Exhibit 3.7


                              ARTICLES OF AMENDMENT
                                       TO
                            ARTICLES OF INCORPORATION
                                       OF
                               DYNEX CAPITAL, INC.


1.       The name of the Corporation is Dynex Capital, Inc.

2.       Article VI of the  Corporation's  Articles  of  Incorporation  shall be
         amended by deleting  paragraph  (7) in its  entirety  and  substituting
         therefor the following:

                  "(7) Application of Article. Nothing contained in this Article
                  or in any other provision  hereof shall limit the authority of
                  the Board of  Directors to take any and all other action as it
                  in its sole discretion deems necessary or advisable to protect
                  the  Corporation  and the  interests  of its  shareholders  by
                  maintaining   the   Corporation's   eligibility   to  be,  and
                  preserving  the  Corporation's  status  as, a  qualified  real
                  estate  investment  trust under the Code,  provided,  however,
                  that nothing in this Article VI or elsewhere in these Articles
                  shall preclude  settlement of any transaction  entered into or
                  through the  facilities of the New York Stock  Exchange or any
                  other exchange on which the Corporation's common shares may be
                  listed from time to time."

3.       This  amendment  to the Articles of  Incorporation  was proposed by the
         Board of Directors  and submitted to the  shareholders  for approval in
         accordance with Section 13.1-707 of the Virginia Stock  Corporation Act
         at the annual meeting on May 19, 1998.

4.       The  designation,  number of  outstanding  shares  and  number of votes
         entitled to be cast by each voting group entitled to vote separately on
         the amendment are as follows:



- ----------------------------------------------------------------------------------------------
      Designation of Voting Group            Number of Shares                Number of Votes
      Entitled to Vote Separately               Outstanding                Entitled to be Cast
- ----------------------------------------------------------------------------------------------
                                                                                
              Holders of                      Common Stock -                  Common Stock -
             Common Stock                      45,580,322                       45,580,322
- ----------------------------------------------------------------------------------------------


5.       There  were  40,049,096  undisputed  votes  cast by the  holders of the
         Corporation's  common stock in favor of the  amendment  and these votes
         were sufficient for approval of the amendment.

         IN  WITNESS  WHEREOF,   the  undersigned   authorized  officer  of  the
Corporation   has  executed  these  Articles  of  Amendment  on  behalf  of  the
Corporation.

Dated:  May 19, 1998

ATTEST:                                    DYNEX CAPITAL, INC.


____________________________________       By___________________________________
Lynn K. Geurin                               Thomas H. Potts
Secretary                                    President