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PRESS RELEASE



FOR IMMEDIATE RELEASE CONTACT: Investor Relations
March 29, 2004 804-217-5897


DYNEX CAPITAL, INC.
ANNOUNCES COMMENCEMENT OF EXCHANGE OFFER AND
SPECIAL MEETINGS OF PREFERRED AND COMMON STOCKHOLDERS

Dynex Capital, Inc. (NYSE: DX) today announced it is commencing an exchange
offer for up to 70% of its three series of Preferred Stock, and is
simultaneously seeking shareholder approval, at meetings scheduled to be held on
April 29, 2004, of certain aspects of its previously-announced recapitalization
plan.

The exchange offer and the approvals being sought from Dynex Capital's
preferred and common stockholders involve separate components of a plan designed
to eliminate the dividends in arrears on the three series of Preferred Stock and
to recapitalize Dynex Capital. In the exchange offer:

o Dynex Capital is offering to exchange, at the election of the
holder, each share of Series A Preferred Stock, Series B Preferred
Stock, and Series C Preferred Stock for new unsecured Senior Notes
that will bear interest at an annual rate of 9.50%. Each share of
Series A Preferred Stock may be exchanged for $27.84 in principal
amount of Senior Notes, each share of Series B Preferred Stock may
be exchanged for $28.42 in principal amount of Senior Notes, and
each share of Series C Preferred Stock may be exchanged for $34.80
in principal amount of Senior Notes, which equates to 116% of the
original issue price of each series of Preferred Stock.

o In the exchange offer, Dynex Capital is offering to acquire up to
an aggregate of 345,579 shares of Series A Preferred Stock, 481,819
shares of Series B Preferred Stock and 479,512 shares of Series C
Preferred Stock.

o Interest on these notes will be payable semi-annually, and the
principal of the Senior Notes will be due and payable in full on
the third anniversary of their issuance.

o The Company will apply for a listing of the Senior Notes on the New
York Stock Exchange, and the Senior Notes will be issued in
denominations of $1,000 or integral multiples of $1,000. Cash will
be paid in lieu of any fraction of $1,000.

The terms of the exchange offer and the Senior Notes are described in
greater detail in the Offering Circular for the exchange offer.

In addition, the holders of each class of Preferred Stock are being
asked to approve the conversion of all of the shares of Series A Preferred
Stock, Series B Preferred Stock, and Series C Preferred Stock into a combination
of a new class of Series D Preferred Stock and shares of Common Stock, plus cash
in lieu of fractional shares (the Series D conversion). In connection with the
Series D conversion:

o The holders of each class of Preferred Stock are being asked to
approve an amendment of Dynex Capital's articles of incorporation
to designate the terms of the new Series D Preferred Stock and
eliminate the existing series of Preferred Stock by providing for
their automatic conversion into Series D Preferred Stock and
Common Stock.

o Each share of Series A Preferred Stock will be converted into
2.784 shares of Series D Preferred Stock, each share of Series B
Preferred Stock will be converted into 2.842 shares of Series D
Preferred Stock and each share of Series C Preferred Stock will be
converted into 3.48 shares of Series D Preferred Stock.

o Each share of Series A Preferred Stock will receive 0.6373 shares
of common stock, each share of Series B Preferred Stock will
receive 0.6506 shares of common stock and each share of Series C
Preferred Stock will receive 0.7967 shares of common stock.

o The new Series D Preferred Stock will bear an annual dividend of
9.50%, and a liquidation preference of $10 per share, and will be
convertible on a one-for-one basis into additional shares of
Common Stock. The Series D Preferred Stock will also convert
automatically into a new class of senior notes (which will be
subordinate to the Senior Notes issued in the exchange offer)
bearing an annual interest rate of 9.50%, under certain
conditions.

The terms of the Series D Preferred Stock, and of the Series D
conversion, are described further in a proxy statement being mailed to all
holders of Preferred Stock as of the record date of March 5, 2004. Approval of
the amendments that will effect the Series D conversion will require the
approval at the special meeting of the holders of Preferred Stock of two-thirds
of the outstanding shares of each series of Preferred Stock.

Because the Series D conversion will result in the issuance of
additional shares of Common Stock, Dynex Capital is mailing a separate proxy
statement to the holders of its Common Stock as of the record date of March 5,
2004, seeking the approval of the holders of Common Stock of the issuance of
additional shares of Common Stock in connection with the Series D conversion,
and the possible future issuance of shares of Common Stock upon future
conversions of Series D Preferred Stock into Common Stock.

The completion of the exchange offer and the Series D conversion is
subject to a number of conditions described in the Offering Circular, including
the separate approval by the common stockholders and each series of Preferred
Stock at special meetings of the respective shareholders on April 29, 2004. In
addition, the consummation of the exchange offer and the Series D conversion are
conditioned upon the issuance of a minimum $10 million in Senior Notes.

DYNEX CAPITAL URGES STOCKHOLDERS TO REVIEW THE PROXY STATEMENTS,
SCHEDULE TO, OFFERING CIRCULAR, LETTERS OF TRANSMITTAL AND OTHER DOCUMENTS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION ("SEC") RELATED TO THE EXCHANGE
OFFER AND OTHER RECAPITALIZATION TRANSACTIONS BECAUSE THEY CONTAIN IMPORTANT
INFORMATION ABOUT THE EXCHANGE OFFER AND THE RECAPITALIZATION TRANSACTIONS.

These documents are available without charge in the SEC's website at
www.sec.gov. A free copy of these documents may also be obtained from Dynex
Capital by calling the contact number listed above or by calling MacKenzie
Partners, Inc., the information agent, at (212) 929-5500 or (800) 322-2885.
STOCKHOLDERS SHOULD READ THE PROXY STATEMENTS, SCHEDULE TO AND RELATED
INFORMATION CAREFULLY BEFORE MAKING ANY DECISION ON HOW TO VOTE AT THE SPECIAL
MEETINGS OF PREFERRED AND COMMON STOCKHOLDERS OR WHETHER TO TENDER THEIR SHARES
IN THE EXCHANGE OFFER.

Dynex Capital is proposing the Series D conversion because the Board
believes, among other things, that it will simplify Dynex Capital's capital
structure and should create improved opportunities for the Company to engage in
strategic transactions, access the capital markets, and/or reinvest in business
activities. The Board of Directors has unanimously recommended to the
stockholders that they vote "FOR" the amendment to Dynex Capital's articles of
incorporation and the aspects of the recapitalization to be voted on by the
common stockholders. Dynex Capital's Board of Directors has not made any
recommendation to its preferred stockholders as to whether or not they should
tender any Preferred Stock pursuant to the exchange offer. Certain members of
the Company's Board of Directors have informed the Company that they will
participate in the exchange offer.

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.

Note: This document contains "forward-looking statements" within the
meaning of the Private Securities Litigation Act of 1995. The words "believe",
"expect", "forecast", "anticipate", "estimate", "project", "plan", and similar
expressions identify forward-looking statements that are inherently subject to
risks and uncertainties, some of which cannot be predicted or quantified. Dynex
Capital's actual results and timing of certain events could differ materially
from those projected in or contemplated by the forward-looking statements as a
result of unforeseen external factors. As discussed in Dynex Capital's filings
with the SEC, these factors may include, but are not limited to, changes in
general economic and market conditions, disruptions in the capital markets,
fluctuations in interest rates, the accuracy of subjective estimates used in
determining the fair value of certain financial assets of Dynex Capital, the
impact of recently issued financial accounting standards, increases in costs and
other general competitive factors.


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