OFFERING CIRCULAR

20,000,000 Shares

5.66% Non-Cumulative

Perpetual Preferred Stock

Freddie Mac

Dividend Rate: 5.66%

Payment Dates: March 31, June 30, September 30 and December 31,

beginning June 30, 2007

Optional Redemption: On or after March 31, 2012

Liquidation Preference: $25 per share plus current dividends

Issue Date: April 16, 2007

Listing: New York Stock Exchange (pending)

An investment in the Preferred Stock involves risks. See Risk Factors beginning on page 5 of

this OÅering Circular and beginning on page 10 of our Information Statement dated March 23,

2007, which we are incorporating by reference in this OÅering Circular.

We alone are responsible for our obligations under and for making payments on the Preferred

Stock. The Preferred Stock is not guaranteed by, and is not a debt or obligation of, the

United States or any federal agency or instrumentality other than Freddie Mac.

Initial Public Underwriting Proceeds to

OÅering Price(1) Discount Freddie Mac(1)(2)

Per ShareÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $25.00 $0.25 $24.75

TotalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $500,000,000 $5,000,000 $495,000,000

(1) Plus any accrued dividends from April 16, 2007.

(2) Before deducting estimated expenses of $150,000.

Joint Book-Running Managers

Banc of America Securities LLC Morgan Stanley

Co-Managers

Bear, Stearns & Co. Inc.

FTN Financial Capital Markets

Goldman, Sachs & Co.

Lehman Brothers

Merrill Lynch & Co.

The date of this OÅering Circular is April 10, 2007.
In this OÅering Circular, we refer to the 5.66% Non-Cumulative Perpetual Preferred Stock as

the ""Preferred Stock.''

The Underwriters may engage in transactions that aÅect the price of the Preferred Stock,

including stabilizing and short-covering transactions and the imposition of a penalty bid, in

connection with the oÅering. For a description of these activities, see Underwriting.

ADDITIONAL INFORMATION

You should read this OÅering Circular together with:

‚ the CertiÑcate of Creation, Designation, Powers, Preferences, Rights, Privileges, QualiÑcations, Limitations, Restrictions, Terms and Conditions for the Preferred Stock (the

""CertiÑcate of Designation''), which will be in substantially the form attached as

Appendix A to this OÅering Circular; and

‚ our Information Statement and Annual Report to Shareholders dated March 23, 2007

(the ""Information Statement'') and our Information Statement Supplements dated

March 8, 2007 and March 23, 2007 (the ""Information Statement Supplements'').

This OÅering Circular incorporates the Information Statement and the Information Statement

Supplements by reference, which means that we are disclosing information to you by referring to

them rather than by providing you with separate copies. The information contained in our

Information Statement and Information Statement Supplements is considered part of this OÅering

Circular. We also furnish our common stockholders with periodic reports containing Ñnancial

information and supplements to our Information Statement. You can obtain copies of any of these

documents by contacting us at:

Freddie Mac

Investor Relations Department

Mailstop D40

1551 Park Run Drive

McLean, Virginia 22102-3110

Telephone: 571-382-4732 or 1-800-FREDDIE (800-373-3343)

e-mail: shareholder@freddiemac.com

Our Information Statement and Information Statement Supplements are also available on the

""Investor Relations'' page of our Internet Website (http://www.freddiemac.com). Although this

information is available on our website, none of the other information on or hyperlinked from our

website is incorporated by reference into this OÅering Circular. You should rely only on the

information included or speciÑcally incorporated by reference in this OÅering Circular in deciding

whether to make an investment in the Preferred Stock. We have not authorized anyone to provide

you with any diÅerent or additional information.

Because of applicable securities law exemptions, we have not registered the Preferred Stock

with any federal or state securities commission. No securities commission has reviewed this

OÅering Circular.

Dividends paid on the Preferred Stock have no exemption under federal law from federal,

state or local taxation. For a discussion of relevant U.S. tax considerations associated with an

investment in the Preferred Stock, see Certain Federal Income Tax Consequences.

Some jurisdictions may by law restrict the distribution of this OÅering Circular and the oÅer,

sale and delivery of the Preferred Stock. Persons who receive this OÅering Circular should know

about and observe any such restrictions.

2
SUMMARY

This summary contains selected information about the Preferred Stock. You should refer to the

remainder of this OÅering Circular for further information.

Issuer ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Federal Home Loan Mortgage Corporation or ""Freddie

Mac,'' a stockholder-owned government-sponsored

enterprise.

Securities OÅered ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 20,000,000 shares of Preferred Stock, each with a $25 per

share redemption price and liquidation preference.

Dividends ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5.66% per annum. Dividends will accrue from but not

including the issue date.

FrequencyÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ We will pay non-cumulative dividends quarterly, when, as

and if declared by our Board of Directors.

Payment Dates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ We will pay dividends, if declared, on March 31, June 30,

September 30 and December 31 of each year, or the next

business day, beginning June 30, 2007.

Preferences ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ The Preferred Stock will receive a preference over our

common stock and any other junior stock as to dividends

and distributions upon liquidation. The Preferred Stock will

rank equally with our other currently outstanding series of

preferred stock as to dividends and distributions upon

liquidation.

MaturityÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Perpetual.

Optional Redemption ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Beginning on March 31, 2012 and at any time thereafter,

we will have the option to redeem the Preferred Stock, in

whole or in part, at the price of $25 per share plus the

amount that would otherwise be payable as the dividend for

the quarterly dividend period in which the redemption date

falls, accrued through and including the redemption date,

whether or not declared. We will give notice of optional

redemption by mail to holders of the Preferred Stock to be

redeemed from 30 days to 60 days before the redemption

date.

Liquidation Rights ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ If Freddie Mac is dissolved or liquidated, you will be

entitled to receive, out of any assets available for distribution to our stockholders, up to $25 per share of Preferred

Stock plus the dividend for the then-current quarterly

dividend period accrued through and including the liquidation payment date, whether or not declared.

Voting Rights ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ None, except in the case of speciÑed changes in the terms

of the Preferred Stock.

Preemptive and Conversion RightsÏÏÏ None.

3
RatingsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ We expect that the Preferred Stock will be rated Aa3

(stable) by Moody's Investors Service, Inc. (""Moody's''),

AA¿ (stable) by Standard & Poor's Ratings Services, a

division of The McGraw-Hill Companies, Inc. (""S&P'')

and AA¿ by Fitch Ratings (""Fitch''). See Ratings.

Use of Proceeds ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ We plan to use the net proceeds from the sale of the

Preferred Stock to Ñnance repurchases of our common

stock. Net proceeds may also be used for general corporate

purposes, including the repayment of outstanding debt and

the purchase of residential mortgages or mortgage

securities.

Transfer Agent, Dividend Disbursing

Agent and Registrar ÏÏÏÏÏÏÏÏÏÏÏÏÏ Computershare Trust Company, N.A.

Exchange Listing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ We have applied to list the Preferred Stock on the New

York Stock Exchange (the ""NYSE'').

CUSIP Number ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 313400665

4
RISK FACTORS

Prospective purchasers of the Preferred Stock should consider carefully the risk factors set forth

below, and in the Information Statement beginning on page 10, as well as all other information

contained or incorporated by reference in this OÅering Circular, in evaluating an investment in the

Preferred Stock.

We Continue to Experience Delays in Our Financial Reporting

Since the restatement and revision of our Ñnancial results for 2000, 2001 and 2002, we have had

to face many challenging and complex accounting and Ñnancial reporting issues, including ongoing

controls remediation and systems re-engineering and development. We fell behind in our annual

Ñnancial reporting for the years ended December 31, 2002, 2003, 2004 and 2005, and we have not

yet returned to quarterly reporting. We face continuing challenges because of the control deÑciencies in our accounting infrastructure and the operational complexities of our business. We have not

made suÇcient progress remediating our material weaknesses and signiÑcant deÑciencies to return

to regular, timely reporting. Failing to meet our reporting obligations could aÅect our ability to

maintain the listing of our securities on the NYSE. Any of these events could have an adverse eÅect

on the trading value of the Preferred Stock. For further information, see Management's Discussion

and Analysis of Financial Condition and Results of Operations Ì Risk Management Ì Operational

Risks Ì Internal Control over Financial Reporting in the Information Statement.

We Have Material Weaknesses and Other DeÑciencies in Our Internal Controls

We have discovered, and may in the future discover, material weaknesses and signiÑcant

deÑciencies in our internal controls that require remediation. Because of the continued material

weaknesses and signiÑcant deÑciencies, our management determined that, as of December 31, 2006,

our internal control over Ñnancial reporting was not eÅective. A number of factors may impede our

eÅorts to remediate our material weaknesses and signiÑcant deÑciencies, including: the complexity

associated with the interdependent nature of the remediation activities; uncertainty regarding the

quality and sustainability of newly established controls; and potentially ineÅective compensating

controls. Failure to eÅectively and timely implement the remediation plan we have undertaken to

correct the identiÑed deÑciencies in our internal control over Ñnancial reporting could similarly

adversely aÅect our business. A failure to establish and maintain an adequate control environment

could result in a material error in our reported Ñnancial results, loss of market conÑdence in our

reported results and additional delays in our Ñnancial reporting timeline. Any of these outcomes

could have a material adverse eÅect on our business and on the trading price of our securities, and

could result in additional regulatory measures. For further information, see Financial Reporting

Matters and Related Information, herein, and Management's Discussion and Analysis of Financial

Condition and Results of Operations Ì Risk Management Ì Operational Risks Ì Internal Control

over Financial Reporting in the Information Statement.

Further, the OÇce of Federal Housing Enterprise Oversight (""OFHEO'') could seek to require

us to implement a remediation plan, hold additional capital or take other actions. EÅective as of

July 1, 2006, we voluntarily limited the growth of our retained portfolio to no more than 2.0%

annually (and 0.5% quarterly on a cumulative basis) based on its carrying value as reported in our

minimum capital report to OFHEO Ñled on July 28, 2006, which was $710.3 billion. This voluntary,

temporary growth limit was undertaken in response to a request from OFHEO.

5
We May Be Unable To Manage EÅectively All of the Risks to Which We Are Subject

Our business is exposed to operational risks, interest-rate and other market risks and credit

risks. We are also exposed to other risks, such as those described in the Risk Factors section of the

Information Statement, including reputation risk, legislation and regulatory risk and risks related to

implementing our business strategies. As described therein, in Management's Discussion and

Analysis of Financial Condition and Results of Operations Ì Risk Management in the Information

Statement and above, we face a number of signiÑcant operational risks, including material

weaknesses and other signiÑcant deÑciencies in our internal control over Ñnancial reporting. These

operational risks may expose us to Ñnancial loss, may delay or interfere with our ability to return to

and sustain timely Ñnancial reporting, or may result in other adverse consequences to our business

and the trading value of our securities. Our retained portfolio activities expose us to interest-rate risk

and other market risks arising primarily from the uncertainty as to when borrowers will repay the

outstanding principal balance of mortgage loans and mortgage-related securities, known as prepayment risk, and the resulting potential mismatch in the timing of our receipt of cash Öows on our

assets versus the timing of our obligation to make payments on our liabilities. Our credit guarantee

activities also expose us to interest-rate risk because changes in interest rates can cause Öuctuations

in the fair value of our existing credit guarantee portfolio. Our credit guarantee portfolio also is

subject primarily to two types of credit risk Ì mortgage credit risk and institutional credit risk.

Mortgage credit risk is the risk that a borrower will fail to make timely payments on a mortgage or

security we own or guarantee. Institutional credit risk is the risk that a counterparty that has entered

into a business contract or arrangement with us will fail to meet its obligations. For further

information, see Risk Factors and Management's Discussion and Analysis of Financial Condition

and Results of Operations Ì Risk Management in the Information Statement.

The Preferred Stock Is Subordinated to Our Senior Obligations

The Preferred Stock is subordinated to our senior obligations, including our subordinated debt

consisting primarily of Freddie SUBS» securities. The terms of the Freddie SUBS that we have

outstanding provide for the deferral of interest payments under certain speciÑed circumstances of

Ñnancial distress and, during those deferral periods, prohibit the payment of dividends on our stock,

including the Preferred Stock. Additionally, we are not permitted to declare or pay dividends on the

Preferred Stock if any arrears or defaults exist in the payment of dividends on any outstanding class

or series of our stock ranking prior to the Preferred Stock with respect to the payment of dividends.

As of the date of this OÅering Circular, we have no outstanding class or series of stock that ranks

senior to the Preferred Stock.

There Is No Existing Trading Market for the Preferred Stock

The Preferred Stock is a new issue of securities with no established trading market. We have

applied to list the Preferred Stock on the NYSE. There is no assurance that the Preferred Stock will

be approved for listing on the NYSE. However, even if the listing of the Preferred Stock is

approved, an active market for the Preferred Stock may not develop or be sustained in the future.

We cannot make assurances to you regarding the liquidity of, or trading markets for, the Preferred

Stock.

6
FREDDIE MAC

Freddie Mac is a stockholder-owned company chartered by Congress in 1970 under the Federal

Home Loan Mortgage Corporation Act (the ""Freddie Mac Act'') to stabilize the nation's

residential mortgage markets and expand opportunities for homeownership and aÅordable rental

housing. We are one of the largest purchasers of mortgage loans in the United States. We bring

innovation and eÇciency to the mortgage lending process.

Our mission is to provide liquidity, stability and aÅordability to the U.S. housing market. We

fulÑll our mission by purchasing residential mortgages and mortgage-related securities in the

secondary mortgage market. We purchase mortgages that meet our underwriting and product

standards, then bundle them into mortgage-related securities that can be sold to investors. We can

use the proceeds to purchase additional mortgages from primary market mortgage lenders, thus

providing them with a continuous Öow of funds. We also purchase mortgage loans and mortgagerelated securities for our investment portfolio, which we Ñnance primarily by issuing a variety of debt

instruments in the capital markets.

Though we are chartered by Congress, our business is funded completely with private capital.

We alone are responsible for making payments on our securities. Neither the U.S. government nor

any other agency or instrumentality of the U.S. government is obligated to fund our mortgage

purchase or Ñnancing activities or to guarantee our securities or other obligations.

Our statutory purposes, as stated in our charter, are:

‚ To provide stability in the secondary market for residential mortgages;

‚ To respond appropriately to the private capital market;

‚ To provide ongoing assistance to the secondary market for residential mortgages

(including activities related to mortgages on housing for low- and moderate-income

families involving a reasonable economic return that may be less than the return

received on other activities) by increasing the liquidity of mortgage investments and

improving the distribution of investment capital available for residential mortgage

Ñnancing; and

‚ To promote access to mortgage credit throughout the United States (including central

cities, rural areas and other underserved areas) by increasing the liquidity of mortgage

investments and improving the distribution of investment capital available for residential

mortgage Ñnancing.

Our principal oÇces are located in McLean, Virginia. We have additional oÇces in Washington, D.C.; Reston, Virginia; Atlanta, Georgia; Chicago, Illinois; Dallas, Texas; New York, New

York; and Woodland Hills, California.

7
USE OF PROCEEDS

We plan to use the net proceeds from the sale of the Preferred Stock to Ñnance repurchases of

our common stock. Net proceeds may also be used for general corporate purposes, including the

repayment of outstanding debt and the purchase of residential mortgages or mortgage securities.

The precise amounts and timing of the application of the proceeds will depend on our capital and

funding requirements.

We continuously engage in Ñnancing transactions. The amount and nature of these transactions

are dependent on a number of factors, including the volume of mortgage prepayments and

mortgages we purchase, as well as general market conditions.

CAPITALIZATION

The following table shows our capitalization at December 31, 2006:

‚ on an actual basis;

‚ on a pro forma basis to give eÅect to the sale of our 5.57% Non-Cumulative Preferred

Stock in January 2007 and the redemption of our 6.14% Non-Cumulative Preferred

Stock in February 2007; and

‚ pro forma as adjusted to give eÅect to the items described in the above bullet and the

sale of the Preferred Stock oÅered by this OÅering Circular.

This information should be read together with our consolidated Ñnancial statements and other

Ñnancial information set forth in the Information Statement. We engage in Ñnancing transactions

and issue or repurchase debt obligations on an ongoing basis, all of which cause our total

capitalization to change. Therefore, on any date after December 31, 2006, our total capitalization

will diÅer (perhaps substantially) from the Ñgures contained in this capitalization table. See Risk

Factors Ì We Continue to Experience Delays in Our Financial Reporting.

8
December 31, 2006

Pro Forma As

Actual Pro Forma(1) Adjusted(2)

(dollars in millions)

Debt securities, net

Senior debt:

Due within one year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $294,861 $294,861 $294,861

Due after one year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 452,677 452,677 452,677

Subordinated Borrowings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6,400 6,400 6,400

Total debt securities, netÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 753,938 753,938 753,938

Stockholders' Equity(3)(4)(5):

Variable Rate, Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption value(6) ÏÏ 250 250 250

6.14% Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption value(7)ÏÏÏÏÏÏÏÏÏÏ 600 Ì Ì

5.81% Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption value(8)ÏÏÏÏÏÏÏÏÏÏ 150 150 150

5% Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption value(9) ÏÏÏÏÏÏÏÏÏÏÏÏ 400 400 400

Variable Rate, Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption value(10) ÏÏ 220 220 220

5.1% Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption value(10) ÏÏÏÏÏÏÏÏÏÏ 400 400 400

5.3% Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption value(11) ÏÏÏÏÏÏÏÏÏÏ 200 200 200

5.1% Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption value(12) ÏÏÏÏÏÏÏÏÏÏ 150 150 150

5.79% Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption value(13) ÏÏÏÏÏÏÏÏÏ 250 250 250

Variable Rate, Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption value(14) ÏÏ 287 287 287

Variable Rate, Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption value(15) ÏÏ 325 325 325

Variable Rate, Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption value(16) ÏÏ 230 230 230

5.81% Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption value(17) ÏÏÏÏÏÏÏÏÏ 173 173 173

Variable Rate, Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption value(18) ÏÏ 201 201 201

6% Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption value(19)ÏÏÏÏÏÏÏÏÏÏÏÏ 173 173 173

5.7% Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption value(20) ÏÏÏÏÏÏÏÏÏÏ 300 300 300

5.81% Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption value(21) ÏÏÏÏÏÏÏÏÏ 300 300 300

Variable Rate, Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption value(22) ÏÏÏÏÏÏ 750 750 750

6.42% Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption value(22) ÏÏÏÏÏÏÏÏÏ 250 250 250

5.9% Non-Cumulative Preferred Stock, $1.00 par value and $25.00 redemption value(23) ÏÏÏÏÏÏÏÏÏÏ 500 500 500

5.57% Non-Cumulative Preferred Stock, $1.00 par value and $25.00 redemption value(24) ÏÏÏÏÏÏÏÏÏ Ì 1,100 1,100

5.66% Non-Cumulative Preferred Stock, $1.00 par value and $25.00 redemption value(25) ÏÏÏÏÏÏÏÏÏ Ì Ì 500

Common stock, $0.21 par value ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 152 152 152

Additional paid-in capital ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 962 951 946

Retained earningsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 32,177 32,177 32,177

Accumulated other comprehensive income (loss), net of taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (7,869) (7,869) (7,869)

Treasury stock, at costÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (3,230) (3,230) (3,230)

Total stockholders' equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 28,301 28,790 29,285

Total capitalization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $782,239 $782,728 $783,223

(1) ""Pro Forma'' reÖects proceeds of $1.09 billion from the January 2007 issuance of 44 million shares of our 5.57% Non-Cumulative Preferred

Stock and the deduction of $300,000 in associated transaction costs, and the redemption of all of the outstanding shares of our 6.14% NonCumulative Preferred Stock in February 2007.

(2) ""Pro Forma As Adjusted'' reÖects anticipated proceeds of $495 million from the issuance of 20 million shares of the Preferred Stock, and

the deduction of $150,000 in estimated transaction costs. The actual transaction costs may diÅer. ""Pro Forma As Adjusted'' also reÖects

the January 2007 issuance of preferred stock and the February 2007 redemption of preferred stock described in footnote (1) above, but

does not reÖect any debt transactions since December 31, 2006 or any repurchases of common stock since December 31, 2006.

(3) Preferred stock amounts reÖect redemption values as shown. Costs associated with the issuance of preferred stock are included in

additional paid-in capital.

(4) As long as the capital monitoring framework established by OFHEO in January 2004 remains in eÅect, any preferred stock redemption will

require prior approval by OFHEO. See Note 10: Regulatory Capital to our consolidated Ñnancial statements included in the Information

Statement for more information.

(5) All classes of preferred stock are perpetual and non-cumulative, and carry no signiÑcant voting rights or rights to purchase additional

Freddie Mac stock or securities.

(6) Optional redemption on or after June 30, 2001.

(7) Optional redemption on or after June 30, 2002. All of the outstanding shares of our 6.14% Non-Cumulative Preferred Stock were redeemed

in February 2007.

(8) Optional redemption on or after October 27, 1998.

(9) Optional redemption on or after March 31, 2003.

(10) Optional redemption on or after September 30, 2003.

(11) Optional redemption on or after October 30, 2000.

(12) Optional redemption on or after March 31, 2004.

(13) Optional redemption on or after June 30, 2009.

(14) Optional redemption on December 31, 2004 and on December 31 every Ñve years thereafter.

(15) Optional redemption on March 31, 2003 and on March 31 every two years thereafter.

(16) Optional redemption on March 31, 2003 and on March 31 every year thereafter.

(17) Optional redemption on or after March 31, 2011.

(18) Optional redemption on June 30, 2003 and on June 30 every two years thereafter.

(19) Optional redemption on or after June 30, 2006.

(20) Optional redemption on or after December 31, 2006.

(21) Optional redemption on or after March 31, 2007.

(22) Optional redemption on or after June 30, 2011.

(23) Optional redemption on or after September 30, 2011.

(24) Optional redemption on or after December 31, 2011.

(25) Optional redemption on or after March 31, 2012.

See Notes 8 and 9 to the consolidated Ñnancial statements included in the Information

Statement for further information about our debt securities, subordinated borrowings and

stockholders' equity.

9
FINANCIAL REPORTING MATTERS AND RELATED INFORMATION

Since the restatement and revision of our Ñnancial results for 2000, 2001 and 2002, we have had

to face many challenging and complex accounting and Ñnancial reporting issues, including ongoing

controls remediation and systems re-engineering and development. We fell behind in our annual

Ñnancial reporting for the years ended December 31, 2002, 2003, 2004 and 2005, and we have not

yet returned to quarterly reporting. We are continuing to make progress on the series of initiatives to

improve our Ñnancial reporting infrastructure and remediate material weaknesses and other

deÑciencies in our internal controls. These activities are part of our plan for returning to quarterly

Ñnancial reporting. Our plan includes mitigation and remediation of identiÑed material weaknesses

and signiÑcant deÑciencies; strengthening of the Ñnancial close process; implementing critical

systems initiatives; and completing a review of our system of internal controls related to the

processing and recording of our Ñnancial transactions. A number of factors may impede our eÅorts

to remediate our material weaknesses and signiÑcant deÑciencies, including: the complexity

associated with the interdependent nature of the remediation activities; uncertainty regarding the

quality and sustainability of newly established controls; and potentially ineÅective compensating

controls. Failure to eÅectively and timely implement the remediation plan we have undertaken to

correct the identiÑed deÑciencies in our internal control over Ñnancial reporting could similarly

adversely aÅect our business. See also Risk Factors Ì Business and Operational Risks and Ì Legal

and Regulatory Risks in our Information Statement. Although we have reduced the severity of some

of our signiÑcant deÑciencies, many of the material weaknesses and other signiÑcant deÑciencies

identiÑed in prior years persisted throughout 2006 and will continue to pose signiÑcant risks to our

Ñnancial reporting processes until fully remediated. See Risk Factors Ì Business and Operational

Risks and Management's Discussion and Analysis of Financial Condition and Results of Operations Ì Risk Management Ì Operational Risks in the Information Statement for more information. The material weaknesses and signiÑcant deÑciencies in our internal control over Ñnancial

reporting adversely aÅect our ability to record, process, summarize and report Ñnancial data in a

timely manner. Based on the continued existence of material weaknesses at December 31, 2006, our

Chief Executive OÇcer and Chief Financial OÇcer concluded that our internal control over

Ñnancial reporting was not eÅective at December 31, 2006.

We have not completed our evaluation of our internal control over Ñnancial reporting.

Accordingly, we are unable to determine whether additional weaknesses or deÑciencies that require

remediation exist. Our ability to identify, manage, mitigate and/or remedy internal control

deÑciencies and other risks may continue to delay our return to regular, timely reporting. Any

controls and procedures, no matter how well designed and operated, can provide only reasonable

assurance of achieving the desired control objectives. Furthermore, we cannot be certain that our

eÅorts to improve our control environment will be successful or that we will be able to maintain

adequate controls over our Ñnancial processes and reporting in the future. A failure to establish and

maintain eÅective internal control over Ñnancial reporting and eÅective disclosure controls and

procedures could result in a material error in our reported Ñnancial results, additional delay in our

Ñnancial reporting timeline, and could have a material adverse eÅect on our business depending on

the nature of the failure and any required remediation. If we fail to meet our reporting obligations,

this could aÅect our ability to maintain the listing of our securities on the NYSE. Further, OFHEO

could seek to require us to implement a remediation plan, hold additional capital or take other

actions (see Regulatory Capital herein for more information). In August 2006, in response to a

request from OFHEO, we announced that we would voluntarily limit, on a temporary basis, the

growth of our retained mortgage portfolio, eÅective July 1, 2006.

10
We are also exposed to the risk that our business processes could be adversely aÅected by

inadequate staÇng, which strains existing resources and increases the risk that an error or fraud will

not be detected. This risk is of particular concern for us because of high voluntary employee turnover

rates experienced in 2005, critical vacancies and recent changes in our senior management. During

2006, we Ñlled some important vacancies such as Chief Financial OÇcer; Corporate Controller and

Principal Accounting OÇcer; Chief Information OÇcer; General Counsel; and General Auditor.

While we have made progress in our eÅorts to reduce voluntary employee turnover rates and to build

a strong management team by Ñlling several senior positions, we need to continue to recruit

additional qualiÑed people into key positions across the organization in order to achieve our

remediation objectives.

We manage risk through a framework, approved by our Board of Directors, that recognizes

primary risk ownership and management by our business areas. Within this framework, our

executive management committees and divisions responsible for independent risk oversight, which

include Enterprise Risk Oversight, Corporate Compliance and Internal Audit, monitor performance

against our risk management strategies and established risk limits, identify and assess potential

issues, and provide oversight regarding changes in business processes and activities. Oversight of risk

management is also provided by our Board of Directors and its committees. Together these groups

assess the adequacy and eÅectiveness of the risk management functions across the company.

While we consider both our day-to-day and long-term management of interest-rate and other

market risks and credit risks to be satisfactory, we identiÑed weaknesses in prior years in our overall

risk governance framework. We created an executive management enterprise risk committee in June

2006 to provide a company-wide view of risk and have formed Ñve subcommittees to focus on credit,

market, models, operations and regulatory risks. Our Board of Directors has also assigned primary

responsibility for oversight of enterprise risk management to the Governance, Nominating and Risk

Oversight Committee of the Board of Directors.

For further discussion of corporate initiatives we have undertaken to improve our ability to

manage our operational risks and the potential eÅects of those risks on our business, see

Management's Discussion and Analysis of Financial Condition and Results of Operations Ì Risk

Management Ì Operational Risks in the Information Statement.

In addition, we face a highly uncertain regulatory environment in light of governmentsponsored enterprise (""GSE'') regulatory oversight legislation currently under consideration in

Congress. We generate a signiÑcant portion of our net income through our Retained portfolio.

Currently, we have in place a voluntary temporary growth limit on our Retained portfolio. GSE

regulatory oversight legislation under consideration in the House of Representatives would give our

regulator substantial authority to regulate the amount and composition of our portfolio investments

and to require substantial reductions in those investments. This legislation also includes provisions

that would increase the regulator's authority to require us to maintain higher minimum and riskbased capital levels and, for 2007 through 2011, require us to make an annual contribution to an

aÅordable housing fund in an amount equal to 1.2 basis points of our average total mortgage

portfolio. See Regulation and Supervision Ì GSE Regulatory Oversight Legislation in our Information Statement for more information regarding this bill. We cannot predict the prospects for the

enactment, timing or content of any Ñnal legislation. The provisions of this legislation, individually

and in certain combinations, could have a material adverse eÅect on our ability to fulÑll our mission,

future earnings, stock price and stockholder returns, the rate of growth in our fair value and our

ability to recruit qualiÑed oÇcers and directors.

11
SELECTED FINANCIAL DATA

The following table sets forth, for the periods and dates indicated, our selected consolidated

Ñnancial data which has been derived from and should be read in conjunction with our annual

consolidated Ñnancial statements, including those incorporated in this OÅering Circular by reference

to our Information Statement for the year ended December 31, 2006.

We do not have current Ñnancial information available and have material weaknesses and other

deÑciencies in our internal control environment. On any date after December 31, 2006, our Ñnancial

information may diÅer (perhaps substantially) from the data contained in this table. See Risk

Factors Ì We Continue to Experience Delays in Our Financial Reporting and Ì We Have Material

Weaknesses and Other DeÑciencies in Our Internal Controls. You should also read, in conjunction

with this Ñnancial information, the discussion of certain operational risks relating to our Ñnancial

reporting set forth under Risk Factors and Financial Reporting Matters and Related Information

above.

12
Selected Financial Data(1)

At or for the Year Ended December 31,

2006 2005 2004 2003 2002

(dollars in millions, except share-related amounts)

Income Statement Data

Net interest incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 4,235 $ 5,370 $ 9,137 $ 9,498 $ 9,525

Non-interest income (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 915 199 (3,039) (244) 7,154

Net income before cumulative eÅect of changes in accounting principles ÏÏÏÏÏ 2,211 2,189 2,937 4,816 10,090

Cumulative eÅect of changes in accounting principles, net of taxes ÏÏÏÏÏÏÏÏÏÏ Ì (59) Ì Ì Ì

Net incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,211 2,130 2,937 4,816 10,090

Net income available to common stockholders ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1,936 $ 1,907 $ 2,727 $ 4,600 $ 9,851

Earnings per common share before cumulative eÅect of changes in accounting

principles:

Basic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 2.84 $ 2.84 $ 3.96 $ 6.69 $ 14.22

Diluted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2.84 2.83 3.94 6.68 14.17

Earnings per common share after cumulative eÅect of changes in accounting

principles:

Basic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 2.84 $ 2.76 $ 3.96 $ 6.69 $ 14.22

Diluted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2.84 2.75 3.94 6.68 14.17

Dividends per common share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1.91 $ 1.52 $ 1.20 $ 1.04 $ 0.88

Weighted average common shares outstanding (in thousands):

Basic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 680,856 691,582 689,282 687,094 692,727

Diluted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 682,664 693,511 691,521 688,675 695,116

Balance Sheet Data

Total assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 813,081 $ 806,222 $ 795,284 $ 803,449 $ 752,249

Senior debt due within one year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 294,861 288,532 282,303 295,262 244,429

Senior debt due after one yearÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 452,677 454,627 443,772 438,738 415,662

Subordinated debt due after one year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6,400 5,633 5,622 5,613 5,605

Miscellaneous liabilities(2) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 30,326 29,290 30,662 30,420 52,914

Minority interests in consolidated subsidiaries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 516 949 1,509 1,929 2,309

Stockholders' equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 28,301 27,191 31,416 31,487 31,330

Ratios

Return on average assets(3)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.3% 0.3% 0.4% 0.6% 1.4%

Return on common equity(4) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8.6 7.7 10.2 17.2 47.2

Return on total equity(5) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8.0 7.3 9.3 15.3 39.6

Dividend payout ratio on common stock(6)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 67.7 56.4 30.7 15.6 6.2

Equity to assets ratio(7) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3.4 3.7 3.9 4.0 3.7

(1) EÅective January 1, 2006, we adopted the provisions of Statement of Financial Accounting Standards, or SFAS, No. 123(R), ""Share-based

Payment'' and also changed our method of estimating prepayments for the purpose of amortizing premiums, discounts and deferred fees related to

mortgage revenue bonds and commercial mortgage-backed securities held in the Retained portfolio. EÅective December 31, 2006, we adopted the

provisions of SFAS No. 158, ""Employers' Accounting for DeÑned BeneÑt Pension and Other Postretirement Plans, an amendment of

FASB Statements No. 87, 88, 106 and 132(R),'' or SFAS 158. EÅective January 1, 2005, we changed our method of accounting for interest

expense related to callable debt instruments to recognize interest expense using an eÅective interest method over the contractual life of the debt and

changed our method for determining gains and losses upon the re-sale of PCs and Structured Securities related to deferred items recognized in

connection with our guarantee of those securities. See ""Note 1: Summary of SigniÑcant Accounting Policies'' to our consolidated Ñnancial

statements in the Information Statement for more information regarding these accounting changes. EÅective January 1, 2003, we adopted the

provisions of FASB Interpretation No. 45, ""Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees

of Indebtedness of Others, an interpretation of FASB Statements No. 5, 57 and 107 and rescission of FASB Interpretation No. 34,'' or FIN 45, and

FASB StaÅ Position FIN 45-2, ""Whether FASB Interpretation No. 45 Provides Support for Subsequently Accounting for a Guarantor's Liability

at Fair Value.''

(2) Includes (a) Due to Participation CertiÑcate investors, (b) Accrued interest payable, (c) Guarantee obligation, (d) Derivative liabilities, at fair

value, (e) Reserve for guarantee losses on Participation CertiÑcates and (f) Other liabilities, as presented on our consolidated balance sheets.

(3) Ratio computed as Net income divided by the simple average of beginning and ending Total assets.

(4) Ratio computed as Net income available to common stockholders divided by the simple average of beginning and ending Stockholders' equity, net

of Preferred stock, at redemption value.

(5) Ratio computed as Net income divided by the simple average of beginning and ending Stockholders' equity.

(6) Ratio computed as Common stock dividends declared divided by Net income available to common stockholders.

(7) Ratio computed as the simple average of beginning and ending Stockholders' equity divided by the simple average of beginning and ending Total

assets.

13
REGULATION AND GOVERNMENTAL RELATIONSHIPS

We face a highly uncertain regulatory environment in light of GSE regulatory oversight

legislation currently under consideration in Congress. During 2005, the House of Representatives

and the Senate Committee on Banking, Housing, and Urban AÅairs each passed a bill that would

have resulted in signiÑcant changes in the existing GSE regulatory oversight structure. Congressional consideration of those bills ended with the expiration of the 109th Congress in December

2006.

A new session of Congress began in January 2007. The House Committee on Financial

Services passed a bill on March 29, 2007 containing provisions that would substantially alter the

current regulatory framework under our charter and the Federal Housing Enterprises Financial

Safety and Soundness Act of 1992 (""GSE Act''). The bill that was passed includes provisions that

would:

‚ give our regulator substantial authority to regulate the amount and composition of our

portfolio investments and to require substantial reductions in those investments;

‚ increase the regulator's authority to require us to maintain higher minimum and risk-based

capital levels and to approve new products;

‚ modify our aÅordable housing goals; and

‚ for 2007 through 2011, require us to make an annual contribution to an aÅordable housing

fund in an amount equal to 1.2 basis points of our average total mortgage portfolio.

While new GSE oversight legislation has yet to be introduced in the Senate, we believe the

Senate is likely to consider legislation that poses similar issues, but may also include provisions that

diÅer materially from any bill considered in the House. Provisions of the bill currently under

consideration in the House or any other bill considered by the House or Senate, individually and in

certain combinations, could have a material adverse eÅect on our ability to fulÑll our mission, future

earnings, stock price and stockholder returns, the rate of growth in our fair value and our ability to

recruit qualiÑed oÇcers and directors.

We believe appropriate GSE regulatory oversight legislation would strengthen market conÑdence and promote our mission. We cannot predict the prospects for the enactment, timing or

content of any Ñnal legislation.

A more detailed discussion of our regulatory and governmental relationships appears under

Regulation and Supervision in our Information Statement.

DESCRIPTION OF PREFERRED STOCK

The Preferred Stock will have the terms shown in the CertiÑcate of Designation attached as

Appendix A to this OÅering Circular. The following is a summary of those terms.

General

Section 306(f) of the Freddie Mac Act authorizes us to issue an unlimited number of shares of

preferred stock. The shares of Preferred Stock we are oÅering will have a par value of $1.00 per

share and will be created by the CertiÑcate of Designation.

Computershare Trust Company, N.A., will be the transfer agent, dividend disbursing agent and

registrar for the Preferred Stock.

14
Authorized Issuance

Our Board of Directors has authorized us to issue the shares of Preferred Stock. The authorized

number of shares may be increased at any time without the consent of the holders of the Preferred

Stock. We may ""reopen'' this oÅering at any time by oÅering additional shares of the Preferred

Stock at prices to be determined at that time.

Dividends

General

Dividends on shares of the Preferred Stock are not mandatory. If you own shares of the

Preferred Stock, you will be entitled to receive non-cumulative, quarterly cash dividends which will

accrue from but not including the original date of issuance and will be payable on March 31,

June 30, September 30 and December 31 of each year (each, a ""Dividend Payment Date''),

beginning on June 30, 2007. Dividends on shares of the Preferred Stock will accrue at an annual rate

of 5.66% or $1.415 per share. However, dividends are payable only if declared by our Board of

Directors in its sole discretion, out of funds legally available for dividend payments. Dividends not

declared for any Dividend Payment Date will not accrue thereafter.

If a Dividend Payment Date is not a Business Day, the related dividend will be paid on the next

Business Day with the same eÅect as though paid on the Dividend Payment Date, without any

increase to account for the period from the Dividend Payment Date through the date of actual

payment. ""Business Day'' means a day other than (a) Saturday or Sunday, (b) a day on which

New York City banks are closed or (c) a day on which our oÇces are closed. We will make

dividend payments to holders of record on the record date established by our Board of Directors,

which will be from 10 to 45 days before the applicable Dividend Payment Date.

If declared, the initial dividend, which will be for the period from but not including the original

date of issuance through and including June 30, 2007, will be $0.29086 per share. Thereafter, the

""Dividend Period'' relating to a Dividend Payment Date will be the period from but not including

the preceding Dividend Payment Date through and including the related Dividend Payment Date.

We will compute the amount of dividends payable on the Preferred Stock for any period shorter

than a full Dividend Period on the basis of twelve 30-day months and a 360-day year. We will

compute any dividends payable on the Preferred Stock for each full Dividend Period by dividing the

annual dividend by four. If we redeem the Preferred Stock, we will include the dividend that would

otherwise be payable for the Dividend Period in which the redemption date falls, accrued through

and including the redemption date, whether or not declared, in the redemption price of the shares

redeemed. We will not pay this dividend to you separately.

The CertiÑcate of Designation does not require us to make any dividend adjustment as a result

of changes in the dividends-received deduction under the Internal Revenue Code of 1986.

Preferences and Limitations

The Preferred Stock will rank prior to our Common Stock with respect to dividends, as

provided in the CertiÑcate of Designation. We will not declare or pay any dividend on our Common

Stock or any of our other junior stock unless dividends have been declared and paid or set apart, or

ordered to be set apart, on the Preferred Stock for the then-current Dividend Period. The Preferred

Stock will rank equally with respect to dividends with our other currently outstanding series of

15
preferred stock (the ""Existing Preferred Stock''), which are listed in Section 1 of the CertiÑcate of

Designation and in the Capitalization Table on page 9 of this OÅering Circular.

Dividends on the Preferred Stock are not cumulative. If we do not pay a dividend on the

Preferred Stock, the holders of the Preferred Stock will have no claim to a payment as long as we do

not pay a dividend for the then-current period on our Common Stock, any of our other junior stock

or the Existing Preferred Stock.

Our Board of Directors may, in its discretion, choose to pay dividends on the Preferred Stock

without paying dividends on our Common Stock.

We have oÅered and sold subordinated debt which we refer to as Freddie SUBS» securities. As

of the date of this OÅering Circular, we have a total of approximately $5.1 billion in Freddie SUBS

outstanding. The most recent issuance of Freddie SUBS took place in December 2006. The terms of

the Freddie SUBS that we have issued provide for the deferral of interest payments under certain

speciÑed circumstances of Ñnancial distress. The terms of the Freddie SUBS also prohibit the

payment of dividends on our stock, including the Preferred Stock, during any period when we have

deferred paying interest on our subordinated debt.

We are not permitted to declare or pay any dividends on the Preferred Stock if at the same time

any arrears or default exists in the payment of dividends on any outstanding class or series of our

stock ranking prior to the Preferred Stock with respect to the payment of dividends. At the time of

issuance of the Preferred Stock, no class or series of our stock ranking prior to the Preferred Stock

will exist.

Holders of shares of the Preferred Stock will not be entitled to any dividends, whether payable

in cash or other property, other than as described above and will not be entitled to interest, or any

sum in lieu of interest, in respect of any dividend payment.

See Regulatory Capital below for a description of possible regulatory restrictions on our ability

to pay dividends.

Optional Redemption

The Preferred Stock will not be redeemable before March 31, 2012. At any time on or after

that date, we may redeem the Preferred Stock, in whole or in part, out of legally available funds. The

redemption price will be $25.00 per share plus an amount equal to the amount of the dividend that

would otherwise be payable for the Dividend Period in which the redemption date falls, accrued

through and including the redemption date, whether or not declared. If we redeem less than all of

the outstanding shares of the Preferred Stock, we will select shares to be redeemed by lot or pro rata

(as nearly as possible) or by any other method which we deem equitable.

We will give notice of optional redemption by mail to holders of the Preferred Stock from

30 days to 60 days before the redemption date. Each notice will state the number of shares of

Preferred Stock being redeemed, the redemption price, the redemption date and the place at which

a holder's Preferred Stock certiÑcates must be presented for such redemption.

On and after the redemption date, the shares of Preferred Stock called for redemption will no

longer be deemed outstanding, and all rights of the holders of those shares will cease, other than the

right to receive the redemption price for such redeemed shares.

16
The terms of our currently oÅered subordinated debt prohibit us from redeeming our stock,

including the Preferred Stock, during any period when we have deferred paying interest on our

subordinated debt.

See Regulatory Capital below for a description of possible regulatory restrictions on our ability

to redeem the Preferred Stock.

No Preemptive Rights and No Conversion

As a holder of Preferred Stock, you will not have any preemptive rights to purchase or

subscribe for any other shares, rights, options or other securities. You will not have any right to

convert your shares into or exchange your shares for any other class or series of our stock or

obligations.

No Voting Rights

Section 306(f) of the Freddie Mac Act prohibits the holders of Preferred Stock from voting for

the election of any member of our Board of Directors. Except as described under Amendments

below, as a holder you will not be entitled to vote.

Liquidation Rights

If we voluntarily or involuntarily dissolve, liquidate or wind up our business, then, after payment

of or provision for our liabilities to creditors and the expenses of dissolution, liquidation or winding

up, the holders of the outstanding shares of Preferred Stock will be entitled to receive out of our

assets available for distribution to stockholders, before any payment or distribution is made on the

Common Stock or any other junior stock, $25.00 per share plus an amount equal to the dividend for

the then-current quarterly Dividend Period accrued through and including the liquidation payment

date, whether or not declared.

In the event of our dissolution, liquidation or winding up, the rights of the Preferred Stock rank

equally with those of the Existing Preferred Stock. If our assets available for distribution to

shareholders are insuÇcient to pay in full the aggregate amount payable to holders of the Preferred

Stock, the Existing Preferred Stock and any other class or series of stock of equal priority upon

liquidation, the assets will be distributed to the holders of Preferred Stock, the Existing Preferred

Stock and such other stock pro rata, based on the amounts to which they are entitled.

Notwithstanding the foregoing, holders of the Preferred Stock will not be entitled to be paid

any amount in respect of our dissolution, liquidation or winding up until holders of any classes or

series of our stock ranking prior to the Preferred Stock upon liquidation have been paid all amounts

to which they are entitled.

Our consolidation, merger or combination with or into any other corporation or entity, or the

sale of all or substantially all of our property or business, will not constitute a liquidation, dissolution

or winding up for purposes of these provisions on liquidation rights.

Additional Classes or Series of Stock

We will have the right to create and issue additional classes or series of stock ranking prior to,

equally with or junior to the Preferred Stock, as to dividends, liquidation or otherwise, without the

consent of holders of the Preferred Stock. As of the date of this OÅering Circular, we have no

17
outstanding class or series of stock or other equity security that ranks senior to the Preferred Stock

as to dividends or distributions upon liquidation.

Amendments

Without the consent of the holders of the Preferred Stock, we will have the right to amend the

CertiÑcate of Designation to cure any ambiguity, to correct or supplement any term which may be

defective or inconsistent with any other term or to make any other provisions so long as the

amendment does not materially and adversely aÅect the interests of the holders of the Preferred

Stock. Otherwise, we may amend the CertiÑcate of Designation only with the consent of the holders

of at least two-thirds of the outstanding shares of Preferred Stock. On matters requiring consent,

each holder will be entitled to one vote per share.

REGULATORY CAPITAL

Regulatory Capital Standards

The GSE Act established minimum, critical and risk-based capital standards for us.

Those standards determine the amounts of core capital and total capital that we must maintain

to meet regulatory capital requirements. Core capital consists of the par value of outstanding

common stock (common stock issued less common stock held in treasury), the par value of

outstanding non-cumulative, perpetual preferred stock, additional paid-in capital and retained

earnings, as determined in accordance with U.S. generally-accepted accounting principles

(""GAAP''). Total capital includes core capital and general reserves for mortgage and foreclosure

losses and any other amounts available to absorb losses that OFHEO includes by regulation.

Minimum Capital

The minimum capital standard requires us to hold an amount of core capital that is generally

equal to the sum of 2.50% of aggregate on-balance sheet assets and approximately 0.45% of the sum

of outstanding mortgage-related securities we guaranteed and other aggregate oÅ-balance sheet

obligations. As discussed below, in 2004 OFHEO implemented a framework for monitoring our

capital adequacy, which includes a mandatory target capital surplus of 30% over the minimum

capital requirement.

Critical Capital

The critical capital standard requires us to hold an amount of core capital that is generally equal

to the sum of 1.25% of aggregate on-balance sheet assets and approximately 0.25% of the sum of

outstanding mortgage-related securities we guaranteed and other aggregate oÅ-balance sheet

obligations.

Risk-Based Capital

The risk-based capital standard requires the application of a stress test to determine the amount

of total capital that we must hold to absorb projected losses resulting from adverse interest-rate and

credit-risk conditions speciÑed by the GSE Act and adds 30% additional capital to provide for

management and operations risk. The adverse interest-rate conditions prescribed by the GSE Act

18
include one scenario in which 10-year Treasury yields rise by as much as 75% (up-rate scenario)

and one in which they fall by as much as 50% (down-rate scenario). The credit risk component of

the stress tests simulates the performance of our mortgage portfolio based on loss rates for a

benchmark region. The criteria for the benchmark region are established by the GSE Act and are

intended to capture the credit-loss experience of the region that experienced the highest historical

rates of default and severity of mortgage losses for two consecutive origination years.

ClassiÑcation

OFHEO monitors our performance with respect to the three regulatory capital standards by

classifying our capital adequacy not less than quarterly.

To be classiÑed as ""adequately capitalized,'' we must meet both the risk-based and minimum

capital standards. If we fail to meet the risk-based capital standard, we cannot be classiÑed higher

than ""undercapitalized.'' If we fail to meet the minimum capital requirement but exceed the critical

capital requirement, we cannot be classiÑed higher than ""signiÑcantly undercapitalized.'' If we fail

to meet the critical capital standard, we must be classiÑed as ""critically undercapitalized.'' In

addition, OFHEO has discretion to reduce our capital classiÑcation by one level if OFHEO

determines that we are engaging in conduct OFHEO did not approve that could result in a rapid

depletion of core capital or determines that the value of property subject to mortgage loans we hold

or guarantee has decreased signiÑcantly.

When we are classiÑed as adequately capitalized, we generally can pay a dividend on our

common or preferred stock or make other capital distributions (which includes common stock

repurchases and preferred stock redemptions) without prior OFHEO approval so long as the

payment would not decrease total capital to an amount less than our risk-based capital requirement

and would not decrease our core capital to an amount less than our minimum capital requirement.

However, because we are currently subject to the regulatory capital monitoring framework described

below, we are required to obtain OFHEO's prior approval of certain capital transactions, including

common stock repurchases, redemption of any preferred stock or payment of dividends on preferred

stock above stated contractual rates.

If we were classiÑed as undercapitalized, we would be prohibited from making a capital

distribution that would reduce our core capital to an amount less than our minimum capital

requirement. We also would be required to submit a capital restoration plan for OFHEO approval,

which could adversely aÅect our ability to make capital distributions.

If we were classiÑed as signiÑcantly undercapitalized, we would be prohibited from making any

capital distribution that would reduce our core capital to less than the critical capital level. We

would otherwise be able to make a capital distribution only if OFHEO determined that the

distribution would: (a) enhance our ability to meet the risk-based capital standard and the

minimum capital standard promptly; (b) contribute to our long-term Ñnancial safety and soundness;

or (c) otherwise be in the public interest. Also under this classiÑcation, OFHEO could take action

to limit our growth, require us to acquire new capital or restrict us from activities that create

excessive risk. We also would be required to submit a capital restoration plan for OFHEO approval,

which could adversely aÅect our ability to make capital distributions.

If we were classiÑed as critically undercapitalized, OFHEO would be required to appoint a

conservator for us, unless OFHEO made a written Ñnding that it should not do so and the Secretary

19
of the Treasury concurred in that determination. We would be able to make a capital distribution

only if OFHEO determined that the distribution would: (a) enhance our ability to meet the riskbased capital standard and the minimum capital standard promptly; (b) contribute to our long-term

Ñnancial safety and soundness; or (c) otherwise be in the public interest.

Performance Against Regulatory Capital Standards

OFHEO has never classiÑed us as other than ""adequately capitalized,'' the highest possible

classiÑcation, reÖecting our consistent compliance with the minimum, critical and risk-based capital

requirements.

The following table summarizes our regulatory capital requirements and surpluses(1):

December 31,

2006 2005

(in millions)

Minimum capital requirement(2)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $25,844 $25,010

Core capital(2) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 36,170 35,964

Minimum capital surplus(2) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10,326 10,954

Critical capital requirement(2) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $13,237 $12,782

Core capital(2) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 36,170 35,964

Critical capital surplus(2) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 22,933 23,182

Risk-based capital requirementÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $15,320 $11,282

Total capital ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 36,742 36,781

Risk-based capital surplus ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 21,422 25,499

(1) OFHEO is the authoritative source of the capital calculations that underlie our capital classiÑcations.

(2) Amounts for 2006 are based on amended reports we submitted to OFHEO in March 2007.

Factors that could adversely aÅect the adequacy of our regulatory capital for future periods

include declines in GAAP income; increases in our risk proÑle; changes in the economic

environment, such as large interest-rate or implied volatility moves or home-price declines; changes

in option-adjusted spreads; legislative or regulatory action that could increase capital requirements

or changes in or adoption of new accounting standards. See Note 1: Summary of SigniÑcant

Accounting Policies Ì Recently Issued Accounting Standards, Not Yet Adopted to our consolidated

Ñnancial statements included in our Information Statement for more information. In particular,

interest-rate levels or implied volatility can aÅect the amount of our core capital, even if we were

economically well hedged against interest-rate changes, because certain gains or losses are

recognized through GAAP earnings while other oÅsetting gains or losses may not be. Changes in

option-adjusted spreads can also aÅect the amount of our core capital, because option-adjusted

spreads are a factor in the valuation of our guaranteed mortgage portfolio.

Regulatory Capital Monitoring Framework

In a letter dated January 28, 2004, OFHEO created a framework for monitoring our capital due

to our higher operational risk, including our inability to produce timely Ñnancial statements in

accordance with GAAP. The letter directed that we maintain a mandatory target capital surplus of

30% over our minimum capital requirement, subject to certain conditions and variations; that we

submit weekly reports concerning our capital levels; and that we obtain prior approval of certain

capital transactions.

Our failure to meet the mandatory target capital surplus would result in an OFHEO inquiry

regarding the reason for such failure. If OFHEO were to determine that we had acted unreasonably

20
regarding our compliance with the framework, as set forth in OFHEO's letter, OFHEO could seek

to require us to submit a remedial plan or take other remedial steps.

In addition, under this framework, we are required to obtain prior written approval from the

Director of OFHEO before engaging in certain capital transactions, as described above. We must

also submit a written report to the Director of OFHEO after the declaration, but before the

payment, of any dividend on our common stock. The report must contain certain information on the

amount of the dividend, the rationale for the payment and the impact on our capital surplus.

This framework will remain in eÅect until the Director of OFHEO determines that it should be

modiÑed or expire. OFHEO's letter indicated that this determination would consider our resumption

of timely Ñnancial and regulatory reporting that complies with GAAP, among other factors.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The Preferred Stock and payments on it are generally subject to taxation by the United States

and other taxing jurisdictions to the same extent as stock of any other corporation. The following

discussion addresses certain U.S. federal income tax consequences that may result from ownership

of the Preferred Stock by a U.S. person (as deÑned below) who holds the Preferred Stock as a

capital asset.

This discussion does not discuss all of the U.S. federal income tax consequences that may be

relevant to a U.S. person in light of its particular circumstances or to U.S. persons subject to special

rules, such as certain Ñnancial institutions, insurance companies, certain former citizens or residents

of the United States, traders in securities that elect to use a mark-to-market method of accounting

for their securities holdings, dealers in securities, U.S. persons holding the Preferred Stock as part of

a hedging transaction, straddle conversion transaction or synthetic security transaction, U.S. persons

whose functional currency is not the U.S. dollar, tax-exempt persons, or regulated investment

companies.

This discussion does not purport to address all rules which may apply to particular investors.

Investors are encouraged to consult their own tax advisors regarding the U.S. federal, state, local and

foreign tax considerations applicable to an investment in the Preferred Stock.

This discussion reÖects current U.S. federal income tax laws and Treasury regulations and

administrative and judicial interpretations. Changes to any of these that occur after the date of this

OÅering Circular may aÅect the tax consequences that we describe herein.

For this purpose, a U.S. person is an individual who is a citizen or resident of the United States

for U.S. federal income tax purposes, a corporation, partnership or other type of entity organized

under the laws of the United States or any state or the District of Columbia (other than a

partnership that is not treated as a U.S. person under any applicable Treasury regulations), an estate

whose income is subject to U.S. federal income tax regardless of its source, or a trust if a court

within the United States is able to exercise primary supervision of the administration of the trust and

one or more U.S. persons have the authority to control all substantial decisions of the trust.

Notwithstanding the preceding sentence, to the extent provided in Treasury regulations, certain

trusts in existence on August 20, 1996, and treated as U.S. persons prior to such date, that elect to

continue to be treated as U.S. persons, also will be U.S. persons.

21
Dividends

Distributions on the Preferred Stock which are paid out of current earnings and proÑts, or

earnings and proÑts accumulated after 1984 (as determined for U.S. federal income tax purposes),

generally constitute dividends taxable as ordinary income. To the extent that the amount of any

distribution paid on a share of Preferred Stock exceeds the current or accumulated earnings and

proÑts attributable to that share, such excess will be treated Ñrst as a return of capital (rather than as

ordinary income) and will be applied against and reduce the holder's adjusted tax basis in that share

of Preferred Stock. Any such amount in excess of the holder's adjusted tax basis will then be taxed

as capital gain. For purposes of the remainder of this discussion, it is assumed that dividends paid

with respect to the Preferred Stock will constitute dividends for U.S. federal income tax purposes.

Dividends received by corporations generally will be eligible for the dividends-received

deduction. The dividends-received deduction is available only with respect to a dividend received on

stock held for more than 45 days (or more than 90 days in the case of a preferred stock dividend

attributable to periods aggregating in excess of 366 days), including the day of disposition but not

the day of acquisition. This holding period must be satisÑed during the 91-day period (or the

181-day period in the case of a preferred stock dividend attributable to periods aggregating in excess

of 366 days) beginning on the date which is 45 (90) days before the date on which the stock

becomes ex-dividend with respect to the dividend. The length of time that a corporate shareholder is

deemed to have held stock for these purposes is reduced for periods during which the shareholder's

risk of loss with respect to the stock is diminished by reason of the shareholder's position in certain

options, contracts to sell, short sales or other similar transactions. The amount of such deduction

generally will equal 70 percent of the amount of the dividends received, subject to reduction in

certain events, including where a holder has indebtedness outstanding that is directly attributable to

an investment in the Preferred Stock. For this purpose, indebtedness of a depository institution

attributable to deposits received in the ordinary course of its business is not treated as indebtedness

directly attributable to an investment in the Preferred Stock.

For purposes of the corporate alternative minimum tax, alternative minimum taxable income is

increased by 75 percent of the amount by which a corporation's adjusted current earnings exceeds its

alternative minimum taxable income prior to the addition of the applicable tax preference item. The

amount of any dividend that is included in a corporate shareholder's adjusted current earnings will

generally not be reduced by any dividends-received deduction otherwise allowable with respect to

that dividend.

Dividends received by individuals generally are subject to a reduced maximum tax rate of

15 percent through December 31, 2010, after which date the rate applicable to dividends is

scheduled to return to the rate generally applicable to ordinary income. The rate reduction does not

apply to dividends received to the extent that the individual shareholder elects to treat the dividends

as ""investment income,'' which may be oÅset against investment expenses. Furthermore, the rate

reduction does not apply to dividends that are paid to individual shareholders with respect to

Preferred Stock that is held for 60 days or less during the 121-day period beginning on the date

which is 60 days before the date on which the Preferred Stock becomes ex-dividend. Individual

shareholders should consult their own tax advisors regarding the implications of these rules in light

of their particular circumstances.

22
Dispositions, Including Redemptions

Any sale, exchange, redemption (except as discussed below) or other disposition of the

Preferred Stock generally will result in taxable gain or loss equal to the diÅerence between the

amount received and the shareholder's adjusted tax basis in the Preferred Stock. Such gain or loss

generally will be capital gain or loss and will be long-term capital gain or loss if the holding period

for the Preferred Stock exceeds one year. Tax rates on capital gain for individuals vary depending on

each individual's income and holding period for the Preferred Stock. Long-term capital gain realized

by individuals is subject to a reduced maximum tax rate of 15 percent through December 31, 2010,

after which date the maximum rate is scheduled to return to the rate generally applicable to longterm capital gains. Individual shareholders should contact their own tax advisors for more

information or for the capital gains tax rate applicable to speciÑc shares of Preferred Stock.

A payment made in redemption of Preferred Stock may be treated as a dividend, rather than as

payment in exchange for the Preferred Stock, unless the redemption is ""not essentially equivalent to

a dividend'' with respect to the holder within the meaning of section 302(b)(1) of the Internal

Revenue Code of 1986. In applying this standard, the holder must take into account not only the

Preferred Stock and other stock of Freddie Mac that it owns directly, but also the Preferred Stock

and other stock of Freddie Mac that it constructively owns within the meaning of section 318 of the

Internal Revenue Code of 1986. A redemption payment made to a holder will be ""not essentially

equivalent to a dividend'' if it results in a ""meaningful reduction'' in the holder's aggregate stock

interest in the company. Because of the ambiguities in applying this rule, each holder should consult

its own tax advisor to determine whether a payment made in redemption of Preferred Stock will be

treated as a dividend or as payment in exchange for the Preferred Stock. If the redemption payment

is treated as a dividend, the rules discussed above under Dividends apply.

Information Reporting and Backup Withholding

Payments of dividends on shares of Preferred Stock held of record by U.S. persons other than

corporations and other exempt holders are required to be reported to the Internal Revenue Service.

Backup withholding of U.S. federal income tax may apply to payments made with respect to

shares of Preferred Stock, as well as payments of proceeds from the sale of shares of Preferred

Stock, to holders that are not ""exempt recipients'' and that fail to provide certain identifying

information (such as the taxpayer identiÑcation number of the holder) in the manner required.

Individuals generally are not exempt recipients, whereas corporations and certain other entities

generally are exempt recipients.

Circular 230

Any U.S. federal tax advice included in this OÅering Circular (1) is not intended or written to

be used, and cannot be used, to avoid any U.S. federal tax penalties, and (2) was written to support

the promotion or marketing of the transaction or matter addressed by this OÅering Circular. Any

taxpayer receiving this OÅering Circular should seek advice from an independent tax advisor based

on the taxpayer's particular circumstances.

23
LEGAL INVESTMENT CONSIDERATIONS

You should consult your own legal advisors to determine whether the shares of Preferred Stock

constitute legal investments for you and whether the shares of Preferred Stock can be used as

collateral for borrowings. In addition, Ñnancial institutions should consult their legal advisors or

regulators in determining the appropriate treatment of the shares of Preferred Stock under riskbased capital or similar rules.

If you are subject to legal investment laws and regulations or to review by regulatory

authorities, you may be subject to restrictions on investing in the shares of Preferred Stock.

Institutions regulated by the Comptroller of the Currency, the Board of Governors of the Federal

Reserve System, the Federal Deposit Insurance Corporation, the OÇce of Thrift Supervision, the

National Credit Union Administration, the Department of the Treasury or any other federal or state

agency with similar authority should review any applicable regulations, policy statements and

guidelines before purchasing or pledging the shares of Preferred Stock.

UNDERWRITING

Under the terms of an underwriting agreement (the ""Underwriting Agreement''), we have

agreed to sell to the Underwriters named below, and the Underwriters, for whom Banc of America

Securities LLC and Morgan Stanley & Co. Incorporated are acting as representatives, have

severally agreed to purchase from us, the shares of Preferred Stock opposite their names.

Number of Shares

Underwriter of Preferred Stock

Banc of America Securities LLCÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8,800,000

Morgan Stanley & Co. Incorporated ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8,800,000

Bear, Stearns & Co. Inc. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 600,000

First Tennessee Bank National Association ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 600,000

Goldman, Sachs & Co. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 400,000

Lehman Brothers Inc. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 400,000

Merrill Lynch, Pierce, Fenner & Smith

Incorporated ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 400,000

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 20,000,000

The Underwriting Agreement requires the Underwriters to take and pay for all of the shares of

Preferred Stock, if any are taken.

The Underwriters propose to oÅer a portion of the Preferred Stock directly to the public at the

initial oÅering price shown on the cover page of this OÅering Circular, plus accrued dividends, if

any, from but not including April 16, 2007, and a portion to certain dealers at that price less a

concession of not more than $0.15 per share. The Underwriters may allow, and the dealers may

reallow, a concession of not more than $0.10 per share on sales to certain brokers and dealers. After

the initial oÅering of the shares, the Underwriters may vary the oÅering price and other selling

terms.

Until this oÅering, there has been no public market for the Preferred Stock. We have applied to

list the Preferred Stock on the NYSE. Trading of the Preferred Stock on the NYSE is expected to

commence within a fourteen-day period after the initial delivery of the Preferred Stock. The

Underwriters have advised us that they intend to make a market in the Preferred Stock prior to the

commencement of trading on the NYSE, but are not obliged to do so and may discontinue any such

24
market making at any time without notice. There is no assurance that the Preferred Stock will be

approved for listing on the NYSE.

In connection with the oÅering, the Underwriters may purchase and sell the Preferred Stock in

the open market. These transactions may include stabilizing transactions and purchases to cover

syndicate short positions created in connection with the oÅering. Stabilizing transactions consist of

certain bids or purchases for the purpose of preventing or retarding a decline in the market price of

the Preferred Stock. Syndicate short positions involve the sale by the Underwriters of a greater

number of shares of Preferred Stock than they are required to purchase from us in the oÅering. The

Underwriters also may impose a penalty bid, whereby selling concessions allowed to syndicate

members or other broker-dealers for securities sold in the oÅering for their account may be

reclaimed by the syndicate if such shares of Preferred Stock are repurchased by the Underwriters in

stabilizing or covering transactions. These activities may stabilize, maintain or otherwise aÅect the

market price of the Preferred Stock, which may be higher than the price that might otherwise

prevail in the open market; and these activities, if commenced, may be discontinued at any time.

These transactions may be eÅected in the over-the-counter market or otherwise.

We and the Underwriters have agreed to indemnify each other against certain liabilities in

connection with the oÅering and sale of the Preferred Stock.

Some of the Underwriters, dealers or agents may engage in transactions with us and perform

services for us in the ordinary course of business.

RATINGS

We expect that Moody's will assign the Preferred Stock a rating of Aa3 and a rating outlook of

stable. An issue which is rated ""Aa'' is considered by Moody's to be ""of high quality'' and ""subject

to very low credit risk.'' The numerical modiÑer ""3'' indicates that the issue ranks in the lower end

of the generic rating category of ""Aa.'' According to Moody's a ""rating outlook is an opinion

regarding the likely direction of a rating over the medium term.''

We expect that S&P will assign the Preferred Stock a rating of AA¿ and a rating outlook of

stable. An issue which is rated ""AA'' is considered by S&P to diÅer ""from the highest-rated

obligations only to a small degree.'' According to S&P, ""the obligor's capacity to meet its Ñnancial

commitment on the obligation is very strong.'' The modiÑer ""¿'' indicates that the issue ranks in the

lower end of the generic rating category ""AA.'' According to S&P, a ""rating outlook assesses the

potential direction of a long-term credit rating over the intermediate term (typically six months to

two years)''; a rating outlook of ""stable'' means that a rating is not likely to change over this period.

We expect that Fitch will assign the Preferred Stock a rating of AA¿. An issue which is rated

""AA'' is considered by Fitch to be of ""very high credit quality.'' According to Fitch, this rating

indicates a ""very strong capacity for payment of Ñnancial commitments.'' The modiÑer ""¿''

indicates that the issue ranks in the lower end of the generic rating category ""AA.''

A security rating is not a recommendation to buy, sell or hold securities and may be subject to

revision or withdrawal at any time by the assigning rating organization.

25
INDEPENDENT ACCOUNTANTS

The consolidated Ñnancial statements as of December 31, 2006 and December 31, 2005 and for

each of the three years in the period ended December 31, 2006, incorporated by reference into this

OÅering Circular, have been audited by PricewaterhouseCoopers LLP, independent accountants, as

stated in their report with respect thereto.

LEGAL MATTERS

Kevin I. MacKenzie, Esq., Vice President and Deputy General Counsel Ì Securities, will

render an opinion on the legality of the Preferred Stock. As of April 10, 2007, Mr. MacKenzie is the

beneÑcial owner of 22,568 shares of Common Stock, 8,558 of which are unvested, and options

covering an additional 14,466 shares of Common Stock, 3,114 of which are unvested. Sidley

Austin LLP is representing the Underwriters on legal matters concerning the Preferred Stock.

26
FORWARD-LOOKING STATEMENTS

We regularly communicate information concerning our business activities to investors, securities analysts, the news media and others as part of our normal operations. Some of these

communications include ""forward-looking statements'' pertaining to our current expectations and

objectives for Ñnancial reporting, future business plans, results of operations, Ñnancial condition and

market trends and developments. Forward-looking statements are often accompanied by, and

identiÑed with, terms such as ""predict,'' ""ability,'' ""intent,'' ""indicator,'' ""trend,'' ""eÅorts,'' ""assumptions,'' ""judgments,'' ""models,'' ""developments,'' ""estimates,'' ""continue,'' ""promote,'' ""affect,'' ""consider,'' ""enable,'' ""currently,'' ""priorities,'' ""remain,'' ""anticipate,'' ""initiative,''

""ongoing,'' ""believe,'' ""expect,'' ""plan,'' ""targeted,'' ""depend,'' ""proposed,'' ""projections,'' ""until,''

""attempt,'' ""forecasts,'' ""outlook,'' ""over time,'' ""future,'' ""seek,'' ""potential,'' ""objective,'' ""longterm,'' ""ultimately,'' ""goal,'' ""will,'' ""may,'' ""might,'' ""should,'' ""can,'' ""could,'' ""would,'' ""likely,''

""if,'' ""typically,'' ""generally,'' ""new,'' ""uncertain'' and similar phrases. This OÅering Circular

includes forward-looking statements. These statements are not historical facts, but rather represent

our expectations based on current information, plans, estimates and projections. Forward-looking

statements involve known and unknown risks, uncertainties and other factors, some of which are

beyond our control. You should be careful about relying on any forward-looking statements and

should also consider all risks, uncertainties and other factors described in this OÅering Circular, the

Information Statement and the Information Statement Supplements in considering any forwardlooking statements. Actual results may diÅer materially from those discussed as a result of various

factors, including those factors described in the Risk Factors section of this OÅering Circular and

the Information Statement incorporated by reference herein. Factors that could cause actual results

to diÅer materially from the expectations expressed in these and other forward-looking statements

by management include, among others:

‚ our ability to eÅectively and timely implement the remediation plan undertaken as a

result of the restatement of our consolidated Ñnancial statements and the consent order

entered into with OFHEO, including particular initiatives relating to technical infrastructure and controls over Ñnancial reporting;

‚ changes in applicable legislative or regulatory requirements, including enactment of

GSE oversight legislation, changes to our charter, aÅordable housing goals, regulatory

capital requirements, the exercise or assertion of regulatory or administrative authority

beyond historical practice, or regulation of the subprime mortgage lending market;

‚ our ability to eÅectively implement our business strategies and manage the risks in our

business, including our eÅorts to improve the supply and liquidity of, and demand for,

our products;

‚ changes in our assumptions or estimates regarding rates of growth in our business,

spreads we expect to earn, required capital levels, the timing and impact of capital

transactions;

‚ our ability to eÅectively manage and implement changes, developments or impacts of

accounting or tax standards and interpretations;

‚ the availability of debt Ñnancing and equity capital in suÇcient quantity and at

attractive rates to support growth in our retained portfolio, to reÑnance maturing debt

and to meet regulatory capital requirements;

27
‚ changes in pricing or valuation methodologies, models, assumptions, estimates and/or

other measurement techniques;

‚ volatility of reported results due to changes in fair value of certain instruments or assets;

‚ changes in general economic conditions;

‚ the rate of growth in total outstanding U.S. residential mortgage debt and the size of the

U.S. residential mortgage market;

‚ preferences of originators in selling into the secondary market;

‚ borrower preferences for Ñxed-rate mortgages or adjustable-rate mortgages;

‚ investor preferences for mortgage loans and mortgage-related and debt securities versus

other investments;

‚ the occurrence of a major natural or other disaster in geographic areas in which portions

of our total mortgage portfolio are concentrated;

‚ other factors and assumptions described in our Information Statement, including in the

sections titled Business, Risk Factors and Management's Discussion and Analysis of

Financial Condition and Results of Operations, and the Information Statement

Supplements;

‚ our assumptions and estimates regarding the foregoing and our ability to anticipate the

foregoing factors and their impacts; and

‚ market reactions to the foregoing.

We undertake no obligation to update forward-looking statements we make to reÖect events or

circumstances after the date of this OÅering Circular, or to reÖect the occurrence of unanticipated

events.

28
Appendix A

FREDDIE MAC

CERTIFICATE OF CREATION, DESIGNATION, POWERS,

PREFERENCES, RIGHTS, PRIVILEGES, QUALIFICATIONS,

LIMITATIONS, RESTRICTIONS, TERMS AND CONDITIONS

of

5.66% NON-CUMULATIVE PERPETUAL PREFERRED STOCK

(Par Value $1.00 Per Share)

I, KEVIN I. MACKENZIE, Assistant Secretary of the Federal Home Loan Mortgage

Corporation, a government-sponsored enterprise of the United States of America (""Freddie Mac''

or the ""Corporation''), do hereby certify that, pursuant to authority vested in the Board of Directors

of Freddie Mac by Section 306(f) of the Federal Home Loan Mortgage Corporation Act, as

amended (12 U.S.C. Û1455(f)), the Board of Directors adopted Resolution FHLMC 2007-04 on

March 2, 2007, which resolution is now, and at all times since such date has been, in full force and

eÅect, and that the Chairman and Chief Executive OÇcer, pursuant to the authority delegated to

him by such resolution, approved the Ñnal terms of the public issuance and sale of the preferred

stock of Freddie Mac designated above.

The 5.66% Non-Cumulative Preferred Stock shall have the following designation, powers,

preferences, rights, privileges, qualiÑcations, limitations, restrictions, terms and conditions:

1. Designation, Par Value, Number of Shares and Seniority

The class of preferred stock of Freddie Mac created hereby (the ""Non-Cumulative Preferred

Stock'') shall be designated ""5.66% Non-Cumulative Perpetual Preferred Stock,'' shall have a par

value of $1.00 per share and shall consist of 20,000,000 shares. The Board of Directors shall be

permitted to increase the authorized number of such shares at any time. The Non-Cumulative

Preferred Stock shall rank prior to the Voting Common Stock of Freddie Mac (the ""Common

Stock'') to the extent provided in this CertiÑcate and shall rank, both as to dividends and

distributions upon liquidation, on a parity with (a) the 5.57% Non-Cumulative Preferred Stock

issued on January 16, 2007, (b) the 5.9% Non-Cumulative Preferred Stock issued on October 16,

2006, (c) the 6.42% Non-Cumulative Preferred Stock issued on July 17, 2006, (d) the Variable

Rate, Non-Cumulative Preferred Stock issued on July 17, 2006, (e) the 5.81% Non-Cumulative

Preferred Stock issued on January 29, 2002, (f) the 5.7% Non-Cumulative Preferred Stock issued

on October 30, 2001, (g) the 6% Non-Cumulative Preferred Stock issued on May 30, 2001, (h) the

Variable Rate, Non-Cumulative Preferred Stock issued on May 30, 2001 and June 1, 2001, (i) the

5.81% Non-Cumulative Preferred Stock issued on March 23, 2001, (j) the Variable Rate, NonCumulative Preferred Stock issued on March 23, 2001, (k) the Variable Rate, Non-Cumulative

Preferred Stock issued on January 26, 2001, (l) the Variable Rate, Non-Cumulative Preferred

Stock issued on November 5, 1999, (m) the 5.79% Non-Cumulative Preferred Stock issued on

July 21, 1999, (n) the 5.1% Non-Cumulative Preferred Stock issued on March 19, 1999, (o) the

5.3% Non-Cumulative Preferred Stock issued on October 28, 1998, (p) the 5.1% Non-Cumulative

Preferred Stock issued on September 23, 1998, (q) the Variable Rate, Non-Cumulative Preferred

Stock issued on September 23, 1998 and September 29, 1998, (r) the 5% Non-Cumulative

A-1
Preferred Stock issued on March 23, 1998, (s) the 5.81% Non-Cumulative Preferred Stock issued

on October 27, 1997 and (t) the Variable Rate, Non-Cumulative Preferred Stock issued on

April 26, 1996 (collectively, the ""Existing Preferred Stock'').

2. Dividends

(a) Holders of outstanding shares of Non-Cumulative Preferred Stock shall be entitled to

receive, ratably, when, as and if declared by the Board of Directors, in its sole discretion, out of

funds legally available therefor, non-cumulative cash dividends at the annual rate of 5.66%, or

$1.415, per share of Non-Cumulative Preferred Stock. Dividends on the Non-Cumulative Preferred

Stock shall accrue from but not including April 16, 2007 and will be payable when, as and if

declared by the Board of Directors quarterly on March 31, June 30, September 30 and December 31

of each year (each, a ""Dividend Payment Date'') commencing on June 30, 2007. If a Dividend

Payment Date is not a ""Business Day,'' the related dividend shall be paid on the next Business Day

with the same force and eÅect as though paid on the Dividend Payment Date, without any increase

to account for the period from such Dividend Payment Date through the date of actual payment.

""Business Day'' means a day other than (i) a Saturday or Sunday, (ii) a day on which New York

City banks are closed, or (c) a day on which the oÇces of Freddie Mac are closed.

If declared, the initial dividend, which will be for the period from but not including April 16,

2007 through and including June 30, 2007, will be $0.29086 per share. Thereafter, dividends will

accrue from Dividend Period to Dividend Period at a rate equal to 5.66% divided by four; the

amount of dividends payable in respect of any shorter period shall be computed on the basis of

twelve 30-day months and a 360-day year. Except for the initial Dividend Payment Date, the

""Dividend Period'' relating to a Dividend Payment Date will be the period from but not including

the preceding Dividend Payment Date through and including the related Dividend Payment Date.

Each such dividend shall be paid to the holders of record of outstanding shares of the

Non-Cumulative Preferred Stock as they appear in the books and records of Freddie Mac on such

record date as shall be Ñxed in advance by the Board of Directors, not to be earlier than 45 days nor

later than 10 days preceding the applicable Dividend Payment Date. No dividends shall be declared

or paid or set apart for payment on the Common Stock or any other class or series of stock ranking

junior to or (except as hereinafter provided) on a parity with the Non-Cumulative Preferred Stock

with respect to the payment of dividends unless dividends have been declared and paid or set apart

(or ordered by the Board of Directors to be set apart) for payment on the outstanding

Non-Cumulative Preferred Stock in respect of the then-current Dividend Period; provided, however,

that the foregoing dividend preference shall not be cumulative and shall not in any way create any

claim or right in favor of the holders of Non-Cumulative Preferred Stock in the event that Freddie

Mac shall not have declared or paid or set apart (or the Board of Directors shall not have ordered to

be set apart) dividends on the Non-Cumulative Preferred Stock in respect of any prior Dividend

Period. In the event that Freddie Mac shall not pay any one or more dividends or any part thereof on

the Non-Cumulative Preferred Stock, the holders of the Non-Cumulative Preferred Stock shall not

have any claim in respect of such non-payment so long as no dividend is paid on any junior or parity

stock in violation of the preceding sentence.

(b) Notwithstanding any other provision of this CertiÑcate, the Board of Directors, in its

discretion, may choose to pay dividends on the Non-Cumulative Preferred Stock without the

payment of any dividends on the Common Stock or any other class or series of stock from time to

A-2
time outstanding ranking junior to the Non-Cumulative Preferred Stock with respect to the

payment of dividends.

(c) No dividend shall be declared or paid or set apart for payment on any shares of the

Non-Cumulative Preferred Stock if at the same time any arrears or default exists in the payment of

dividends on any outstanding class or series of stock of Freddie Mac ranking prior to or (except as

provided herein) on a parity with the Non-Cumulative Preferred Stock with respect to the payment

of dividends. If and whenever dividends, having been declared, shall not have been paid in full, as

aforesaid, on shares of the Non-Cumulative Preferred Stock and on the shares of any other class or

series of stock of Freddie Mac ranking on a parity with the Non-Cumulative Preferred Stock with

respect to the payment of dividends, all such dividends that have been declared on shares of the

Non-Cumulative Preferred Stock and on the shares of any such other class or series shall be paid

pro rata, so that the respective amounts of dividends paid per share on the Non-Cumulative

Preferred Stock and on such other class or series shall in all cases bear to each other the same ratio

that the respective amounts of dividends declared but unpaid per share on the shares of the

Non-Cumulative Preferred Stock and on the shares of such other class or series bear to each other.

(d) Holders of shares of the Non-Cumulative Preferred Stock shall not be entitled to any

dividends, in cash or in property, other than as herein provided and shall not be entitled to interest,

or any sum in lieu of interest, on or in respect of any dividend payment.

3. Optional Redemption

(a) The Non-Cumulative Preferred Stock shall not be redeemable prior to March 31, 2012.

Subject to this limitation and the notice provisions set forth in Section 3(b) below and to any further

limitations which may be imposed by law, Freddie Mac may redeem the Non-Cumulative Preferred

Stock, in whole or in part, at any time or from time to time, out of funds legally available therefor, at

the redemption price of $25.00 per share plus an amount, determined in accordance with

Section 2(a) above, equal to the amount of the dividend, if any, otherwise payable for the thencurrent Dividend Period accrued through and including the date of such redemption, whether or not

declared. If less than all of the outstanding shares of the Non-Cumulative Preferred Stock are to be

redeemed, Freddie Mac shall select shares to be redeemed from the outstanding shares not

previously called for redemption by lot or pro rata (as nearly as possible) or by any other method

which Freddie Mac in its sole discretion deems equitable. If Freddie Mac redeems the NonCumulative Preferred Stock, the dividend that would otherwise be payable for the Dividend Period

ending on the date of redemption will be included in the redemption price of the shares redeemed

and will not be separately payable.

(b) In the event Freddie Mac shall redeem any or all of the Non-Cumulative Preferred Stock

as aforesaid, notice of such redemption shall be given by Freddie Mac by Ñrst class mail, postage

prepaid, mailed neither less than 30 nor more than 60 days prior to the redemption date, to each

holder of record of the shares of the Non-Cumulative Preferred Stock being redeemed, at such

holder's address as the same appears in the books and records of Freddie Mac. Each such notice

shall state the number of shares being redeemed, the redemption price, the redemption date and the

place at which such holder's certiÑcate(s) representing shares of the Non-Cumulative Preferred

Stock must be presented for cancellation or exchange, as the case may be, upon such redemption.

Failure to give notice, or any defect in the notice, to any holder of the Non-Cumulative Preferred

A-3
Stock shall not aÅect the validity of the proceedings for the redemption of shares of any other holder

of the Non-Cumulative Preferred Stock being redeemed.

(c) Notice having been mailed as aforesaid, from and after the redemption date speciÑed

therein and upon payment of the consideration set forth in Section 3(a) above, said shares of the

Non-Cumulative Preferred Stock shall no longer be deemed to be outstanding, and all rights of the

holders thereof as holders of the Non-Cumulative Preferred Stock shall cease, with respect to shares

so redeemed, other than the right to receive the redemption price for such redeemed shares.

(d) Any shares of the Non-Cumulative Preferred Stock which shall have been redeemed shall,

after such redemption, no longer have the status of authorized, issued or outstanding shares.

4. No Voting Rights

Except as set forth in Section 9(h) below, the shares of the Non-Cumulative Preferred Stock

shall not have any voting powers, either general or special.

5. No Conversion or Exchange Rights

The holders of shares of the Non-Cumulative Preferred Stock shall not have any right to

convert such shares into or exchange such shares for any other class or series of stock or obligations

of Freddie Mac.

6. No Preemptive Rights

No holder of the Non-Cumulative Preferred Stock shall as such holder have any preemptive

right to purchase or subscribe for any other shares, rights, options or other securities of any class of

Freddie Mac which at any time may be sold or oÅered for sale by Freddie Mac.

7. Liquidation Rights and Preference

(a) Except as otherwise set forth herein, upon the voluntary or involuntary dissolution,

liquidation or winding up of Freddie Mac, after payment of or provision for the liabilities of Freddie

Mac and the expenses of such dissolution, liquidation or winding up, the holders of the outstanding

shares of the Non-Cumulative Preferred Stock shall be entitled to receive out of the assets of

Freddie Mac available for distribution to stockholders, before any payment or distribution shall be

made on the Common Stock or any other class or series of stock of Freddie Mac ranking junior to

the Non-Cumulative Preferred Stock upon liquidation, the amount of $25.00 per share plus an

amount, determined in accordance with Section 2(a) above, equal to the dividend, if any, otherwise

payable for the then-current Dividend Period accrued through and including the date of payment in

respect of such dissolution, liquidation or winding up, and the holders of the outstanding shares of

any class or series of stock of Freddie Mac ranking on a parity with the Non-Cumulative Preferred

Stock upon liquidation shall be entitled to receive out of the assets of Freddie Mac available for

distribution to stockholders, before any such payment or distribution shall be made on the Common

Stock or any other class or series of stock of Freddie Mac ranking junior to the Non-Cumulative

Preferred Stock and to such parity stock upon liquidation, any corresponding preferential amount to

which the holders of such parity stock may, by the terms thereof, be entitled; provided, however,

that if the assets of Freddie Mac available for distribution to stockholders shall be insuÇcient for the

payment of the amount which the holders of the outstanding shares of the Non-Cumulative

Preferred Stock and the holders of the outstanding shares of such parity stock shall be entitled to

A-4
receive upon such dissolution, liquidation or winding up of Freddie Mac as aforesaid, then, subject

to paragraph (b) of this Section 7, all of the assets of Freddie Mac available for distribution to

stockholders shall be distributed to the holders of outstanding shares of the Non-Cumulative

Preferred Stock and to the holders of outstanding shares of such parity stock pro rata, so that the

amounts so distributed to holders of the Non-Cumulative Preferred Stock and to holders of such

classes or series of such parity stock, respectively, shall bear to each other the same ratio that the

respective distributive amounts to which they are so entitled bear to each other. After the payment

of the aforesaid amounts to which they are entitled, the holders of outstanding shares of the

Non-Cumulative Preferred Stock and the holders of outstanding shares of any such parity stock

shall not be entitled to any further participation in any distribution of assets of Freddie Mac.

(b) Notwithstanding the foregoing, upon the dissolution, liquidation or winding up of Freddie

Mac, the holders of shares of the Non-Cumulative Preferred Stock then outstanding shall not be

entitled to be paid any amounts to which such holders are entitled pursuant to paragraph (a) of this

Section 7 unless and until the holders of any classes or series of stock of Freddie Mac ranking prior

upon liquidation to the Non-Cumulative Preferred Stock shall have been paid all amounts to which

such classes or series are entitled pursuant to their respective terms.

(c) Neither the sale of all or substantially all of the property or business of Freddie Mac, nor

the merger, consolidation or combination of Freddie Mac into or with any other corporation or

entity, shall be deemed to be a dissolution, liquidation or winding up for the purpose of this

Section 7.

8. Additional Classes or Series of Stock

The Board of Directors shall have the right at any time in the future to authorize, create and

issue, by resolution or resolutions, one or more additional classes or series of stock of Freddie Mac,

and to determine and Ñx the distinguishing characteristics and the relative rights, preferences,

privileges and other terms of the shares thereof. Any such class or series of stock may rank prior to

or on a parity with or junior to the Non-Cumulative Preferred Stock as to dividends or upon

liquidation or otherwise.

9. Miscellaneous

(a) Any stock of any class or series of Freddie Mac shall be deemed to rank:

(i) prior to the shares of the Non-Cumulative Preferred Stock, either as to dividends or

distributions upon liquidation, if the holders of such class or series shall be entitled to the

receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of

Freddie Mac, as the case may be, in preference or priority to the holders of shares of the

Non-Cumulative Preferred Stock;

(ii) on a parity with shares of the Non-Cumulative Preferred Stock, either as to dividends

or distributions upon liquidation, whether or not the dividend rates or amounts, dividend

payment dates or redemption or liquidation prices per share, if any, be diÅerent from those of

the Non-Cumulative Preferred Stock, if the holders of such class or series shall be entitled to

the receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up

of Freddie Mac, as the case may be, in proportion to their respective dividend rates or amounts

A-5
or liquidation prices, without preference or priority, one over the other, as between the holders

of such class or series and the holders of shares of the Non-Cumulative Preferred Stock; and

(iii) junior to shares of the Non-Cumulative Preferred Stock, either as to dividends or

distributions upon liquidation, if such class or series shall be Common Stock, or if the holders

of shares of the Non-Cumulative Preferred Stock shall be entitled to receipt of dividends or of

amounts distributable upon dissolution, liquidation or winding up of Freddie Mac, as the case

may be, in preference or priority to the holders of shares of such class or series.

(b) Freddie Mac and any agent of Freddie Mac may deem and treat the holder of a share or

shares of Non-Cumulative Preferred Stock, as shown in Freddie Mac's books and records, as the

absolute owner of such share or shares of Non-Cumulative Preferred Stock for the purpose of

receiving payment of dividends in respect of such share or shares of Non-Cumulative Preferred

Stock and for all other purposes whatsoever, and neither Freddie Mac nor any agent of Freddie Mac

shall be aÅected by any notice to the contrary. All payments made to or upon the order of any such

person shall be valid and, to the extent of the sum or sums so paid, eÅectual to satisfy and discharge

liabilities for moneys payable by Freddie Mac on or with respect to any such share or shares of

Non-Cumulative Preferred Stock.

(c) The shares of the Non-Cumulative Preferred Stock, when duly issued, shall be fully paid

and non-assessable.

(d) The Non-Cumulative Preferred Stock shall be issued, and shall be transferable on the

books of Freddie Mac, only in whole shares, it being intended that no fractional interests in shares of

Non-Cumulative Preferred Stock shall be created or recognized by Freddie Mac.

(e) For purposes of this CertiÑcate, the term ""Freddie Mac'' means the Federal Home Loan

Mortgage Corporation and any successor thereto by operation of law or by reason of a merger,

consolidation or combination.

(f) This CertiÑcate and the respective rights and obligations of Freddie Mac and the holders of

the Non-Cumulative Preferred Stock with respect to such Non-Cumulative Preferred Stock shall be

construed in accordance with and governed by the laws of the United States, provided that the law

of the Commonwealth of Virginia shall serve as the federal rule of decision in all instances except

where such law is inconsistent with Freddie Mac's enabling legislation, its public purposes or any

provision of this CertiÑcate.

(g) Any notice, demand or other communication which by any provision of this CertiÑcate is

required or permitted to be given or served to or upon Freddie Mac shall be given or served in

writing addressed (unless and until another address shall be published by Freddie Mac) to Freddie

Mac, 8200 Jones Branch Drive, McLean, Virginia 22102, Attn: Vice President and Deputy General

Counsel Ì Securities. Such notice, demand or other communication to or upon Freddie Mac shall

be deemed to have been suÇciently given or made only upon actual receipt of a writing by Freddie

Mac. Any notice, demand or other communication which by any provision of this CertiÑcate is

required or permitted to be given or served by Freddie Mac hereunder may be given or served by

being deposited Ñrst class, postage prepaid, in the United States mail addressed (i) to the holder as

such holder's name and address may appear at such time in the books and records of Freddie Mac or

(ii) if to a person or entity other than a holder of record of the Non-Cumulative Preferred Stock, to

such person or entity at such address as appears to Freddie Mac to be appropriate at such time.

A-6
Such notice, demand or other communication shall be deemed to have been suÇciently given or

made, for all purposes, upon mailing.

(h) Freddie Mac, by or under the authority of the Board of Directors, may amend, alter,

supplement or repeal any provision of this CertiÑcate pursuant to the following terms and conditions:

(i) Without the consent of the holders of the Non-Cumulative Preferred Stock, Freddie

Mac may amend, alter, supplement or repeal any provision of this CertiÑcate to cure any

ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or

questions arising under this CertiÑcate, provided that such action shall not materially and

adversely aÅect the interests of the holders of the Non-Cumulative Preferred Stock.

(ii) The consent of the holders of at least 66 2/3% of all of the shares of the NonCumulative Preferred Stock at the time outstanding, given in person or by proxy, either in

writing or by a vote at a meeting called for the purpose at which the holders of shares of the

Non-Cumulative Preferred Stock shall vote together as a class, shall be necessary for

authorizing, eÅecting or validating the amendment, alteration, supplementation or repeal of the

provisions of this CertiÑcate if such amendment, alteration, supplementation or repeal would

materially and adversely aÅect the powers, preferences, rights, privileges, qualiÑcations,

limitations, restrictions, terms or conditions of the Non-Cumulative Preferred Stock. The

creation and issuance of any other class or series of stock, or the issuance of additional shares of

any existing class or series of stock of Freddie Mac (including the Non-Cumulative Preferred

Stock), whether ranking prior to, on a parity with or junior to the Non-Cumulative Preferred

Stock, shall not be deemed to constitute such an amendment, alteration, supplementation or

repeal.

(iii) Holders of the Non-Cumulative Preferred Stock shall be entitled to one vote per

share on matters on which their consent is required pursuant to subparagraph (ii) of this

paragraph (h). In connection with any meeting of such holders, the Board of Directors shall Ñx

a record date, neither earlier than 60 days nor later than 10 days prior to the date of such

meeting, and holders of record of shares of the Non-Cumulative Preferred Stock on such

record date shall be entitled to notice of and to vote at any such meeting and any adjournment.

The Board of Directors, or such person or persons as it may designate, may establish reasonable

rules and procedures as to the solicitation of the consent of holders of the Non-Cumulative

Preferred Stock at any such meeting or otherwise, which rules and procedures shall conform to

the requirements of any national securities exchange on which the Non-Cumulative Preferred

Stock may be listed at such time.

A-7
(i) RECEIPT AND ACCEPTANCE OF A SHARE OR SHARES OF THE NON-CUMULATIVE PREFERRED STOCK BY OR ON BEHALF OF A HOLDER SHALL CONSTITUTE

THE UNCONDITIONAL ACCEPTANCE BY THE HOLDER (AND ALL OTHERS HAVING

BENEFICIAL OWNERSHIP OF SUCH SHARE OR SHARES) OF ALL OF THE TERMS

AND PROVISIONS OF THIS CERTIFICATE. NO SIGNATURE OR OTHER FURTHER

MANIFESTATION OF ASSENT TO THE TERMS AND PROVISIONS OF THIS CERTIFICATE SHALL BE NECESSARY FOR ITS OPERATION OR EFFECT AS BETWEEN

FREDDIE MAC AND THE HOLDER (AND ALL SUCH OTHERS).

IN WITNESS WHEREOF, I have hereunto set my hand and the seal of Freddie Mac this

16th day of April, 2007.

®Seal©

Kevin I. MacKenzie, Assistant Secretary

A-8
If you intend to purchase the Preferred Stock, you

should rely only on the information in this OÅer- 20,000,000 Shares

ing Circular, including the information in the

documents that we have incorporated by reference

herein. We have not authorized anyone to provide

you with diÅerent information. Freddie Mac

This OÅering Circular and the incorporated documents may not be correct after their dates. 5.66% Non-Cumulative

Perpetual Preferred Stock We are not oÅering the Preferred Stock in any

jurisdiction that prohibits its oÅer. (Liquidation Preference

$25.00 Per Share)

TABLE OF CONTENTS

Description Page

Additional InformationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2

Summary ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3

Risk Factors ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5

Freddie Mac ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7

Use of Proceeds ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8 Banc of America Securities LLC

Capitalization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8 Morgan Stanley Financial Reporting Matters and Related

Information ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10

Selected Financial Data ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 12

Regulation and Governmental Bear, Stearns & Co. Inc.

Relationships ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 14 FTN Financial Capital Markets

Description of Preferred Stock ÏÏÏÏÏÏÏÏÏÏÏÏ 14 Goldman, Sachs & Co.

Regulatory Capital ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 18 Lehman Brothers

Certain Federal Income Tax Merrill Lynch & Co.

Consequences ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 21

Legal Investment Considerations ÏÏÏÏÏÏÏÏÏÏ 24

Underwriting ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 24

Ratings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 25

Independent Accountants ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 26

Legal Matters ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 26 April 10, 2007

Forward-Looking Statements ÏÏÏÏÏÏÏÏÏÏÏÏÏ 27

Appendix A Ì CertiÑcate of Designation ÏÏÏ A-1