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FreddieNotes® Securities FAQ

  1. What are FreddieNotes® securities?
  2. Why is Freddie Mac issuing FreddieNotes securities?
  3. What are the minimum investment requirements?
  4. How are the securities structured?
  5. How can I find out about the available structures?
  6. Are FreddieNotes securities suitable for all investors?
  7. Are FreddieNotes securities guaranteed by the federal government?
  8. Are all FreddieNotes securities redeemable by Freddie Mac?
  9. Does Freddie Mac's right to redeem FreddieNotes securities present any risk to investors?
  10. Are FreddieNotes securities repayable before maturity under any other circumstances?
  11. When can the Survivor's Option be exercised on a FreddieNote?
  12. Who is eligible to exercise the Survivor's Option?
  13. Where do I mail in the repayment election form?
  14. When will I receive the proceeds from exercising the Survivor's Option?
  15. Are FreddieNotes securities subject to either federal or state and local taxes?
  16. What was the issuance volume of FreddieNotes securities in 2007?
  17. How can I invest in FreddieNotes securities?
  18. How can I find out more information on FreddieNotes securities?

  1. What are FreddieNotes securities?

    FreddieNotes securities are unsecured senior debt obligations of Freddie Mac issued as callable medium-term notes (MTN). FreddieNotes securities are designed with an estate-planning feature that gives the representative of a deceased beneficial owner the right, but not the obligation, to require repayment of the issue by Freddie Mac at par.

  2. Why is Freddie Mac issuing FreddieNotes securities?

    Freddie Mac began selling debt securities to the retail market in 1995 in response to requests from the dealer community. Our FreddieNotes securities program is a more focused approach to issuing and distributing retail debt securities that enables Freddie Mac to diversify its investor base and tap new sources of funding. In this way, Freddie Mac lowers the cost of mortgage credit and fulfills our public mission of providing a continuous flow of funds to mortgage lenders in support of homeownership and rental housing.

  3. What are the minimum investment requirements?

    Like other MTNs issued by Freddie Mac, FreddieNotes securities are offered in $1,000 minimum denominations.

  4. How are the securities structured?

    FreddieNotes securities may be issued with maturities of up to thirty years. Freddie Mac has the right to redeem FreddieNotes securities at par as provided in the related pricing supplement, usually beginning one to four years after issuance. FreddieNotes securities pay interest on a monthly, quarterly, semiannual or annual basis.

  5. How can I find out about the available structures?

    An array of 5-6 callable structures, with varying interest payment frequencies, redemption provisions and maturities, are posted on the FreddieNotes securities web site on Monday afternoons at approximately 3:00 PM. The offer periods for these structures are closed the following Monday by 12:00 noon and settled on the following Thursday.

  6. Are FreddieNotes securities suitable for all investors?

    No, they may not be suitable for all investors. The Offering Circular and Offering Circular Supplement for FreddieNotes securities describe some of the general risks and considerations investors should examine before investing in FreddieNotes securities. These risks and considerations may vary depending on each investor's particular circumstances and on various economic and interest rate scenarios. Investors should consider carefully the suitability for them of a particular issue of FreddieNotes securities.

  7. Are FreddieNotes securities guaranteed by the federal government?

    No. FreddieNotes securities are obligations of Freddie Mac only. FreddieNotes securities, including any interest on FreddieNotes securities, are not guaranteed by, and are not debts or obligations of, the United States or any agency or instrumentality of the United States other than Freddie Mac.

  8. Are all FreddieNotes securities redeemable by Freddie Mac?

    Yes, if so provided in the applicable Pricing Supplement, Freddie Mac has the right, but not the obligation, to redeem FreddieNotes securities at par, usually beginning one to four years after issuance.

  9. Does Freddie Mac's right to redeem FreddieNotes securities present any risk to investors?

    Yes. Freddie Mac may choose to redeem FreddieNotes securities when prevailing interest rates are relatively low. Following redemption, investors may not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as the interest rate on the FreddieNotes securities that were redeemed. See the Offering Circular and Offering Circular Supplement for FreddieNotes securities for further discussion of the risks involved in investing in FreddieNotes securities.

  10. Are FreddieNotes securities repayable before maturity under any other circumstances?

    Yes. The representative of a deceased beneficial owner has the right, but not the obligation, to exercise the Survivor's Option and require repayment of FreddieNotes securities by Freddie Mac at par. The calendar year limit on such repayments for any one beneficial owner is $200,000.

    Freddie Mac reserves the right to limit the total payments made pursuant to the Survivor's Option during any calendar year to all beneficial owners of FreddieNotes securities to the greater of (1) 1% of the outstanding aggregate principal amount of FreddieNotes securities as of December 31 of the previous year or (2) $1 million.

  11. When can the Survivor's Option be exercised on a FreddieNote?

    The Survivor's Option can only be exercised upon the death of the beneficial owner, subject to the passage of at least one year from issue date.

  12. Who is eligible to exercise the Survivor's Option?

    The person with authority to act on behalf of the deceased beneficial owner under the laws of the appropriate jurisdiction can exercise the FreddieNote's Survivorship Option (including, without limitation, the personal representative, executor, surviving joint tenant or surviving tenant by the entirety of such owner). For information on the exercise of the Survivorship Option relating to a Freddie Note held in trust, please see the Instructions for Completing Repayment Form and Exercising Repayment Option in the Offering Circular Supplement for FreddieNotes securities, or contact your own financial or estate planning advisor.

  13. Where do I mail in the repayment election form?

    Mail an original copy of the completed form to Freddie Mac's Global Agent as follows:

    U.S. Bank Trust National Association
    Attn: Corporate Trust Department
    100 Wall Street, 16th Floor
    New York, NY 10005

  14. When will I receive the proceeds from exercising the Survivor’s Option?

    As stated in the FreddieNotes Offering Circular , Freddie Mac makes quarterly payments on any FreddieNotes accepted for repayment pursuant to the exercise of the Survivor's Option on the following dates: January 15, April 15, July 15, or October 15.

    If the date does not fall on a business day, the payment will be made on the next succeeding business day. Freddie Mac's Global Agent, U.S. Bank, must receive requests for repayment at least 20 calendar days before the next quarterly payment date.

    For example, if the acceptance date for FreddieNotes delivered pursuant to the Survivor's Option was June 1, 2005, we would be obligated to repay those FreddieNotes by July 15, 2005. However, if the acceptance date was July 1, 2005, we would be obligated to repay those FreddieNotes by October 15, 2005.

  15. Are FreddieNotes securities subject to either federal or state and local taxes?

    FreddieNotes securities are subject to taxation under both federal and state and local tax laws.

  16. What was the issuance volume of FreddieNotes securities in 2007?

    Freddie Mac issued a total of $2.63 billion in FreddieNotes securities in 2007. As of December 31, 2007, the shortest maturity for a FreddieNote issuance has been 3 years and the longest maturity has been 20 years. Redemption lockouts have ranged from 12 months to 4 years depending on the maturity. Frequency of interest payments for FreddieNotes, other than zero-coupon notes, have ranged from monthly to semiannually.

  17. How can I invest in FreddieNotes securities?

    FreddieNotes securities are offered for sale through a network of over 250 registered broker-dealers. The web site lists broker/dealers participating in the FreddieNotes securities Selling Group, each of which can provide information on current structures and on the program.

  18. How can I find out more information on FreddieNotes securities?

    The Offering Circular and Offering Circular Supplement for FreddieNotes securities and current FreddieNotes securities structures being offered are available on the FreddieNotes securities Web site, www.FreddieNotes.com. The Pricing Supplements for outstanding issues are also available on this Web site.

    This information is neither an offer to sell, nor a solicitation of offers to buy, any FreddieNotes securities. Any such offering is only made by the Offering Circular, Offering Circular Supplement and applicable Pricing Supplement.

© 2009 Freddie Mac

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