may have collateral consequences under federal or state law and the rules and
regulations of self-regulatory organizations, licensing boards, and other
regulatory organizations. Such collateral consequences include, but are not
limited to, a statutory disqualification with respect to membership or
participation in, or association with a member of, a self-regulatory
organization. This statutory disqualification has consequences that are separate
from any sanction imposed in an administrative proceeding. In addition, in any
disciplinary proceeding before the Commission based on the entry of the
injunction in this

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action, Defendant understands that it shall not be permitted to contest the
factual allegations of the Complaint in this action.
     12. Defendant understands and agrees to comply with the Commission’s policy
“not to permit a defendant or respondent to consent to a judgment or order that
imposes a sanction while denying the allegation in the complaint or order for
proceedings.” 17 C.F.R. § 202.5. In compliance with this policy, Defendant
agrees: (i) not to take any action or to make or permit to be made any public
statement denying, directly or indirectly, any allegation in the Complaint or
creating the impression that the Complaint is without factual basis; and
(ii) that upon the filing of this Consent, Defendant hereby withdraws any papers
filed in this action to the extent that they deny any allegation in the
Complaint. If Defendant breaches this agreement, the Commission may petition the
Court to vacate the Final Judgment and restore this action to its active docket.
Nothing in this paragraph affects Defendant’s: (i) testimonial obligations; or
(ii) right to take legal or factual positions in litigation or other legal
proceedings in which the Commission is not a party.
     13. Defendant hereby waives any rights under the Equal Access to Justice
Act, the Small Business Regulatory Enforcement Fairness Act of 1996, or any
other provision of law to seek from the United States, or any agency, or any
official of the United States acting in his or her official capacity, directly
or indirectly, reimbursement of attorney’s fees or other fees, expenses, or
costs expended by Defendant to defend against this action. For these purposes,
Defendant agrees that Defendant is not the prevailing party in this action since
the parties have reached a good faith settlement.
     14. In connection with this action and any related judicial or
administrative proceeding or investigation commenced by the Commission or to
which the Commission is a

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party, Defendant (i) agrees to make available its employees and agents to appear
and be interviewed by Commission staff at such times and places as the staff
requests upon reasonable notice; (ii) will accept service by mail or facsimile
transmission of notices or subpoenas issued by the Commission for documents or
testimony at depositions, hearings, or trials, or in connection with any related
investigation by Commission staff; (iii) appoints Defendant’s undersigned
attorney as agent to receive service of such notices and subpoenas; (iv) with
respect to such notices and subpoenas, waives the territorial limits on service
contained in Rule 45 of the Federal Rules of Civil Procedure and any applicable
local rules, provided that the party requesting the testimony reimburses
Defendant’s travel, lodging, and subsistence expenses at the then-prevailing
U.S. Government per diem rates; and (v) consents to personal jurisdiction over
Defendant in any United States District Court for purposes of enforcing any such
subpoena.
     15. Defendant agrees that the Commission may present the Final Judgment to
the Court for signature and entry without further notice.
     16. Defendant agrees that this Court shall retain jurisdiction over this
matter for the purpose of enforcing the terms of the Final Judgment.

                              Federal National Mortgage Association
 
               
Dated:
       23 May 2006       By:   /s/  Daniel H. Mudd
 
               
 
              Daniel H. Mudd
 
              President and Chief Executive Officer
 
              3900 Wisconsin Avenue, NW
 
              Washington, DC 20016

     On May 23, 2006, Daniel H. Mudd, a person known to me, personally appeared
before me and acknowledged executing the foregoing Consent with full authority
to do so on behalf of Federal National Mortgage Association as its [attorney].

      
/s/    Katherine E. Coles        
Notary Public
Commission expires:  10/14/08

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Approved as to form:

/s/   William R. McLucas                            
William R. McLucas
Wilmer Cutler Pickering Hale and Dorr LLP
2445 M Street NW
Washington, DC 20037
202-663-6000
Attorney for Defendant Federal National Mortgage Association

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