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Dynex Capital, Inc. Updates Market On Transfer of Servicing

6 September 1999

Dynex Capital, Inc. Updates Market On Transfer of Servicing

    GLEN ALLEN, Va.--Sept. 3, 1999--Dynex Capital, Inc. announced today that the servicing of the automobile installment contracts, which collateralize the funding notes owned by the Company, has been transferred from AutoBond Acceptance Corporation ("AutoBond") to the back-up servicer, Systems & Services Technologies, Inc. ("SST").
    The Company reported that the computer records have been electronically transferred to SST, and that notification letters have been mailed by both AutoBond and SST to all borrowers notifying them of the transfer of servicing. The physical loan files are in the process of being delivered to SST. This transfer is pursuant to an injunction order issued on August 26, 1999 by the District Court of Travis County, Texas.
    Dynex is still a defendant on a lawsuit filed by AutoBond relating to the funding of automobile installment contracts. The trial is set for December 6, 1999.
    Dynex Capital, Inc. is a financial services company that elects to be treated as a real estate investment trust (REIT) for federal income tax purposes. The Company's strategy is to create investments from its production operations at a lower effective cost than if assets were purchased in the market, and as a result, steadily increase its net interest margin income and earnings per share over time.
    Note: This document contains "forward-looking statements"(within the meaning of the Private Securities Litigation Act of 1995) that inherently involve risks and uncertainties. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of unforeseen external factors. As discussed in the Company's filings with the SEC, these factors may include, but are not limited to, changes in general economic conditions, disruptions in the capital markets, fluctuations in interest rates, increases in costs and other general competitive factors.