"In January last year, Fannie Mae consolidated a number of different debt issuances into a universal package," says company spokeswoman Janis Smith. "These are recallable notes, and our investors understood that when they purchased them. We consistently review these notes to determine when to buy them back. We're buying them back because it's more cost effective to do so."

The notes can be redeemed on Jan. 12, 2001 at a redemption price equal to 100% of the principal plus accrued interest to the redemption date, Smith says.

Fannie Mae is a New York Stock Exchange company and the largest non-bank financial services company in the world. It operates by Federal charter and is the nation's largest source of financing for home mortgages. Since 1968, Fannie Mae has provided $2.9 trillion of mortgage financing for over 35 million families.