Fannie Mae has received regulatory approval to pay dividends on preferred stock, but its regulator has served notice that the undercapitalized mortgage company will have to seek approval to pay a fourth-quarter dividend on its common stock.Fannie said it received a letter from the Office of Federal Housing Enterprise Oversight that approves the Dec. 31 dividend payment to its preferred stock investors. "We are appreciative of OFHEO's quick review and responsiveness on this issue," Fannie Mae spokesman Chuck Greener said. In rendering its decision, OFHEO told Fannie that "it is not prepared to issue an approval for subsequent periods and will continue to review dividend payment requests based on the facts and conditions existing at the time," Mr. Greener said. Fannie Mae generally announces the fourth-quarter dividend on its common stock in late January. There has been speculation that Fannie might have to suspend the common stock dividend to fix a $3 billion capital shortfall. OFHEO is working with Fannie Mae on a time frame and a way to restore its capital to meet the minimum regulatory requirement and to build a capital surplus. Fannie Mae can be found online at http://www.fanniemae.com.

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