FREDDIE MAC ANNOUNCES OFHEO ACTION CONCERNING CAPITAL SURPLUS

McLean, VA – Freddie Mac (NYSE:FRE) today announced that the Office of Federal Housing Enterprise Oversight (“OFHEO”), the company’s safety and soundness regulator, has created a framework for monitoring Freddie Mac’s capital due to the temporarily higher operational risk arising from the company’s current inability to produce timely financial statements in accordance with generally accepted accounting principles.

The framework includes a target capital surplus of 30 percent of Freddie Mac’s 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. The full text of the letter establishing the framework is available on OFHEO’s website (www.ofheo.gov).

“Freddie Mac remains well capitalized and well positioned to fulfill our mission, including responding appropriately to provide stability in the mortgage market,” said Freddie Mac Chairman & CEO Richard F. Syron. “While OFHEO’s framework includes stringent monitoring and imposes restrictions on share repurchases, we do not expect it to adversely affect our disciplined growth strategy or require us to raise additional capital.”

OFHEO’s oversight of the company’s actions ensures that any growth is reasonable given market conditions and the company’s capital position. OFHEO will monitor Freddie Mac’s capital position on a weekly basis. A failure by Freddie Mac to meet the target capital surplus would result in discussions between Freddie Mac and OFHEO concerning the reason for such failure. If OFHEO were to determine, based on these discussions and weekly monitoring, that the company had unreasonably deviated from the framework established in the letter, OFHEO would require Freddie Mac to submit a remedial plan or to take other remedial steps.

In addition, Freddie Mac is required to obtain prior written approval from the Director of OFHEO before engaging in certain capital transactions, including the repurchase of any shares of common stock or the redemption of any preferred stock.

OFHEO indicated that this framework is temporary and will be lifted when the Director of OFHEO determines that it should expire based on the company’s resumption of timely capital reporting that complies with generally accepted accounting principles and other factors described in the letter.

Management believes that this framework will provide OFHEO with frequent information about Freddie Mac’s capital position, and thus provide OFHEO with a mechanism to ensure that Freddie Mac manages its business with continued prudence and appropriate levels of capital, taking into account that the company is not currently able to produce timely financial information.

The information in this press release will be included in Freddie Mac’s Information Statement Supplement to be dated January 29, 2004, which will be posted on the Investor Relations page of Freddie Mac’s website.

Freddie Mac’s press releases sometimes contain forward-looking statements pertaining to management’s current expectations as to Freddie Mac’s 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 Supplement dated November 21, 2003, Appendix I, “Selected Restatement Topics,” available on the Investor Relations page of the company’s website.

Freddie Mac is a stockholder-owned company established by Congress in 1970 to support homeownership and rental housing. Freddie Mac purchases residential mortgages and mortgage-related securities, which we finance primarily by issuing mortgage securities and debt instruments in the capital markets. Over the years, Freddie Mac has opened doors for one in six homebuyers and more than two million renters in America.

Freddie Mac's earnings releases and other financial disclosures are available on the Investor Relations page of the company's website.

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