MOODY’S CONFIRMS AND CONCURRENTLY WITHDRAWS RATINGS OF DYNEX CAPITAL, INC.
(PREFERRED STOCK AT Ca)

Approximately $95 Million of Securities Affected

New York, September 04, 2002 — Moody’s Investors Service has confirmed, and concurrently withdrew, its Ca preferred stock rating of Dynex Capital, Inc. Dynex, which operates as a REIT, is a financial services company that invests in a portfolio of securities backed principally by single-family mortgages, commercial mortgages and manufactured housing installment loans.

According to Moody’s, these rating actions reflect Dynex’s stressed financial position, default on its preferred stock, and strategic flux. The REIT intends to pursue strategic alternatives that will likely result in a marked change in its capital structure and business model, or even in the firm’s liquidation. On July 15, 2002, Dynex repaid upon maturity the remaining $48 million of its senior unsecured notes (then rated Caa1), thereby removing restrictions associated with the notes’ indenture, and giving the REIT greater financial and operating flexibility. The ultimate recovery value of Dynex’s preferred stock remains uncertain. The REIT is now in default on the dividends of this cumulative preferred stock. However, Moody’s anticipates that preferred stockholders should achieve a reasonable level of recovery upon conclusion by the REIT of its strategic review.

The following ratings were confirmed and concurrently withdrawn:

Dynex Capital, Inc. — senior unsecured debt shelf at (P)Caa1; subordinate unsecured debt shelf at (P)Caa3; preferred stock at Ca; preferred stock shelf at (P)Ca.

Dynex Capital, Inc. (NYSE: DX), headquartered in Glen Allen, Virginia, USA, is a real estate investment trust involved in asset finance. Dynex reported assets of $2.5 billion and equity of $175 million at June 30,
2002.

New York
Philip Kibel
Vice President – Senior Analyst
Real Estate Finance Group
Moody’s Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
John J. Kriz
Managing Director
Real Estate Finance Group
Moody’s Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Copyright 2002 by Moody’s Investors Service
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