FREDDIE MAC EXPANDS INITIAL INTEREST^SM SUITE WITH 3/1, 5/1, 7/1-YEAR ARMS WITH 10-YEAR INTEREST ONLY TERMS

Freddie Mac Also Announces New Selling System Executions for July 1, 2005

Washington, DC – Freddie Mac today announced it was expanding its Initial Interest^sm suite of mortgage products to include Constant Maturity Treasury (CMT) and London Interbank Offered Rate (LIBOR) 3/1, 5/1, and 7/1 adjustable rate mortgages with a 10-year interest only period. Borrowers choosing these new Initial Interest ARMs will make fully amortizing principal and interest payments only after the 10-year initial interest period expires.

Freddie Mac also announced that starting July 1, 2005, originators could sell Initial Interest mortgages through the company’s web-based selling system and opt for Cash or Guarantor executions. Currently, Initial Interest mortgages are eligible for Guarantor executions through MIDANET or Gold Connection for Delivery.

All Initial Interest mortgages are available through Loan Prospector, Freddie Mac’s automated underwriting service.

"Freddie Mac’s Initial Interest ARMs with 10-year interest-only periods give savvy borrowers three important new ways to match their homebuying ambitions to their individual financial situations," said David Stevens, senior vice president of Mortgage Sourcing at Freddie Mac. "This also gives originators using Loan Prospector new marketing muscle by expanding the secondary market for an even wider range of interest-only mortgage product."

Today’s announcement builds on Freddie Mac’s Initial Interest suite, which includes fixed rate mortgages and 3/1, 5/1, 7/1 and 10/1 CMT and LIBOR-indexed ARMs with 3, 5, 7, and 10-year interest-only periods, respectively.

Designed for borrowers who fully understand that the monthly payment will rise following the interest-only period, Initial Interest mortgages provide lower monthly payments during the initial interest-only period and give borrowers the option of paying down principal with immediate reductions in their monthly payments during the interest only period . Once the interest-only period expires, the Initial Interest mortgage becomes a fully amortizing mortgage. (For more information, visit www.freddiemac.com/sell/factsheets/initialinterest-arm.html.)

July 1: WAC ARM Cash Execution on Selling System for Initial Interest ARMs

In addition, Freddie Mac also announced that on July 1, 2005 it would make all Initial Interest ARMs available through it’s Weighted Average Coupon ARM Cash (servicing retained) execution and Guarantor Swap execution for lenders using its web-based selling system.

The WAC ARM cash execution permits eligible ARMs with different note rates, margins, servicing spreads, months to adjustment, and life caps to be delivered together under a single contract, subject to tolerances established by the selling system.

Freddie Mac is a stockholder-owned corporation established by Congress in support of homeownership and rental housing. Freddie Mac purchases single-family and multifamily residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage passthrough 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.

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