Freddie Mac Announces Restructuring of a Unit of Mortgage Securities Operations

MCLEAN, VA – As part of its ongoing initiative to focus its business activities on its core mission, Freddie Mac today announced that it is restructuring certain of its mortgage securities operations. This will be accomplished primarily by ceasing the market-making activities of its Securities Sales & Trading Group business unit (SS&TG) and transferring that unit’s mortgage sourcing and investment activities to other Freddie Mac business units. In a related decision, the company is also discontinuing its Money Manager program, through which it had designated eight registered investment advisers to manage a small portion of the company’s capital under prescribed investment guidelines. The company intends to continue its active support for the liquidity and depth of the market for its mortgage securities through its core securitization and investment business activities.

Dick Syron, Chairman and Chief Executive Officer of Freddie Mac, explained that the company is making the changes to simplify its business operations. “Freddie Mac’s senior management team is intensely focusing on the full range of our secondary mortgage market activities. Today’s actions demonstrate our intention to focus and streamline our business operations so that we execute our mission in the most efficient and effective way possible.”

Syron elaborated: “We’ll implement the restructuring of SS&TG’s business activities, including any disposition of assets, in an orderly manner over a period of months. We intend to redeploy certain of the unit’s functions, including its mortgage sourcing capabilities, into the mainstream of our investment and securitization business. We’ll also continue to provide support for the market performance of our PCs through these core activities.”

The information in this press release will be included in Freddie Mac’s Information Statement Supplement to be dated October 4, 2004, which will be posted on the Investor Relations page of Freddie Mac’s website. 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 in America.

Freddie Mac’s press releases sometimes contain forward-looking statements. A description of factors that could cause actual results to differ materially from the expectations expressed in these and other forward-looking statements can be found in the information statement and annual report to stockholders dated September 24, 2004, which is available on the company’s Web site: http://www.FreddieMac.com.