This Pricing Supplement relates to the issue of Medium-Term Notes, Series B described below (the "Notes") and should be read in conjunction with the Offering Circular dated June 24, 1997 (the "Offering Circular") relating to the Medium-Term Notes, Series B of the Federal National Mortgage Association (the "Corporation" or "Fannie Mae"). Unless otherwise defined herein, capitalized terms used herein have the meanings given to them in the Offering Circular.

     THE NOTES, TOGETHER WITH INTEREST THEREON, ARE NOT GUARANTEED BY THE UNITED STATES AND DO NOT CONSTITUTE A DEBT OR OBLIGATION OF THE UNITED STATES OR OF ANY AGENCY OR INSTRUMENTALITY THEREOF OTHER THAN THE CORPORATION.

     Investors considering purchasing the Notes should read and understand the following discussion of certain risk factors. Investors also should read and understand the more complete discussion of certain risk factors that appears in the Offering Circular. See the cover, insider front cover and "Certain Risk Factors" (beginning on page 6 thereof) in the Offering Circular. The following discussion and the Certain Risk Factors section in the Offering Circular do not describe all of the risks and investment considerations (including those relating to each investor's particular circumstances) of an investment in the Notes.

     Investors considering purchasing the Notes, including investors who themselves do not have access to and knowledge of appropriate analytical tools to evaluate the merits and risks of investing in callable debt securities in the context of their financial situation, should consult with their financial advisors as to the risks and investment considerations arising from an investment in the Notes and the appropriate tools to analyze such investment.

     Investors considering purchasing the Notes also should consult their financial advisors as to the suitability of any investment in the Notes in the investors' particular circumstances, particularly in light of the redemption feature described herein. For example, the Notes are not an appropriate investment for investors who have a need to receive the distribution of the principal amount on the Maturity Date or investors who require the fixed interest rate on the Notes until the Maturity Date.

     The ability of the Corporation to redeem the Notes before the Maturity Date is likely to affect the market value of the Notes. During any period in which the Notes are subject to redemption, their market value generally will not rise substantially above the redemption price because of the increased likelihood of redemption by the Corporation, and this also may be true prior to any such period.

     No investor should purchase the Notes unless such investor understands and is able to bear the risk that the Notes may not be readily saleable, that the value of the Notes will fluctuate over time, and that such fluctuations may be significant and could result in significant losses to such investor. This is particularly the case for investors whose circumstances may not permit them to hold the Notes until the Maturity Date. If any Note is sold prior to the Maturity Date, an investor may receive sales proceeds (less applicable transaction costs) that are less than the amount originally invested.

     The Corporation may be expected to redeem the Notes when the Corporation's cost of borrowing is lower than the interest rate on such Notes. Because a callable debt security is most likely to be redeemed when interest rates have fallen, principal is likely to be returned to the investor upon redemption at a time when prevailing interest rates are lower. Therefore, if the Notes are redeemed before the Maturity Date, investors generally will not be able to reinvest redemption proceeds at an effective interest rate as high as the interest rate on the Notes, and such reinvestment might only be at a significantly lower rate. Investors considering purchasing the Notes should consider the related reinvestment risk in light of other investments available at the time of an investment in the Notes.

     Investors considering purchasing Notes at a premium (or a discount) should consider the risk that a redemption relatively early (or late) following issuance of the Notes could result in an actual yield that is lower than such investor's anticipated yield.

     A partial redemption of the Notes also may adversely affect liquidity for the remaining outstanding Notes.

     Before purchasing any Note, investors should understand thoroughly the terms of the Notes, be familiar with the behavior of the relevant financial markets, and consider (possibly with the assistance of a financial advisor) possible scenarios for economic, interest rate and other factors that may affect their investment and their ability to bear the associated risks under a variety of such scenarios. Investors considering purchasing the Notes should be able to bear the redemption and other risks relating to an investment in the Notes.

CUSIP Number: 31364FJQ5

Certain Securities Terms

     1.     Principal Amount: $25,000,000.00

     2.     Issue Date (expected Settlement Date): December 17, 1997

     3.     Maturity Date: December 17, 2007

             a.     Amount Payable on the Maturity Date: 100% of principal amount

     4.     Subject to Redemption Prior to Maturity Date
                    No
              X    Yes; in whole or in part, at the option of the Corporation, at any time (and from
                     time to time) on or after  December 17, 2001  at a redemption price of 100% of the
                    principal amount redeemed, plus accrued interest thereon to the date of redemption

                     In order for the Corporation to elect to redeem the Notes, the Corporation shall give notice of its intention to redeem the Notes to Holders of such Notes not less than 10 days prior to the date of redemption in the manner described under "Description of the Notes - Notices" in the Offering Circular. In the case of a partial redemption of the Notes, the Corporation will redeem a pro rata portion of the outstanding principal amount of each Note.

5.    Interest Category:  Fixed Rate Notes

6.    Interest

       a.    Frequency of Interest Payments
                X      Semiannually
                      Other:                                 

       b.    Interest Payment Dates:  The 17th day of each June and December

       c.    First Interest Payment Date:  June 17, 1998

       d.    Interest rate per annum:  6.50%

7.    Denominations:  $1,000 and additional increments of $1,000
 
 
 
 
 

Offering

     1.    Pricing Date:  December 1, 1997

     2.    Method of Distribution:        X    Principal             Non-Underwritten

     3.    Dealer:  Smith Barney Inc.

     4.    Offering Price:

      __  Fixed Offering Price:                , plus accrued interest, if any, from 
          X       Variable Price Offering

     5.    If Fixed Offering Price, discount to Dealer(s): n/a of Principal Amount

     6.    Price to Dealer(s): 99.08% of Principal Amount

     7.    Proceeds to Corporation: $24,770,000.00

     8.    Concession: n/a and reallowance: n/a
 
 

United States Taxation

     In the opinion of Arnold & Porter, special tax counsel to the Corporation, the following paragraphs, when read in conjunction with the discussion under "United States Taxation" in the Offering Circular, correctly describe the principal aspects of the current United States federal tax treatment of investors who purchase the Notes described in the Offering Circular. The discussion does not purport to deal with all tax consequences applicable to all categories of investors, some of which may be subject to special rules.

General Information

     The beneficial owner (the "Owner") of a Note generally will include interest on such Note as ordinary income in accordance with his or her method of accounting for federal income tax purposes. Cash-basis Owners, including most individuals, include interest in income in the year in which they receive payment. Accrual-basis Owners generally include interest in income during the year in which it is earned or accrues, without regard to when the payment is received.

     An Owner who sells, exchanges or otherwise disposes of a Note generally will recognize a gain or loss to the extent of the difference between the amount he or she paid for the Note and the sales price. Such gain or loss generally will be capital gain or loss. Any capital gain or loss will be long-term capital gain or loss if at the time of disposition the Note has been held for a term of more than one year.

     Payments of interest on, and proceeds from the sale of, a Note held by an individual and certain others generally are required to be reported to both the Internal Revenue Service and to the holder. Backup withholding at a rate of 31 percent may apply to payments made on a Note unless the Owner supplies his or her taxpayer identification number, certified under penalties of perjury, and certain other information. Generally, an individual's taxpayer identification number is his or her Social Security number.

     The Notes or interest thereon are not exempt from taxation by any state, locality or other governmental unit.

     For a more specific tax discussion of the rules applicable to Owners, see "United States Taxation" in the Offering Circular. Different rules may apply to investors who are not U.S. persons, do not hold the Notes as capital assets, or to whom other special circumstances may apply. Investors considering purchasing the Notes should consult their own tax advisors to determine the tax consequences applicable to them.

  X    Additional Tax Information: The Notes may be issued with OID or at a premium. See "United States Taxation - U.S. Persons - Notes with OID" and "United States Taxation - U.S. Persons - Premium, Acquisition Premium and Market Discount" in the Offering Circular.

1997 Tax Legislation

     The Taxpayer Relief Act of 1997 modified the federal income taxation of capital gains. The maximum tax rate on capital gains received by individuals from the sale or disposition of investments (other than collectibles) held for more than 18 months is 20 percent. If an individual holds an investment for more than one year, but not for more than 18 months, the maximum rate is 28 percent. Finally, the top capital gains tax rate for individuals will drop to 18 percent for assets purchased after January 1, 2000, and held for more than five years. Investors should consult their own tax advisors for more information or for the capital gains rate applicable to a specific Note they own.

Final Regulations Relating to Withholding and Information Reporting

          The Offering Circular describes proposed regulations issued by the IRS relating to withholding, backup withholding and information reporting with respect to payments made to Non-U.S. Persons. In October 1997, the IRS finalized those regulations. Those final regulations generally are effective for payments made after December 31, 1998. However, withholding certificates that are valid under the present rules and that are held by a Withholding Agent on December 31, 1998, remain valid until the earlier of December 31, 1999 or the expiration date of the certificate under the present rules (unless otherwise invalidated due to changes in the circumstances of the person whose name is on the certificate).

          When effective, the new regulations will streamline and, in some cases, alter the types of statements and information that must be furnished to a Withholding Agent to claim a reduced rate of withholding. While various IRS forms (such as IRS Forms 1001 and 4224) currently are used to claim exemption from withholding or a reduced withholding rate, the preamble to the regulations states that the IRS intends most certifications to be made on revised Forms W-8. The regulations also clarify the duties of Withholding Agents and modify the rules concerning withholding on payments made to Non-U.S. Persons through foreign intermediaries. With some exceptions, the new regulations treat a payment to a foreign partnership as a payment directly to the partners.