FREDDIE MAC REPORTS 2003 FINANCIAL RESULTS

Highlights of Freddie Mac's 2003 performance:
Freddie Mac financed homes for approximately six million families, including approximately: 2.5 million low and moderate income families, 184,000 first-time homebuyers, and 720,000 minority families Net income was $4.9 billion, down 52 percent as compared to $10.1 billion in 2002 Net interest income was down slightly at $9.498 billion, as compared to $9.525 billion in 2002 Non-interest income (loss) was ($259) million, as compared to $7.1 billion in 2002 Non-interest expense was $2.1 billion, as compared to $1.9 billion in 2002 Diluted earnings per common share was $6.79, down 52 percent as compared to $14.18 in 2002 Total stockholders' equity increased by $232 million, or 0.7 percent Fair value of net assets (net of tax effect) grew by $4.5 billion, or 20 percent Net credit losses remained low, averaging 0.7 basis points of the average total mortgage portfolio Total mortgage portfolio grew by $97.8 billion, or 7 percent, to $1.4 trillion Retained portfolio grew by $78.2 billion, or 14 percent, to $645.5 billion
Timetable for Additional Financial Reporting
Management expects to publish the company's 2003 annual report in late September 2004 and hold the related stockholders' meeting in November 2004. Our current objective is to provide quarterly and full-year financial results for 2004 by March 31, 2005.

McLean, VA – Freddie Mac (NYSE:FRE) today reported quarterly and full-year financial results for the year ended December 31, 2003.

"These results demonstrate Freddie Mac's continued robust financial performance and underscore the strength of our underlying business," said Richard F. Syron, Freddie Mac's chairman and chief executive officer. "Last year, Freddie Mac capitalized on market opportunities while maintaining strict adherence to the financial and risk management disciplines that are a core strength of our company. Given the challenges the company faced in 2003, this strong financial performance is particularly noteworthy. It is important to point out, however, that 2003 was a unique year, with the ongoing remediation of our financial reporting processes, a volatile market and strong mortgage origination activity that may not be replicated in the near future. As a consequence, certain exceptional results – such as fair value net asset growth – exceed our long-run expectations."

"Today and as we move to the future, however, a reinvigorated Freddie Mac is keenly focused on our mission of making home financing more affordable," Syron added. "Under my leadership, this renewed commitment to our mission will be the hallmark of this company. Freddie Mac can, and will, fulfill our mission to America's homebuyers at the same time as we provide value to our shareholders."

"The completion of our 2003 financial results in accordance with our announced timetable is another important step for Freddie Mac on our path to returning to timely reporting," said Martin F. Baumann, executive vice president - finance and chief financial officer. "We are making substantial progress overhauling Freddie Mac's financial reporting and accounting systems, but this process is a challenging one and more hard work is in front of us. As part of this effort, we are devoting the full scope of our corporate resources to rebuilding our processes and systems to return to timely reporting as quickly as possible."

2003 SUMMARY OF RESULTS

Our net income was $4.9 billion for 2003, a decrease of 52 percent from $10.1 billion for 2002. Diluted earnings per common share were $6.79 for 2003, a decrease of 52 percent from diluted earnings per common share of $14.18 for 2002. The net decrease for 2003 was primarily driven by a substantial decrease in total non-interest income. Non-interest income results continue to be affected by changes in unrealized gains and losses on certain financial instruments that we report at fair value. Changes in the level and volatility of interest rates have resulted in significant period-to-period volatility in our reported net income. To the extent changes in interest rates continue to be significant, our overall net income will remain volatile. For example, as disclosed in Table 1 – "Summary of Quarterly and Annual Selected Financial Information," our quarterly net income (loss) in 2003 ranged from a low of a net loss of ($288) million in the third quarter to a high of $2.5 billion in net income in the second quarter. However, it is important to note that while our reported net income under generally accepted accounting principles, or GAAP, was volatile, our interest-rate risk remained low, as demonstrated by the low levels of portfolio market value sensitivity, or PMVS, and duration gap throughout 2003.

Net interest income was down slightly, totaling $9.498 billion in 2003, compared to $9.525 billion in 2002. The 2003 results were attributable to the positive effects of a decrease in average debt funding costs and growth in the retained portfolio largely offset by lower yields on assets acquired in 2003 and increased amortization expense related to premiums paid on interest earning assets.

Net interest yield decreased to 127 basis points in 2003 from 146 basis points in 2002. The decline in net interest yield was driven by increased amortization expense related to premiums paid on interest earning assets and by the addition of lower-yielding mortgage-related securities in 2003, which outpaced the benefit of improved funding costs and lower derivative-related expenses during 2003. During the first quarter of 2003, we refined the assumptions and calculations for the amortization of deferred fees recorded as discounts on assets in our retained portfolio, most notably with regard to estimates of future prepayments. The effect on net interest income of refining these assumptions, which was treated as a change in estimate and also impacted management and guarantee income as noted below, was the recognition of $31 million of additional amortization income during the first quarter of 2003.

Management and guarantee income, which is a component of "Non-interest income (loss)" on the consolidated statements of income, was $1.6 billion in 2003, compared to $1.5 billion in 2002. Reported management and guarantee income consists of the guarantee fee on outstanding mortgage-backed securities guaranteed by us, referred to as Participation Certificates, or PCs, and the amortization of certain fees paid by the seller/servicer at the time of securitization that are amortized into management and guarantee income over the estimated life of the security. The increase in reported management and guarantee income in 2003 was driven by a 3 percent increase in the average balance of outstanding PCs and an increase in net amortization income related to the fees paid to us. As noted above, during the first quarter of 2003, we refined the assumptions and calculations for this fee amortization, most notably with regard to estimates of future prepayments. The effect on management and guarantee income of refining these assumptions, which was treated as a change in estimate, was the recognition of $110 million of additional amortization income during the first quarter of 2003. These positive impacts were partially offset by a decrease in the average contractual guarantee fee on outstanding PCs.

Non-interest income (loss), excluding "Management and guarantee income," totaled ($1.9) billion in 2003, compared to $5.6 billion in 2002. The large decrease in comparison to 2002 was primarily due to a significantly smaller net mark-to-fair value gain on derivative instruments in 2003 of $39 million, compared to $5.3 billion in 2002; losses on investment activity of ($1.1) billion in 2003, compared to gains of $1.8 billion in 2002 (primarily due to a net mark-to-fair value loss on trading securities in 2003 of ($2.1) billion compared to a net gain of $0.9 billion in 2002); and an increase in losses on debt retirements to ($1.8) billion in 2003, from ($0.7) billion in 2002.

Non-interest expense totaled $2.1 billion in 2003, compared to $1.9 billion in 2002. During 2003, we incurred significant increases in "Other expenses" primarily due to accounting, auditing and consulting costs of approximately $124 million and legal costs of approximately $48 million associated with the restatement and related remediation activities, the $125 million civil money penalty discussed below and fees of $124 million that were paid in connection with certain multifamily affordable housing transactions. The 2002 results include a $225 million charge related to a special cash contribution to our philanthropic program, which includes the Freddie Mac Foundation and corporate giving programs. We did not make a similar contribution in 2003.

Total stockholders' equity increased to $31.6 billion at December 31, 2003 from $31.3 billion at December 31, 2002. The primary drivers of the net increase were an increase in retained earnings partially offset by a decrease in accumulated other comprehensive income (loss), net of taxes, or AOCI. Retained earnings increased as a result of net income in 2003, which was driven by the factors discussed above, partially offset by $0.9 billion in dividends declared in 2003. The decrease in AOCI of ($3.8) billion was due to high prepayment activity related to higher coupon securities and higher interest rates at the end of 2003 compared to the end of 2002, which resulted in a net decrease in the mark-to-fair value of available-for-sale securities of ($5.9) billion, partially offset by a decrease in deferred losses related to the effective portion of derivatives accounted for as cash flow hedges of approximately $2.1 billion. The fair value of our available-for-sale securities tends to decrease as interest rates rise. Derivatives accounted for in cash flow hedge relationships primarily consist of pay-fixed interest rate swaps, which tend to generate gains when interest rates rise.

As discussed in our Information Statement dated February 27, 2004, Freddie Mac is subject to various legal proceedings. In December 2003, Freddie Mac entered into a consent order with the Office of Federal Housing Enterprise Oversight, or OFHEO, Freddie Mac's safety-and-soundness regulator. Under the terms of the consent order, we paid a $125 million civil money penalty and we are undertaking a variety of remedial actions in accordance with a prescribed schedule. No provisions have been made in our financial results with respect to other governmental investigations or civil litigation because, at present, it is not possible for us to accurately predict the outcome of the various legal proceedings or regulatory investigations or reasonably estimate the amount of loss (or range of possible loss) that might result from adverse resolutions of any of these matters, or their potential effect on our financial condition and results of operations.

See Appendix I to this press release for additional details on our earnings and performance for 2003.

FAIR VALUE BALANCE SHEETS FOR DECEMBER 31, 2003 AND 2002

Management believes fair value measures provide an important view of our business economics and risks because fair value takes a consistent approach to the representation of all financial assets and liabilities, rather than an approach that combines historical cost and fair value techniques, as is the case with our GAAP-based consolidated financial statements.

As presented in Table 6 – "Consolidated Fair Value Balance Sheets," at December 31, 2003, the fair value of net assets (net of tax effect) was $27.4 billion, a $4.5 billion, or 20 percent, increase from December 31, 2002. For the same period, the fair value of net assets attributable to common stockholders (representing the fair value balance sheet total net assets less the fair value of net assets attributable to preferred stockholders) was $23.0 billion, a $4.7 billion, or 26 percent, increase from December 31, 2002. The difference between the $4.5 billion increase and the $4.7 billion increase relates to the change in the fair value of preferred stock. Among the primary contributors to the increase in 2003 fair value balance sheet net assets were core spread income (defined as the income we expect to earn from the spread between mortgage investments and debt, calculated on an option-adjusted basis), guarantee fees on the sold portfolio and other fee income.

In 2003, core spread income benefited from retained portfolio growth of approximately 14 percent. Guarantee fees benefited in 2003 from growth of outstanding PCs held by third parties. Other fee income benefited in 2003 from substantial resecuritization fees related to high demand by investors for REMIC securities. In 2003, there was a significant positive impact to the change in fair value of net assets as a result of favorable changes in market conditions with respect to both mortgage-to-debt option-adjusted spreads (due to tighter mortgage-to-debt option-adjusted spreads) and guarantee portfolio valuation.

Management believes that while changes in mortgage-to-debt option-adjusted spreads affecting the fair value of the existing retained portfolio and fair value changes in the existing guarantee portfolio will fluctuate from year-to-year, they will not have a significant impact on the fair value of net assets over the longer term. However, as discussed below under "Business Outlook," the fair value growth percentage achieved in 2003 exceeds management's long-run expectations.

The consolidated fair value balance sheets do not capture all elements of value that are implicit in our operations as a going concern and thus do not purport to present the net realizable, liquidation or market value of the company as a whole. Furthermore, amounts ultimately realized by the company from the disposition of assets and settlement of liabilities may vary significantly from the fair values presented.

TIMETABLE FOR ADDITIONAL FINANCIAL REPORTING

We expect to publish our 2003 annual report in late September and hold the related stockholders' meeting in November 2004. Our current objective is to provide quarterly and full-year financial results for 2004 by March 31, 2005.

The decision to deliver both quarterly and full-year 2004 results in the first quarter of 2005 will enable us to resume quarterly financial reporting in 2005 on a timetable to be announced later this year. This decision now allows primary focus in the company on controls and systems remediation efforts to address the material weaknesses in our controls surrounding financial reporting, as described in our Information Statement dated February 27, 2004. This should permit us to complete a comprehensive assessment of the design of our internal controls before the next earnings release, an important step in our ongoing remediation efforts. At the same time, we expect to be able to make significant progress on our efforts to develop and build a fully capable systems infrastructure. These combined efforts will facilitate our return to timely financial reporting enabling us to fulfill our commitment to register our common stock with the Securities and Exchange Commission.

Significant systems revisions are still required as a result of our adoption of revised accounting policies from the 2002 restatement and new accounting rules promulgated for 2003. While we have made substantial progress, we face continuing challenges because of the prior deficiencies in our accounting infrastructure and the operational complexities caused by the enormous volume of revised and new accounting policies we have adopted.

Because most of our new systems are still in development, our prior year and current close processes are executed in two steps – first, producing preliminary financial figures with our existing systems and then "remeasuring" the figures using interim processes, with several dependencies on manual off-line processes, as described in our Information Statement dated February 27, 2004, to adjust to GAAP standards. As a result, we must complete substantial back-end analytical review procedures of our financial results to mitigate our current inability to rely extensively on more automated internal controls.

The continued existence of material weaknesses in our controls surrounding financial reporting and the need for back-end analytical review procedures are highlighted by the fact that, in the course of the 2003 close process, we identified a number of immaterial errors in our previously published results, which have been recorded as corrections in the first quarter of 2003. Although not material to the net income of 2003 or any prior year's published results, these errors evidence the higher level of operating risk that we are addressing. See the discussion of "Other income" in Appendix I to this press release for more details concerning the correction of these errors.

We are devoting extraordinary resources to systems and controls initiatives and have made significant progress during the first half of 2004. For example, we have implemented a controlled subledger system for our retained mortgage portfolio that captures all accounting data for our mortgage security investment activities, replacing what had been a much more manual process dependent on end-user desktop systems. For the remainder of 2004 and into 2005, we will continue to re-engineer and build systems to eliminate our two-step closing process.

We believe that our overall timetable is appropriate in that it contemplates the necessary additional management due diligence processes for current financial reports in this challenging operating environment and the significant requirements for controls remediation and systems re-engineering and development that are needed to prepare us for the future. We will provide briefings to the market, at least quarterly, beginning in October 2004, regarding our business, timetable and progress toward timely financial reporting.

2003 BUSINESS VOLUMES AND RESULTS

The following section discusses volume statistics we regularly disclose in our Monthly Volume Summary. As previously announced in our Monthly Volume Summaries, we have updated the following statistics in conjunction with the completion of our 2003 financial statements.

Total Mortgage Portfolio

The total mortgage portfolio grew 7 percent to $1.414 trillion at December 31, 2003, from $1.317 trillion at December 31, 2002. New business purchase volume (which excludes purchases of PCs for the retained portfolio) was $834.9 billion in 2003, up from $650.7 billion in 2002. Total mortgage portfolio liquidations were $737.1 billion in 2003, up from $484.8 billion in 2002.

Retained Portfolio

The retained portfolio grew 14 percent to $645.5 billion at December 31, 2003, from $567.3 billion at December 31, 2002. Mortgage-related investment opportunities were most attractive during the second and third quarters, but began to lessen in the fourth quarter as strong demand from other investors, coupled with lower mortgage originations, resulted in tighter mortgage-to-debt spreads.

The retained portfolio and its related debt funding are the primary source of our interest-rate risk. In 2003, our interest-rate risk remained low. We provide investors with monthly interest-rate risk sensitivity disclosures in our Monthly Volume Summary using our primary interest-rate risk measures: PMVS and duration gap. PMVS-L, one of the two ways we measure PMVS, estimates the sensitivity of our fair value of net assets attributable to common stockholders to immediate adverse shifts in the level of interest rates. Duration gap estimates the average daily difference (measured in months) between the estimated weighted-average lives of our financial assets, liabilities and derivatives. We have re-estimated PMVS-L and duration gap for the month of December 2003 in conjunction with the completion of our 2003 earnings release and the previously reported amounts remain 3 percent and zero months, respectively.

Total PCs Issued and Outstanding PCs

Total PCs issued grew 7 percent, lagging the 12.5 percent growth in U.S. residential mortgage debt outstanding. Total PCs issued increased to $1.162 trillion at December 31, 2003, from $1.091 trillion at December 31, 2002. Historically, growth in Total PCs issued has slightly exceeded the growth in U.S. residential mortgage debt outstanding. The below market growth in 2003 was primarily caused by weak PC price performance, together with the loss of a significant mortgage originator and adverse market reaction to additional credit fees we charged for lower credit quality loans. In the second quarter of 2003, the demand for and price of Freddie Mac's PCs weakened relative to comparable Fannie Mae securities. Customer contracts typically establish a fixed guarantee fee commitment for each mortgage product (e.g., 15-year fixed-rate, 30-year fixed rate, ARMs) during the period the contract is in effect. The negotiated guarantee fee contained in these contracts is based on the value created for the seller through sales to Freddie Mac and the sales alternatives that exist. The attractiveness of the execution Freddie Mac offers is based on this fixed guarantee fee and the market price of the PCs we create. In June 2003, Freddie Mac began taking action to improve our market share by broadly implementing a pricing feature that adjusts the contract guarantee fee by the security execution difference (the current level of security price spreads on single class mortgage-backed securities issued by Freddie Mac and Fannie Mae) at the time of the loan sale to Freddie Mac. This provision adjusts guarantee fees upward or downward as the security price differential moves. Given the weak performance of our PCs in the second half of 2003, the pricing feature caused the contractual guarantee fees on new business to be adjusted downward.

Outstanding PCs (equal to Total PCs issued less PCs held in the retained portfolio or held as part of our PC market-making and support activities) grew 3 percent to $752.2 billion at December 31, 2003, from $729.2 billion at December 31, 2002.

Credit

Our total credit losses, defined as "Real estate owned, or REO, operations income (expense)" plus "net charge-offs," rose slightly in 2003 but were still low as a percentage of the average total mortgage portfolio (excluding non-Freddie Mac securities). These positive results during 2003 were driven by the quality of our total mortgage portfolio and favorable economic conditions, primarily low mortgage rates and continued single-family house-price appreciation. Our single-family credit loss results also continued to reflect the benefits of automated underwriting, loss mitigation activities, high levels of credit enhancement we have obtained on our existing mortgage portfolio and overall strong nationwide house-price appreciation. Multifamily market vacancy rates continued to rise in 2003, but our portfolio had minimal losses. Highlights of our strong credit performance are disclosed in Table 5 – "Non-Interest Expense," Table 9 – "Credit Quality Indicators" and discussed in Appendix I to this press release.

BUSINESS OUTLOOK

Retained Portfolio Growth

During the first part of 2004, our retained portfolio purchases were low due to tight mortgage-to-debt option-adjusted spreads. Together with high liquidations, this has caused a net decrease in the retained portfolio. Mortgage-to-debt option-adjusted spreads have widened recently and, as interest rates have risen, liquidations have slowed. As a result, we anticipate the net retained portfolio growth rate for full-year 2004 to be in the low single digits. However, market conditions such as demand from other investors, mortgage origination volume and liquidation rates could cause the actual growth rate to vary substantially from this forecast.

Regulatory Capital

Management believes the current level of our capital is adequate to meet all regulatory capital requirements, and the target capital surplus established by OFHEO in January 2004 equal to 30 percent of our minimum capital requirement. For additional information regarding the target capital surplus, see "Capital" below.

Fair Value Balance Sheet Net Asset Growth

A significant portion of our fair value balance sheet net asset growth for 2003 was due to the tightening of mortgage-to-debt option-adjusted spreads as of December 31, 2003. As a result, the increase in fair value balance sheet net assets for 2003 was above our long-term expectations. The 2004 outlook for this metric is inherently uncertain because the final results will depend heavily on market conditions as of December 31, 2004. Mortgage-to-debt option-adjusted spreads are currently wider than at December 31, 2003. If current conditions remain in place, management expects fair value balance sheet net asset growth in 2004 to be significantly below the growth seen in 2003.

Total PC Portfolio Growth

In 2004, management expects the growth rate of our Total PCs issued to be between 7 percent and 9 percent, slightly lagging the 10 percent anticipated growth rate in U.S. residential mortgage debt outstanding. As mortgage rates change over time, the ratio of fixed-rate mortgages to adjustable-rate mortgages, or ARMs, will change. As rates rise, the market tends to produce a higher ratio of ARMs. Bank portfolios typically retain a large percentage of ARM product. In 2004, we expect interest rates to rise and the proportion of ARMs originated to increase. As a result, bank portfolios will likely retain a larger percent of the loans they originate in whole loan form and the percent of loans sold to the government sponsored enterprises, or GSEs, will decline.

Guarantee Fees/Security Performance

In the second quarter of 2003, the demand for and price of our PCs weakened relative to comparable Fannie Mae securities. As discussed above under "2003 Business Volumes and Results," in June 2003 we began to take action to improve our security performance by broadly implementing a pricing feature that adjusts the contract guarantee fee by the security execution difference. The downward pricing adjustments that we made to certain mortgages securitized in the second half of 2003 have caused the contractual guarantee fee on new business to be adjusted downward and therefore will affect the contractual guarantee fee collected. During the first several months of 2004, Freddie Mac PC prices have strengthened considerably compared to the second half of 2003. This recovery is expected to have a positive impact on guarantee fees on new business purchases, reflecting the improvement in our security prices relative to the competition.

Credit Losses

Although single-family credit losses are expected to increase from recent levels, we currently expect single-family market conditions to remain favorable and, given our strong credit position, we expect single-family credit losses to remain low relative to both historical dollar amounts and as a percentage of the average total mortgage portfolio (excluding non-Freddie Mac securities). Multifamily market vacancy rates are expected to stabilize in late 2004 and early 2005, with many rental markets experiencing slow recovery from recent widespread market weakness. Nevertheless, we expect delinquencies in the multifamily portfolio to increase somewhat this year, as loans in weaker markets default. Although we expect multifamily credit losses may remain low in 2004, we expect to see an increase in 2005.

Administrative Expenses

Management expects administrative expenses, which include "Salaries and employee benefits," "Occupancy expense" and certain "Other expenses" such as professional services and audit fees, to be higher than historical levels at least through 2005 due to the significant infrastructure and control remediation efforts that are necessary to address the material weaknesses in controls surrounding our financial reporting.

CAPITAL

OFHEO is the authoritative source of the capital calculations that underlie our capital classification.

We have submitted to OFHEO amended minimum capital reports for 2003, including estimates of our capital surpluses. The estimated minimum capital surpluses for each quarter in 2003, as reported to OFHEO in our amended minimum capital reports, are set forth in the table below. Based on these estimates, management believes that Freddie Mac was in compliance with its regulatory capital requirements for each of these periods. The large increase in the "As Amended" amounts in comparison to the "As Reported" amounts for the first, second and third quarters of 2003 primarily results from adjustments caused by the restatement of our financial results for 2002, 2001 and 2000. The implementation of certain new accounting standards and accounting policy changes, as discussed in Appendix I to this press release, also affected the "As Amended" results in each of the quarters.

Table 1: Estimated 2003 Regulatory Minimum Capital Surplus as Reported to OFHEO¹

⁽¹⁾ Freddie Mac is required to hold "Core Capital" consisting of the par value of outstanding common stock (common stock issued less common stock held in treasury), par value of outstanding perpetual preferred stock, additional paid in capital and retained earnings, as determined in accordance with GAAP. Core capital available to meet the minimum capital requirement is effectively equal to Total Stockholders' Equity less AOCI. This table shows the excess of estimated Core Capital over the regulatory minimum capital requirement.

We have submitted to OFHEO information regarding the impacts of the completion of the 2003 financial statements on previously reported risk-based capital surpluses and will provide any additional information that OFHEO may require to re-assess our capital classifications during the associated quarters of 2003.

In a January 2004 letter, OFHEO created a framework for monitoring our capital due to the temporarily higher operational risk arising from our inability to produce timely financial statements in accordance with GAAP. The framework includes a target capital surplus of 30 percent of our minimum capital requirement, subject to certain conditions and variations; weekly monitoring; and prior approval of certain capital transactions, to ensure that appropriate levels of capital are maintained. Had OFHEO's target capital surplus been in effect at December 31, 2003, our estimated surplus in excess of the target would have been approximately $2.2 billion. A failure to meet the target capital surplus would result in discussions between OFHEO and us concerning the reason for such failure. If OFHEO were to determine, based on these discussions and weekly monitoring, that we had unreasonably deviated from the framework established by OFHEO, OFHEO would require us to submit a remedial plan or take other remedial steps. OFHEO has indicated that this framework is temporary and will be lifted when the Director of OFHEO determines that it should expire based on our resumption of timely financial reporting that complies with GAAP and other factors described in OFHEO's letter.

Management does not expect to engage in share repurchases until some time after the company resumes timely financial reporting. As long as the capital monitoring framework established by OFHEO remains in effect, any such repurchases will require prior approval by OFHEO.

OTHER MATTERS

Quarterly Consolidated Fair Value Balance Sheets and Other Performance Measures

We expect to provide quarterly consolidated fair value balance sheets as part of our 2004 financial statements and thereafter along with our quarterly financial reports. In addition, we continue to consider providing additional supplemental performance measures to assist investors in further understanding our financial performance, but our priorities of getting current in our financial reporting and building our control infrastructure take precedence at this time.

Recent Events and Additional Information

Affordable Housing Goals

On May 3, 2004, the U.S. Department of Housing and Urban Development, or HUD, published for public notice and comment a proposed rule that would establish higher affordable housing mortgage purchase goals for Freddie Mac and Fannie Mae for calendar years 2005 through 2008. The proposed rule would establish new subgoals for purchase-money mortgages. Freddie Mac is currently analyzing the proposed rule and assessing potential business impacts of the proposed goal and subgoal levels and expects to file comments on HUD's proposal before the close of the extended comment period on July 16, 2004.

Management's preliminary view is that, if the rule were adopted as proposed and under certain market conditions, the rule could have a material adverse impact on our results of operations in future years as a result of increased credit losses on purchases of goal-qualifying mortgages or reduced purchases of non-goal-qualifying mortgages. If a final rule were to be adopted substantially as proposed, Freddie Mac would take measures to reduce or eliminate material adverse business impacts; however, there could be no assurance that any such measures would be fully successful.

At the conclusion of the rulemaking process, HUD may promulgate a final rule that differs from, or is the same as, the proposed rule based upon the comments that it receives, or HUD may withdraw the proposed rule entirely. Consequently, we are unable to predict with certainty the future impact of any final rule on Freddie Mac's business operations, financial condition or results of operations.

Additional Information

For more information about recent events and contingencies, see the discussion of "Recent Events and Contingencies" in Appendix I to this press release.

Additional information about Freddie Mac and its business is also set forth in our Information Statement dated February 27, 2004 and related Information Statement Supplements, available on the Investor Relations page of our website at www.FreddieMac.com/investors.

Announcement of Conference Call and Webcast

We will host a conference call discussing today's announcement at 8:00 a.m. Eastern Time. Domestic investors should call 1-888-428-4478 and international investors can access the call at 612-326-1003. The conference call will be Web cast live on our website. During the call our Chief Financial Officer, Martin F. Baumann, will be referring to a slide presentation that we have posted on the website this morning. You can find a link to these slides at the end of our press release on our website. We would encourage you to have this presentation available so that you can better follow Mr. Baumann's remarks during the call. A telephone recording of this conference call will be available continuously beginning at approximately 3 p.m. Eastern Time on June 30, 2004 until midnight on July 14, 2004. To access this recording in the United States, call 1-800-475-6701 and use access code 736338. Outside of the United States, call 320-365-3844 and use access code 736338.

This release summarizes financial and company information for 2003. Additional materials, including financial statements and the accompanying Appendix I providing important disclosures and analyses, are available on our website, at www.FreddieMac.com. 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. These materials are organized as follows:

• Consolidated Financial Statements [PDF 109K]
• Core Tables [PDF 156K]
• Appendix I [PDF 308K]

The information in this press release is included in our Information Statement Supplement dated June 30, 2004, which is posted on the Investor Relations page of our website.

Freddie Mac's press releases sometimes contain forward-looking statements pertaining to management's current expectations as to our 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 our Information Statement dated February 27, 2004 and the accompanying Appendix I to this press release, which are available on the Investor Relations page of our website 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 opened doors for one in six homebuyers in America.

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