FREDDIE MAC ANNOUNCES AGREEMENT TO SETTLE SECURITIES CLASS ACTION AND SHAREHOLDER DERIVATIVE LITIGATION

McLean, VA – Freddie Mac (NYSE: FRE) today announced that it has reached an agreement in principle to settle the securities class action and shareholder derivative lawsuits that were filed following the company's restatement of financial results for the years 2000 through 2002.

The proposed settlement of these actions includes a cash payment by Freddie Mac of $410 million. The settlement is also based on corporate governance reforms instituted by the company under its current management. The settlement does not include any admission of wrongdoing by the company.

"Today's settlement, like the settlement announced earlier this week with the Federal Election Commission, enables this management team to resolve past issues so that we can focus squarely on meeting our important housing mission, running the business well and serving the needs of our customers," said Richard F. Syron, Freddie Mac's chairman and chief executive officer.  "We are pleased with the progress we are making in moving Freddie Mac forward."

The company estimates that this settlement will reduce first quarter 2005 net income by approximately $220 million after tax, including the application of expected insurance proceeds.  This impact is in addition to other matters affecting 2005 net income, including approximately $200 million of adjustments and corrections that were discussed in the company's March 31, 2006 press release.
 
The class action cases, entitled Ohio Public Employees Retirement System, et al. v. Freddie Mac, et al., against the company and certain former executive officers, and the shareholder derivative lawsuits, entitled Maureen Henry, et. al. v. Brendsel, et al., and Esther Sadowsky Testamentary Trust v. Brendsel, et al., on behalf of the company against certain former executive officers and current and former members of the company's Board of Directors, have been consolidated and are pending in the U.S. District Court for the Southern District of New York. 

The proposed settlement is subject to a number of conditions, including approval by the Retirement Boards of Ohio Public Employees Retirement System (which we are informed has occurred) and State Teachers Retirement System of Ohio; negotiation and execution of final documentation; and preliminary and final court approval.

The proposed settlement does not resolve other legal proceedings related to the restatement.  Additional information regarding these matters is provided in Freddie Mac's Information Statement dated June 14, 2005 and Information Statement Supplement dated August 31, 2005.

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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