Exhibit 10.1

United States of America

Office of Federal Housing Enterprise Oversight (OFHEO)
and
Federal National Mortgage Association (Fannie Mae)

Supplement to the Agreement of September 27, 2004

The Office of Federal Housing Enterprise Oversight (OFHEO) and the Federal
National Mortgage Association (Fannie Mae), as authorized by its Board of
Directors (the Board), agree that events have transpired that support
supplemental terms (“Supplement”) to the Agreement of September 27, 2004
(“Agreement”). Because of concerns at OFHEO with internal controls and
resolution of other organizational problems and following determinations by the
Securities and Exchange Commission, public filings by Fannie Mae,
reclassification of the capital position of Fannie Mae and actions taken by the
Board since the Agreement of September 27, 2004, OFHEO and Fannie Mae hereby
agree to the following:

I. Agreement of September 27, 2004

Except as noted in this Supplement, the Agreement of September 27, 2004 remains
in effect and undertakings by Fannie Mae under the Agreement should proceed.

II. Supplementary Actions

In addition to the commitments made in the September 27, 2004 Agreement, the
Board consistent with its fiduciary duties, shall take the following actions:

A. Internal Controls

1. The Board shall cause to be conducted a review of procedures surrounding the
preparing, revising, validating, authorizing and recording of journal entries
and a report to OFHEO on the results of such review, including a description of
how deficiencies will be resolved.

2. The Board shall direct management to develop and implement written policies
and procedures for journal entries. Such policies and procedures must include,
but are not limited to,

prohibition of employees from falsifying signatures in journal entries as well
as from signing such entries without proper authorization;

requirements that journal entry preparers understand the purpose for which the
journal entry is made;

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requirements that journal entry reviewers and approvers determine that an entry
is valid and appropriate;

requirements that journal entries be supported by appropriate documentation;
and,

requires that journal entries be independently reviewed by an authorized person
other than the preparer.

3. The Board shall direct management to develop and implement a plan that
addresses deficiencies in the current portfolio accounting system, including,
but not limited to, ensuring the ability to:

calculate the amortization of deferred price adjustments pursuant to SFAS 91;

automate marking the mortgage-backed securities portfolio to market, to the
degree practicable;

properly account for mortgage revenue bonds;

properly account for dollar roll transactions; and,

properly account for interest-only strips pursuant to EITF 99-20.

The implementation of the plan shall be subject to no less than quarterly
reporting to OFHEO until completion.

4. The Board shall direct management to undertake a review to assess and correct
deficiencies in internal controls relating to modifications of databases
supporting the general ledger. The Board shall direct management to adopt
appropriate internal controls, including for documentation, to govern when, if
ever, technology application support personnel, at the direction of management,
may overwrite database records in order to make changes or corrections. The
report shall be submitted to OFHEO for review and the implementation plan shall
be the subject of no less than quarterly status reports until completion.

B. Organization and Staffing

1. CEO and CFO Positions

The Board has separated the functions of Chief Executive Officer and Chairman of
the Board and shall report to OFHEO on the segregation of duties between these
two positions within forty

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five days. The Board shall provide OFHEO within ten business days its written
requirements for a new Chief Executive Officer and Chief Financial Officer, the
status of its search for these positions and its search criteria.

2. Personnel

The Board shall consult with OFHEO on matters relating to organization and
staffing pursuant to the Agreement and this Supplement and the Board shall
direct management to act expeditiously to make changes, particularly regarding
disciplinary or other actions relating to individuals, to address concerns
raised by OFHEO in the course of its review of matters that are the subject of
the Agreement and this Supplement.

3. Separated Employees

The Board agrees that Mr. Franklin Raines and Mr. Timothy Howard may not be
engaged, employed or otherwise provide services to Fannie Mae, whether for
compensation or not, subsequent to the separation of these employees from Fannie
Mae, unless otherwise required by law. Fannie Mae may apply to OFHEO for
approval to utilize such individuals to meet obligations it may have under
regulations or regulatory agreements. Nothing herein precludes the participation
of these individuals in any government inquiry, regulatory matter, litigation,
internal investigation or information-gathering related thereto. Fannie Mae
shall seek OFHEO’s approval should it wish to engage, employ or otherwise secure
services from other employees separated from the company as a result of matters
arising from OFHEO’s report of finding of September 20, 2004.

C. Governance

1. Legal and Regulatory Compliance

The Board shall cause to be conducted a review of Fannie Mae’s legal and
regulatory compliance structures. Such review shall include recommendations for
changes to organizational structures, responsibilities and personnel. Such
review shall address as well the structures needed to meet compliance
requirements under law and regulation, particularly for regulatory reporting
(internal controls and validation of the accuracy of regulatory reporting) and
for related data processing services. The Board shall report to OFHEO on the
results of such review and shall consult with OFHEO on changes Fannie Mae
proposes to undertake.

2. Annual Reviews of Compliance Program and Responsibilities

The Board shall cause to be created a program for no less than annual briefings
for the Board and senior management on the legal and regulatory requirements
applicable to Fannie Mae as well as reviewing policies or practices that may
inhibit effective compliance with such legal and

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regulatory requirements. Within twelve months of the date of this Supplement,
the Board shall oversee the conduct of an audit and review, by an independent
external party, of the operation of its compliance program and a report of this
independent audit and review shall be provided to OFHEO on a timely basis.

3. Internal Investigation Function

The Board has directed management to create a new Office of Compliance and
Ethics that reports to the Chief Executive Officer and independently to the
Board’s Audit Committee. Such office shall be headed by an individual who has no
other responsibilities at Fannie Mae and who shall operate independently,
including the ability to communicate with OFHEO and the Board independent of
management, particularly on matters of wrongdoing. Such office shall include a
separate internal investigation function that has access to adequate resources
to perform its functions that shall include review of internal complaints,
whistleblower reports, ethics matters and related topics. Such investigation
function shall report on its findings to OFH EO in a prompt manner. The head of
such office may only be hired or removed upon approval of the Board.

OFHEO will review the operational, staffing and resource plans for this office
which shall be submitted within one hundred and twenty days of this Supplement.

4. Report of General Counsel

The Board shall cause to be created a procedure directing the General Counsel,
in meeting the counsel’s professional and ethical duties to Fannie Mae, to
report in a timely fashion directly to the Board any information the counsel
becomes aware of relating to actual or possible misconduct that relates to or
may affect Fannie Mae by an executive officer, as defined by OFHEO regulation,
or a Board director, or such actual or possible misconduct of a not
inconsequential nature by employees. The procedure shall provide for the Board
to inform the Director of OFHEO of the substance of such allegations, with any
comments by the Board, in a timely manner. Should the Board fail to notify OFHEO
in a timely manner, the General Counsel shall notify OFHEO of the information
reported to the Board. Such procedure shall be submitted to OFHEO for its review
forty-five days from the date of this Agreement.

5. Review of Bylaws and Codes of Conduct

The Board shall cause to be conducted a review and appropriate revision of
bylaws and codes of conduct to assure that they support legal and regulatory
compliance.

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D. Accounting

1. Fannie Mae will assure that in any future engagement of an external auditor
the engagement letter shall provide that (a) upon OFHEO’s request, the external
auditor will provide OFHEO with access to senior audit partners on the
engagement and any other personnel whom such partners deem necessary, (b) OFHEO
has access to the auditor’s working papers prepared in the course of performing
the services set forth in the letter and (c) OFHEO has such access to the
external auditor without Fannie Mae personnel in attendance.

2. Fannie Mae will conduct a restatement of prior period financial statements as
necessary and have such financial statements reaudited by Fannie Mae’s new
external auditor consistent with the auditing standards of the Public Company
Accounting Oversight Board. Changes occurring as a result of such reaudit and
restatement shall be reported promptly to OFHEO. The Board shall direct the
Audit Committee to direct management to take all necessary actions to assure
that Fannie Mae’s accounting policies and practices conform to GAAP, disclosure
and other regulatory standards. In addition to reviewing current practices
concerning SFAS 91 and SFAS 133, Fannie Mae should focus attention on, among
other standards, SFAS 115, 140, 65, 149 and FIN 46.

3. The following provisions of the September 27th Agreement, because of
intervening events, are hereby rescinded— Section I (2)(b)(i), (iv)-(vi) and
(3)(c) and (d).

E. Capital

The Board authorized Fannie Mae’s filing of a capital restoration plan on
February 10, 2005, as provided in the September 27, 2004 Agreement and
consistent with such other requirements as provided by OFHEO in written
communications with OFHEO. The Board shall oversee management’s diligent and
good faith pursuit of the commitments set forth in such plan, as approved by
OFHEO on February 17, 2005.

III. Other Provisions

1. Effect of Supplementary Agreement

(a) This Supplement to the Agreement of September 27, 2004 is binding and may be
enforced by OFHEO as a “written agreement” for purposes of 12 USC 4631. This
Supplement is effective until modified or terminated in writing by OFHEO.

(b) This Supplement and the Agreement do not supplant any other duties or
obligations of the Board and Fannie Mae or affect the authority of other
government agencies.

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(c) Each provision of this Supplement and the Agreement shall remain effective
and enforceable until modified, terminated or suspended in writing by the
Director. The Director and Fannie Mae understand that in determining whether to
take such steps, consideration shall be given to whether internal controls of
Fannie Mae have been enhanced and are consistent with safety and soundness and
whether Fannie Mae’s accounting policies and methodology are satisfactory to
OFHEO.

(d) Nothing in this Supplement or the Agreement prevents Fannie Mae from seeking
the Director’s determination to modify, terminate or suspend any provision
therein.

2. Savings Clauses

(a) Nothing contained herein precludes additional actions by OFHEO on matters
addressed by this Supplement or the Agreement or discovered in the course of
carrying forward the actions
provided for herein nor action by OFHEO on past or present matters or matters
subsequently raised by its ongoing review of Fannie Mae.

(b) In entering into this Agreement, Fannie Mae neither admits nor denies any
wrongdoing or any asserted or implied finding in this Agreement.

Agreed to this 7th day of March, 2005.

     
/s/ Armando Falcon, Jr.
 

 
   
Armando Falcon, Jr.
Director
Office of Federal Housing Enterprise Oversight
 

 
   
/s/ Stephen B. Ashley
 

 
 

Stephen Ashley
Non-Executive Chairman of the

Board of Directors

on behalf of Fannie Mae

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