FREDDIE MAC PROVIDES MARKET UPDATE

Total Mortgage Portfolio Up 12 Percent in 2005; Company Maintains Strong Capital Position, Balance Sheet

McLean, VA – Freddie Mac (NYSE:FRE) today is providing an update on the company’s 2005 and early 2006 business performance, reporting growth in its total mortgage portfolio and GSE market share, a continued strong capital position and balance sheet and success in meeting its affordable housing mission. The company also announced its preliminary estimate of financial performance for 2005 and its financial reporting schedule for 2006.

“2005 was a solid year for Freddie Mac,” said Richard F. Syron, Freddie Mac chairman and chief executive officer. “We had considerable success serving our vital housing mission, especially our efforts to help low- and moderate-income families and families in underserved areas and regions impacted by natural disasters. We are particularly proud that we continued to demonstrate the essential role Freddie Mac plays in the nation’s housing finance system – in good times, and at times of great need.”

“We are equally pleased that we improved our business operations, enhanced our strong senior management team and built stronger ties with our business partners,” Syron added. “That said, we quite obviously need to make additional progress on our financial reporting. We shall take the necessary steps to upgrade our control and financial reporting infrastructure to meet our regulatory and reporting commitments.”

“Throughout 2005, our business performed well,” said Eugene M. McQuade, Freddie Mac’s president and chief operating officer. “We increased our GSE market share. Our total mortgage portfolio increased by 12 percent. We managed interest-rate and credit risks extremely well. Our funding costs remained low. Importantly, we accomplished all these goals while maintaining a strong balance sheet and capital position.”

BUSINESS RESULTS

Portfolio Growth

Growth in the company’s total mortgage portfolio was strong in 2005. During the year, Freddie Mac delivered on its charter responsibility to be a provider of secondary mortgage market liquidity through both investment and securitization activities. The unpaid principal balance (UPB) of the company’s total mortgage portfolio (which consists of the company’s outstanding guaranteed mortgage participation certificates (PCs) and structured securities plus its retained portfolio) grew 12 percent in 2005, to approximately $1.7 trillion, roughly in line with the growth in residential mortgage debt outstanding. For the first two months of 2006, the UPB of the total mortgage portfolio grew at an annualized growth rate of 13.5 percent. Management continues to expect that, over the long-term, the total mortgage portfolio will grow at or slightly below the growth rate of mortgage debt outstanding.

The UPB of the company’s portfolio of PCs and structured mortgage securities issued grew 11 percent in 2005, to approximately $1,336 billion, and was $1,372 billion as of February 28, 2006, an annualized growth rate of 16 percent. The growth in 2005 is due in part to the company’s successful efforts to increase market share. The company estimates its share of government sponsored enterprise mortgage securitizations was 45 percent in 2005, compared to 41 percent in 2004.

The UPB of the company’s retained portfolio grew nine percent in 2005, to $710 billion, but declined to $705 billion as of February 28, 2006, as mortgage-to-debt option-adjusted spreads tightened somewhat in the first two months of the year. The company maintained its disciplined approach and expects its retained portfolio to increase only when such growth would meet both its mission and return objectives.

Debt Funding Costs

A key driver of the company’s success in 2005 was its continued ability to fund mortgage purchases at attractive levels. Average funding levels remain significantly below LIBOR rates and improved by approximately two basis points versus LIBOR during 2005 as global fixed-income investors increasingly purchased longer dated assets such as 5- and 10-year agency securities in a search for higher absolute yields. In addition, the company increased the amount of outstanding callable debt financing its retained portfolio, with approximately $273 billion in callable debt outstanding at year-end.

Interest-Rate Risk Management

The company’s interest-rate risk remains low. For 2005, Portfolio Market Value Sensitivity (PMVS) and duration gap averaged one percent and zero months, respectively. PMVS has averaged one percent in the first two months of 2006. Duration gap has averaged zero months in the first two months of 2006.

Credit-Risk Management

The company’s credit risk remains low. As of December 31, 2005, the total single-family delinquency rate was 69 basis points, compared to 73 basis points as of December 31, 2004. Delinquency rates reached a low of 59 basis points as of September 30, 2005 and have increased recently, primarily due to the effects of Hurricane Katrina. The company previously disclosed that it estimated after-tax losses of approximately $190 million related to the hurricanes. However, based on the company’s recent experience related to properties in the hurricane areas, it is likely to report a modest reduction in this preliminary provision for losses related to the hurricanes when it releases its full-year 2005 financial results in late May.

Expenses

The company expects to report that it met its objective in 2005 of keeping administrative expenses relatively flat compared to 2004, at approximately $1.5 billion. Going forward, the company’s intent is to manage administrative expenses as a declining percentage of its total mortgage portfolio while at the same time providing the resources needed to support its internal control and financial reporting infrastructure initiatives.

Mission and Housing Goals

The company has reported to the U.S. Department of Housing and Urban Development (HUD) that it believes it exceeded all of the 2005 annual housing goals and home purchase subgoals established by HUD. The company’s success in 2005 was due to its continued efforts to extend the benefits of the mortgage market to very-low-, low- and moderate-income families and people living in underserved areas, against a backdrop of favorable market conditions. The Secretary of HUD makes the final determination regarding attainment of the annual housing goals based upon application of regulatory reporting standards.

CAPITAL POSITION AND FINANCIAL REPORTING UPDATE

Capital Position

Throughout 2005, the company continued to maintain a strong capital position. In accordance with its monthly minimum capital reporting requirements, the company submitted its December 31, 2005 capital report to its financial regulator, the Office of Federal Housing Enterprise Oversight (OFHEO), on January 30, 2006. At that time, the company’s estimated minimum capital surplus at December 31, 2005, was approximately $11.3 billion and its estimated surplus in excess of the 30-percent target surplus was approximately $3.8 billion. Also at that time, the company’s estimated regulatory core capital at December 31, 2005, was $36.3 billion, a $1.3 billion increase compared to $35.0 billion at December 31, 2004.

The reported $1.3 billion increase in regulatory core capital would imply estimated net income for 2005 of approximately $2.5 billion, after dividends and other capital transactions of approximately $1.2 billion. The implied net income reflects a preliminary reduction of approximately $500 million after tax in the fair value of the company’s guarantee-related assets, due to the valuation methodology change adopted for 2005. Based on work to date, the company expects a further reduction in the net income implied by the capital report of approximately $200 million to reflect the net impact of certain adjustments and corrections identified in the course of closing its books.

The company expects to report an increase for 2005 in the fair value of net assets attributable to common stockholders, before capital transactions, less than management’s long-term expectations, primarily due to the impact of net widening of mortgage-to-debt option-adjusted spreads (OAS) on reported fair values. Management expects to provide a dollar estimate of the impact of OAS on reported fair values with its release of 2005 financial results. Because the company generally holds a substantial portion of its mortgage assets for the long term, management does not believe that periodic increases or decreases in the fair value of net assets arising from fluctuations in OAS will significantly affect the long-term value of the retained portfolio. Although a widening of OAS is generally accompanied by lower current period fair values, it can also provide the company with the opportunity to purchase new assets for its investment portfolio at the wider mortgage-to-debt OAS. Looking beyond 2005, management continues to believe the company will achieve its long-term expectation of generating returns on the average fair value of net assets attributable to common stockholders, before capital transactions, in the low- to mid-teens, although period-to-period returns may fluctuate substantially due to market conditions.

None of these preliminary estimates includes the impact on the guarantee obligation from the valuation methodology change adopted for 2005. In addition, the company’s preliminary estimate of net income may change materially as the company completes the process of closing its books for 2005.

Internal Controls/Financial Reporting Update

The company is pursuing a series of initiatives to improve its financial reporting infrastructure and remediate material weaknesses and other deficiencies in its internal control environment. The objective of these initiatives is to strengthen the internal control environment to reduce the risk of error to an acceptable level and enable the company to execute the monthly close process to enable it to submit timely, unqualified capital reports and meet the 45-day quarterly filing requirement for SEC registrants. Most significantly, these initiatives include an end-to-end assessment of the design and effectiveness of the company’s internal controls environment, and an initiative to improve information technology-related controls, together with remedial actions needed to address any issues identified in the course of these reviews. In addition, the company is scheduled to implement several of its planned system enhancements to its accounting, financial reporting and operational infrastructure later in the year.

The company expects to release quarterly and full-year 2005 financial results in late May. As previously disclosed, the company’s reporting schedule for its 2005 results will allow management to implement a significant improvement in its method for determining the estimated fair values of its guarantee assets and guarantee obligations. For periods beginning with 2005 and going forward, the company will make greater use of third-party market information in its valuation methodology and is implementing this change in its 2005 financial statements as of the beginning of the year. This will be reflected as a change in estimate and significantly improves reliability and transparency in the valuation of these instruments. This change will not affect the company’s previously released audited financial statements for 2004 and prior years.

Following its release of 2005 results, the company will provide quarterly market updates that will include estimates of net income derived from capital reports submitted to OFHEO, information and analysis on key drivers of current financial and business performance, and updates to the market on its business outlook and progress on financial infrastructure and control remediation initiatives. The company’s objective is to return to quarterly reporting, and file timely, GAAP-compliant, monthly capital reports with OFHEO, with its release of full-year 2006 results. After the company resumes regular quarterly reporting, it will begin the process of registering its common stock with the Securities and Exchange Commission.

ANNOUNCEMENT OF CONFERENCE CALL AND WEBCAST

Freddie Mac management will host a conference call discussing today’s announcement at 8:30 a.m. Eastern Time today. Domestic investors should call 1-800-611-1148 and international investors can access the call at 1-612-332-0335. The conference call will be webcast live on Freddie Mac’s Web site. During the call, President and COO Eugene M. McQuade will refer to a slide presentation that will be posted on the Web site shortly before commencement of the conference call. Freddie Mac encourages participants to have this presentation available during the call. A telephone recording of this conference call will be available continuously beginning at approximately 2:00 p.m. Eastern Time on March 31, 2006, until midnight on April 14, 2006. To access this recording in the United States, call 1-800-475-6701 and use access code 824082. Outside of the United States, call 1-320-365-3844 and use access code 824082.

The information in this press release will be included in an Information Statement Supplement dated March 31, 2006, which will be posted on the Investor Relations page of the company’s Web site.

ADDITIONAL INFORMATION

Additional information about Freddie Mac and its business is also set forth in its Information Statement dated June 14, 2005, and related Information Statement Supplements, which are available on the Investor Relations page of its Web site at www.FreddieMac.com/investors. Freddie Mac encourages all investors and interested members of the public to review these materials for a more complete understanding of its financial results and related company disclosures.

Freddie Mac’s press releases sometimes contain forward-looking statements pertaining to management’s current expectations as to its future business plans, results of operations and/or financial condition. Management’s expectations for the company’s future necessarily involve a number of assumptions and estimates, and various factors could cause actual results to differ materially from these expectations.  These assumptions and factors are discussed in the company’s Information Statement dated June 14, 2005, and its Information Statement Supplements dated August 31, 2005, October 4, 2005, November 8, 2005 and December 1, 2005, which are available on the Investor Relations page of the company’s Web site at www.FreddieMac.com/investors.

Freddie Mac is a stockholder-owned company established by Congress in 1970 to support homeownership and rental housing. Freddie Mac fulfills its mission by purchasing residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage-related securities and debt instruments in the capital markets. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than four million renters in America.

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