**UNITED        STATES**

**SECURITIES        AND EXCHANGE COMMISSION**

**Washington,        DC 20549**

**FORM        10-K/A**

**(Amendment        No. 1)**

**DYNEX        CAPITAL, INC.**

| **Virginia**                                                                                                      | **52-1549373**                                               |
|-------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------|
| (State                  or other jurisdiction of incorporation or organization)                                   | (I.R.S.                  Employer Identification No.)        |
|                                                                                                              |                                                         |
| **4551                  Cox Road, Suite 300, Glen Allen, Virginia**                                               | **23060-6740**                                               |
| (Address                  of principal executive offices)                                                         | (Zip                  Code)                                  |
|                                                                                                              |
| Registrant’s                  telephone number, including area code (804) 217-5800                          |
|                                                                                                              |
| Securities                  registered pursuant to Section 12(b) of the Act:                                      |
| *Title                  of each class*                                                                            | *Name                  of each exchange on which registered* |
| Common                  Stock, $.01 par value                                                                     | New                  York Stock Exchange                     |
| Series                  D 9.50% Cumulative Convertible Preferred Stock, $.01                  par value           | New                  York Stock Exchange                     |
|                                                                                                              |
| Securities                  registered pursuant to Section 12(g) of the Act:None(Title                  of class) |

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**DYNEX        CAPITAL, INC.**

**2005        FORM 10-K/A ANNUAL REPORT**

|                       |                      |                                                                                                                             | Page                  Number |
|----------------------------|---------------------------|----------------------------------------------------------------------------------------------------------------------------------|------------------------------|
| PART                  III. |                      |                                                                                                                             |                         |
|                       | Item                  10. | Directors                  and Executive Officers of the Registrant                                                              | 1                            |
|                       | Item                  11. | Executive                  Compensation                                                                                          | 3                            |
|                       | Item                  12. | Security                  Ownership of Certain Beneficial Owners and Management and Related                  Stockholder Matters | 5                            |
|                       | Item                  13. | Certain                  Relationships and Related Transactions                                                                  | 7                            |
|                       | Item                  14. | Principal                  Accounting Fees and Services                                                                          | 7                            |
|                       |                      |                                                                                                                             |                         |
| PART                  IV.  |                      |                                                                                                                             |                         |
|                       | Item                  15. | Exhibits,                  Financial Statement Schedules                                                                         | 9                            |
|                       |                      |                                                                                                                             |                         |
| SIGNATURES                 |                      | 11                                                                                                                               |
|                       |                      |                                                                                                                             |

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**PART        III**

**Item        10.**
**Directors        and Executive Officers of the Registrant**

*Directors*

**Thomas        B. Akin **

**J.        Sidney Davenport **

**Leon        A. Felman **

**Barry        Igdaloff **
** **

**Daniel        K. Osborne **

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**Eric        P. Von der Porten **
** **

*Executive        Officer*

| Name                                  | Age | Positions                  Held                                                                               |
|---------------------------------------|-----|---------------------------------------------------------------------------------------------------------------|
| Stephen                  J. Benedetti | 43  | Executive                  Vice President, Chief Operating Officer , Secretary and                  Treasurer |

**Stephen        J. Benedetti**

*Audit        Committee*

*Section        16(a) Beneficial Ownership Reporting Compliance*

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**Item        11.**
**Executive        Compensation**

*Executive        Compensation*

**Summary        Compensation Table**

|                                                                                                                                              |           | **Annual                  Compensation** | **Long-Term                  Compensation****Awards** |                                               |
|---------------------------------------------------------------------------------------------------------------------------------------------------|----------------|------------------------------------------|-------------------------------------------------------|----------------------------------------------------|
| **Name                  and Principal Position**                                                                                                  |  **Year** |  **Salary                  ($)**    |  **Bonus                  ($)**                  | **Other                  Annual Compensation ($)** |  **SARs** | **All                  Other Compensation ($)(2)** |
|                                                                                                                                              |           |                                     |                                                  |                                               |   |   |
| Stephen                  J. BenedettiExecutive                  Vice President, Chief Operating Officer, Secretary and                  Treasurer | 200520042003   | 200,000189,600183,960                    | 105,000128,000102,000                            | (1)(1)(1)                                          | 60,000-- | 14,18013,16012,160 |

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*Stock        Appreciation Rights*

**SAR        Grants in Last Fiscal Year**

|                                  | **Number                  of SARS** | **Percent                  of Total****SARs                  Granted to****Employees                  in 2005** | **Exercise                  or Base Price** | **Expiration** | **Potential                  Realizable****Value                  at Assumed Annual Rates of Stock Price Appreciation for                  Term** |
|---------------------------------------|-------------------------------------|-----------------------------------------------------------------------------------------------------------------|---------------------------------------------|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------|
| **Name**                              | **Granted**                         | **(%)**                                                                                                         | **($/Share)**                               | **Date**       | **5%                  ($)**                                                                                                                       | **10%                  ($)** |
| Stephen                  J. Benedetti | 60,000                              | 48                                                                                                              | 7.81                                        | 12-31-2011     | 86,400                                                                                                                                            | 265,200 |

**Aggregated        SAR Exercises in Last Fiscal Year**

**and        Fiscal Year-End SAR Value Table**

|                                  |                                   | **Number                  of Unexercised****SARs                  at 12-31-05** | **Value                  of Unexercised In-the-****Money                  SARS at 12-31-05** |
|---------------------------------------|----------------------------------------|---------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------|
|  **Name**                        | **Number****of                  SARs** | **Value****Realized**                                                           |  **Exercisable**                                                                        |  **Unexercisable** |  **Exercisable** |  **Unexercisable** |
|                                  |                                   |                                                                            |                                                                                         |   |   |   |
| Stephen                  J. Benedetti | 60,000                                 | $                  -                                                            | -                                                                                            | 60,000 | $- | $103,721 |

*Employment        Agreements*

** **

*Directors’        Compensation*

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*Compensation        Committee Interlocks and Insider Participation*

**Item        12.**
**Security        Ownership of Certain Beneficial Owners and Management**

*Security        Ownership of Certain Beneficial Owners and Management*

|                                                                                                                                                                                                                                                                                 | **Common                  Stock** | **Series                  D Preferred Stock** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------|-----------------------------------------------|
| **Name**                                                                                                                                                                                                                                                                             | **Shares                  (1)**   | **Percentage                  (2)**           | **Shares** | **Percentage                  (3)** |
| Thomas                  B. Akin (4)                   4551 Cox Road, Suite 300                   Glen Allen, Virginia 23060                                                                                                                                           | 1,777,770                         | 13.95%                                        | 576,645 | 13.66% |
| Stephen                  J. Benedetti                                                                                                                                                                                                                                                | 21,163                            | *                                             | -- | -- |
| J.                  Sidney Davenport                                                                                                                                                                                                                                                 | 25,356                            | *                                             | -- | -- |
| Leon                  A. Felman (5)                                                                                                                                                                                                                                                  | 147,190                           | 1.20%                                         | 67,086 | 1.59% |
| Barry                  Igdaloff (6)                   4551 Cox Road, Suite 300                    Glen Allen, Virginia 23060                                                                                                                                          | 556,671                           | 4.43%                                         | 415,118 | 9.82% |
| Daniel                  K. Osborne (7)                                                                                                                                                                                                                                               | 16,869                            | *                                             | 5,008 | * |
| Eric                  P. Von der Porten (8)                                                                                                                                                                                                                                          | 165,621                           | 1.36%                                         | 11,813 | * |
|                                                                                                                                                                                                                                                                                 |                              |                                          |   |   |
| All                  directors and executive officers as a group (7 persons)                                                                                                                                                                                                         | 2,710,591                         | 20.47%                                        | 1,075,670 | 25.48% |
|                                                                                                                                                                                                                                                                                 |                              |                                          |   |   |
| Rockwood                  Partners, L.P. (9)                   Rockwood Asset Management, Inc.                   Demeter Asset Management, Inc.                   Jay Buck                   35 Mason Street                   Greenwich, Connecticut 06830 | 967,805       | 7.86%                                         | 141,983 | 3.36%      |
| Wellington                  Management Company, LLP (10)75                  State StreetBoston,                  Massachusetts 02109                                                                                                                                                 | 671,500                           | 5.52%                                         | -- | -- |

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*Equity        Compensation Plan Information*

**Equity        Compensation Plan Information**

|  **Plan                  Categoty**                                   | **Number                  of Securities to Be Issued upon Exercise of Outstanding Options,****Warrants                  and Rights** | **Weighted                  Average****Exercise                  Price of Outstanding Options,****Warrants                  and Rights** | **Number                  of Securities Remaining Available****for                  Future Issuance****Under                  Equity****Compensation                  Plans****(2)** |
|----------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                       |                                                                                                                                 |                                                                                                                                     |                                                                                                                                                                                 |
| Equity                  Compensation Plans Approved by Shareholders:       |                                                                                                                                 |                                                                                                                                     |                                                                                                                                                                                 |
| 2004                  Stock Incentive Plan                                 | 166,297(1)                                                                                                                           | $7.97                                                                                                                                    | 1,333,703                                                                                                                                                                            |
| Equity                  Compensation Plans Not Approved by Shareholders(2) |   -                                                                                                                        |   -                                                                                                                            |   -                                                                                                                                                                        |
|                                                                       |                                                                                                                                 |                                                                                                                                     |                                                                                                                                                                                 |
| Total                                                                      | 166,297                                                                                                                              | $7.97                                                                                                                                    | 1,333,703                                                                                                                                                                            |

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**Item        13. Certain        Relationships and Related Transactions**

**Item        14.**
**Principal        Accountant Fees and Services**

*Fees        of Independent Public Accountants*

|                                                              |   | **Fiscal                  Year Ended December 31,** |    |
|-------------------------------------------------------------------|--------|-----------------------------------------------------|---------|
|                                                              |   |  **2005**                                      |    |  **2004** |   |
| Audit                  Fees:                  (1)                 |   |                                           |    |    |   |
|     BDO                  Seidman LLP          |   | $                                                   | 186,790 |   | $ | - |   |
|     Deloitte&                  Touche LLP |   |                                                | 142,190 |   |   | 294,755 |   |
| Total                  Audit Fees                                 |   |                                                | 328,980 |   |   | 294,755 |   |
|                                                              |   |                                                |    |   |   |   |   |
| Audit-Related                  Fees: (2)                          |   |                                                |    |   |   |   |   |
|     BDO                  Seidman LLP          |   |                                                | 7,700   |   |   | - |   |
|     Deloitte&                  Touche LLP |   |                                                | -       |   |   | 20,700 |   |
| Total                  Audit-Related Fees                         |   |                                                | 7,700   |   |   | 20,700 |   |
|                                                              |   |                                                |    |   |   |   |   |
| Tax                  Fees (3)                                     |   |                                                | -       |   |   | - |   |
|                                                              |   |                                                |    |   |   |   |   |
| All                  Other Fees (4)                               |   |                                                |    |   |   |   |   |
|     BDO                  Seidman LLP          |   |                                                | 16,400  |   |   | - |   |
|     Deloitte&                  Touche LLP |   |                                                | -       |   |   | - |   |
| Total                  Audit-Related Fees                         |   |                                                | 16,400  |   |   | - |   |
|                                                              |   |                                                |    |   |   |   |   |
| Total                                                             |   | $                                                   | 353,080 |   | $ | 315,455 |   |
|                                                              |   |                                                |    |   |   |   |   |

|   | (1) | Both                    2005 and 2004 Audit Fees include: (i) the audit of the Company’s                    consolidated financial statements included in its annual report                    on Form                    10-K and services attended to, or required by, statute or regulation;                    (ii)                    reviews of the interim consolidated financial statements included                    in the                    Company’s quarterly reports on Form 10-Q; (iii) comfort letters, consents                    and other services related to Securities and Exchange Commission                    (“SEC”)                    and other regulatory filings. Fees for 2005 for Deloitte & Touche LLP                    include fees incurred for the reviews on the quarterly reports                    on Form                    10-Q for the first and second quarter of 2005. The Company expects                    to                    receive additional billings from BDO Seidman LLP related to the                    completion                    of its 2005 audit. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | (2) | Audit-Related                  Fees represent professional services for assurance and related                  services                  that are reasonably related to the performance of the audit or                  review of                  the Company’s consolidated financial statements and not reported under the                  heading “Audit Fees.” During 2005, these amounts include the professional                  services provided in connection with the audit of the Company’s 401(k)                  Plan. During 2004, these services included professional services                  rendered                  in connection with the Company’s recapitalization and the audit of its                  401(k) Plan. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Tax                  Fees include tax compliance, tax planning, tax advisory and related                  services. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------|

|   | (4) | During                  2005, BDO Seidman performed certain agreed upon procedures related                  to the                  Company’s master servicing responsibilities on certain securitization                  financing issuances. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Pre-Approval        Policies and Procedures *

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**PART        IV**

**Item        15.**
**        Exhibits, Financial Statement Schedules **

| Number | Exhibit                                                                                                                                                                                                                                                                                                                                                    |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1    | Articles                  of Incorporation of the Registrant, as amended, effective as of                  February                  4, 1988. (Incorporated herein by reference to Dynex’s Amendment No. 1 to                  the Registration Statement on Form S-3 (No. 333-10783) filed March                  21,                  1997.)  |
| 3.2    | Amended                  Bylaws of the Registrant. (Incorporated by reference to Dynex’s Annual                  Report on Form 10-K for the year ended December 31, 1992, as                  amended.)                                                                                                                                        |
| 3.3    | Amendment                  to Articles of Incorporation, effective December 29, 1989. (Incorporated                  herein by reference to Dynex’s Amendment No. 1 to the Registration                  Statement on Form S-3 (No. 333-10783) filed March 21, 1997.)                                                                           |
| 3.4    | Amendment                  to Articles of Incorporation, effective October 9, 1996. (Incorporated                  herein by reference to the Registrant’s Current Report on Form 8-K, filed                  October 15, 1996.)                                                                                                                |
| 3.5    | Amendment                  to Articles of Incorporation, effective October 19, 1992. (Incorporated                  herein by reference to Dynex’s Amendment No. 1 to the Registration                  Statement on Form S-3 (No. 333-10783) filed March 21,                  1997.)                                                      |
| 3.6    | Amendment                  to Articles of Incorporation, effective April 25, 1997. (Incorporated                  herein by reference to Dynex’s Quarterly Report on Form 10-Q for the                  quarter ended March 31, 1997.)                                                                                                          |
| 3.7    | Amendment                  to Articles of Incorporation, effective June 17, 1998 (Incorporated                  herein                  by reference to Dynex’s Annual Report on Form 10-K for the year ended                  December 31, 2004).                                                                                              |
| 3.8    | Amendment                  to Articles of Incorporation, effective August 2, 1999 (Incorporated                  herein by reference to Dynex’s Annual Report on Form 10-K for the year                  ended December 31, 2004).                                                                                                              |
| 3.9    | Amendment                  to Articles of Incorporation, effective May 19, 2004. (Incorporated                  herein                  by reference to Dynex’s Quarterly Report on Form 10-Q for the quarter                  ended June 30, 2004.)                                                                                            |
| 3.10   | Amendments                  to the Bylaws of Dynex. (Incorporated herein by reference to Dynex’s                  Annual Report on Form 10-K for the year ended December 31, 2002,                  as                  amended.)                                                                                                               |

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| Number | Exhibit                                                                                                                                                                                                                                                                                                                                                                   |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.1   | Dynex                    Capital, Inc. 2004 Stock Incentive Plan (Incorporated herein                    by reference                    to Dynex’s Annual Report on Form 10-K for the year ended December 31,                    2004).                                                                                                                       |
| 10.2   | Form                    of Stock Option Agreement for Non-Employee Directors under the                    Dynex                    Capital, Inc. 2004 Stock Incentive Plan. (Incorporated herein                    by reference                    to Dynex’s Quarterly Report on Form 10-Q for the quarter ended June 30,                    2005.)          |
| 10.3   | Form                    of Stock Appreciation Rights Agreement for Senior Executives                    under the                    Dynex Capital, Inc. 2004 Stock Incentive Plan. (Incorporated                    herein by                    reference to Dynex’s Quarterly Report on Form 10-Q for the quarter ended                    June 30, 2005.)  |
| 21.1   | List                    of consolidated entities of Dynex (filed with Form 10-K on March                    31,                    2006).                                                                                                                                                                                                                            |
| 23.1   | Consent                    of BDO Seidman, LLP (filed with Form 10-K on March 31, 2006).                                                                                                                                                                                                                                                                             |
| 23.2   | Consent                    of Deloitte & Touche, LLP (filed with Form 10-K on March 31,                    2006).                                                                                                                                                                                                                                                |
| 31.1   | Certification                    of Principal Executive Officer and Principal Financial Officer                    pursuant to                    Section 302 of the Sarbanes-Oxley Act of 2002 (filed with Form                    10-K on                    March 31, 2006).                                                                                      |
| 31.2   | Certification                    of Principal Executive Officer and Principal Financial Officer                    pursuant to                    Section 302 of the Sarbanes-Oxley Act of 2002 (filed                    herewith).                                                                                                                                 |
| 32.1   | Certification                    of Principal Executive Officer and Chief Financial Officer pursuant                    to                    Section 906 of the Sarbanes-Oxley Act of 2002 (filed with Form                    10-K on                    March 31, 2006).                                                                                          |

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**SIGNATURE**

|                         | **DYNEX                  CAPITAL, INC.**                         |   |
|------------------------------|------------------------------------------------------------------|--------|
|                         | (Registrant)                                                     |   |
|                         |                                                             |   |
|                         |                                                             |   |
| May                  1, 2006 | /s/                  Stephen J. Benedetti                        |   |
|                         | Stephen                  J. Benedetti, Executive Vice President, |   |
|                         | Chief                  Operating Officer and Secretary           |   |

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