OFFERING CIRCULAR

3,000,000 Shares

Freddie Mac VVariable Rate, Non-Cumulative

Preferred Stock

Dividend Rate: (3-Month LIBOR ° 1.0%)1.377

Dividend Rate Cap: 7.5%

Payment Dates: March 31, June 30, September 30and December 31 of each year,beginning December 31, 1998

Dividend Reset Frequency: Quarterly

Dividend Adjustment: Dividend amount subject toadjustment upon certain adversechanges to dividends-receiveddeduction prior to September 23,2000

Liquidation Preference: $50 per share plus currentdividends

Optional Redemption: On or after September 30, 2003

Issue Date: September 23, 1998

Initial Dividend Rate: 4.7204% (from September 23, 1998through December 31, 1998)

Listing: New York Stock Exchange(pending)

FREDDIE MAC'S OBLIGATIONS UNDER THE TERMS OF THE PREFERRED STOCK ARE OBLIGATIONSOF FREDDIE MAC ONLY AND ARE NOT OBLIGATIONS OF, OR GUARANTEED BY,

THE UNITED STATES OR ANY AGENCY OR INSTRUMENTALITY OFTHE UNITED STATES OTHER THAN FREDDIE MAC.

Initial Public Underwriting Proceeds toOÅering Price(1) Discount Freddie Mac(1)(2)

Per ShareÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $50.00 $0.50 $49.50Total(3) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $150,000,000 $1,500,000 $148,500,000

(1) Plus accrued dividends, if any, from September 23, 1998.(2) Before deducting estimated expenses of $100,000 payable by Freddie Mac.(3) Freddie Mac has granted the Underwriters an option to purchase up to an additional 450,000 shares to cover

overallotments. If all such shares are purchased, the total Initial Public OÅering Price, Underwriting Discount andProceeds to Freddie Mac will be $172,500,000, $1,725,000 and $170,775,000, respectively. See ""Underwriting.''

Goldman, Sachs & Co.Bear, Stearns & Co. Inc.

Blaylock & Partners, L.P.Lehman Brothers

Merrill Lynch & Co.J.P. Morgan Securities Inc.

Morgan Stanley Dean WitterSalomon Smith Barney

The date of this OÅering Circular is September 18, 1998.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSAC-TIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE PRE-FERRED STOCK, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERINGTRANSACTIONS IN SUCH SECURITIES, AND THE IMPOSITION OF A PENALTY BID, INCONNECTION WITH THE OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE""UNDERWRITING.''

ADDITIONAL INFORMATION

This OÅering Circular should be read in conjunction with, and is qualiÑed in its entirety by:

‚ the CertiÑcate of Creation, Designation, Powers, Preferences, Rights, Privileges, QualiÑcations,Limitations, Restrictions, Terms and Conditions (the ""CertiÑcate of Designation'') relating to theVariable Rate, Non-Cumulative Preferred Stock (the ""Preferred Stock''), which will be insubstantially the form attached as Appendix A to this OÅering Circular; and

‚ Freddie Mac's Information Statement dated March 31, 1998 and its Information StatementSupplements dated May 15, 1998 and August 14, 1998 (together, the ""Information Statement''),which are hereby incorporated by reference.

Freddie Mac furnishes its stockholders with annual reports containing Ñnancial information audited byindependent public accountants and quarterly reports containing unaudited Ñnancial information.

The shares of Preferred Stock are exempt from the registration requirements of the Securities Act of1933 and are ""exempted securities'' within the meaning of the Securities Exchange Act of 1934. Accordingly,no registration statement has been Ñled with the Securities and Exchange Commission, and Freddie Macdoes not Ñle periodic reports with the Securities and Exchange Commission.

Copies of Freddie Mac's most recent annual and quarterly reports and its most recent proxy statement areavailable, and copies of the CertiÑcate of Designation as executed will be available, without charge, fromShareholder Relations, Freddie Mac, 8200 Jones Branch Drive, McLean, VA 22102, telephone (800)FREDDIE (800-373-3343).

Dividends paid on the Preferred Stock have no exemption under federal law from federal, state or localtaxation.

The distribution of this OÅering Circular and the oÅer, sale and delivery of the Preferred Stock incertain jurisdictions may be restricted by law. Persons who receive this OÅering Circular should informthemselves about and observe any such restrictions.

2

OFFERING SUMMARY

Issuer ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Federal Home Loan Mortgage Corporation (""Freddie Mac'' orthe ""Corporation'').

Security OÅered ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,000,000 shares (assuming the Underwriters' overallotment op-tion is not exercised) of Variable Rate, Non-Cumulative PreferredStock (the ""Preferred Stock''), with a redemption price andliquidation preference of $50 per share.

Dividends:

Rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (3-Month LIBOR ° 1.0%)1.377

Dividends will accrue from September 23, 1998 and will resetquarterly. For information about how and when LIBOR will bedetermined, see ""Description of Preferred Stock Ì Determinationof LIBOR.''

Initial Rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4.7204% (from September 23, 1998 through December 31, 1998)

Rate Cap ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7.5%

Calculation AgentÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Freddie Mac

FrequencyÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Quarterly, when, as and if declared by the Board of Directors.

Payment Dates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ March 31, June 30, September 30 and December 31 of each year,beginning December 31, 1998.

DRD Protection ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ If, prior to September 23, 2000, certain amendments to theInternal Revenue Code of 1986, as amended (the ""Code''), areenacted that reduce the percentage of the dividends-receiveddeduction below 70%, the amount of dividends payable in respectof the Preferred Stock will be adjusted to oÅset the eÅect of suchreduction. However, no adjustment will be made to the extent thatthe percentage of the dividends-received deduction is reducedbelow 50%. Such adjustment may result in a dividend rate inexcess of 7.5% per annum.

PreferencesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ The Preferred Stock will be entitled to a preference, both as todividends and upon liquidation, over the common stock (and anyother junior stock) of Freddie Mac. The Preferred Stock will rankon a parity, both as to dividends and upon liquidation, with othercurrently outstanding series of Freddie Mac preferred stock.

Optional Redemption ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Beginning September 30, 2003, Freddie Mac will have the optionto redeem the Preferred Stock at any time, in whole or in part, atthe redemption price of $50 per share plus the amount that wouldotherwise be payable as the dividend for the then-current quarterlydividend period accrued through the redemption date.

Liquidation Rights ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ In the event of any dissolution or liquidation of Freddie Mac,holders of the Preferred Stock will be entitled to receive, out ofany assets available for distribution to stockholders, up to $50 pershare plus the dividend for the then-current quarterly dividendperiod accrued through the liquidation payment date.

Voting Rights ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ None, except with respect to certain changes in the terms of thePreferred Stock.

Preemptive and Conversion RightsÏÏÏÏÏ None.

RatingÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ The Preferred Stock has been rated ""aa3'' by Moody's InvestorsService, Inc. (""Moody's'') and ""AA-'' by Standard & Poor'sRatings Services (""S&P''). See ""Rating.''

Use of Proceeds ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ To be added to the working capital of Freddie Mac and used forgeneral corporate purposes, including the purchase of residentialmortgages, the redemption of previously issued shares of preferredstock, the repayment of outstanding debt and the repurchase ofoutstanding shares of the Corporation's stock.

Transfer Agent, Dividend DisbursingAgent and Registrar ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ First Chicago Trust Company, New York, New York.

NYSE Listing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Application has been made to list the Preferred Stock on the NewYork Stock Exchange (the ""NYSE'').

3

SUMMARY SELECTED FINANCIAL DATA

At or For the SixMonths Ended

June 30, At or For the Year Ended December 31,

1998 1997 1997 1996 1995 1994 1993

(dollars in millions, except per share amounts)

BALANCE SHEETRetained portfolio, gross ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 196,634 $ 149,249 $ 164,421 $ 137,755 $ 107,424 $ 72,828 $ 55,698Total assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 229,991 $ 184,003 $ 194,597 $ 173,866 $ 137,181 $ 106,199 $ 83,880Primary capital base(1) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 9,133 $ 8,192 $ 8,215 $ 7,411 $ 6,546 $ 5,895 $ 5,197Adjusted total capital base(2) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 9,572 $ 8,696 $ 8,736 $ 7,901 $ 7,179 $ 7,121 $ 6,680

MORTGAGE PURCHASE AND FINANCINGACTIVITIESMortgage purchasesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 124,862 $ 51,174 $ 121,490 $ 128,565 $ 98,386 $ 124,246 $ 229,706Number of mortgages purchasedÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,081,226 457,015 1,085,046 1,232,540 934,890 1,256,566 2,315,162PC issuances ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 113,218 $ 50,457 $ 114,258 $ 119,702 $ 85,877 $ 117,110 $ 208,724Mortgage Participation Certificates (""PCs'')(3) ÏÏ $ 609,791 $ 567,187 $ 579,385 $ 554,260 $ 515,051 $ 491,325 $ 454,906

INCOME STATEMENTNet interest income on earning assetsÏÏÏÏÏÏÏÏÏ $ 1,049 $ 893 $ 1,882 $ 1,542 $ 1,298 $ 1,047 $ 808Management and guarantee income ÏÏÏÏÏÏÏÏÏÏ $ 650 $ 646 $ 1,298 $ 1,249 $ 1,185 $ 1,173 $ 1,077Net incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 807 $ 669 $ 1,395 $ 1,243 $ 1,091 $ 983 $ 786Earnings per common share:(4)

Basic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1.11 $ 0.90 $ 1.90 $ 1.65 $ 1.42 $ 1.27 $ 1.02Diluted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1.10 $ 0.89 $ 1.88 $ 1.63 $ 1.41 $ 1.26 $ 1.01

Dividends per common share(4)ÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 0.24 $ 0.20 $ 0.40 $ 0.35 $ 0.30 $ 0.26 $ 0.22Return on common equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 24.4% 22.8% 23.1% 22.6% 22.1% 23.3% 22.3%

(1) ""Stockholders' equity,'' ""Reserves for losses on retained mortgages'' and ""Reserves for losses on Mortgage ParticipationCertiÑcates.''

(2) ""Primary capital base'' and ""Subordinated borrowings.''(3) Includes Freddie Mac PCs held in the retained portfolio.(4) Per share amounts reÖect a four-for-one stock split eÅective December 31, 1996.

4

FREDDIE MAC

Freddie Mac is a shareholder-owned government-sponsored enterprise (""GSE'') chartered on July 24,1970 pursuant to the Federal Home Loan Mortgage Corporation Act, Title III of the Emergency HomeFinance Act of 1970, as amended (the ""Freddie Mac Act''). Freddie Mac's statutory mission is (i) to providestability in the secondary market for residential mortgages, (ii) to respond appropriately to the private capitalmarket, (iii) to provide ongoing assistance to the secondary market for residential mortgages (includingactivities relating to mortgages on housing for low- and moderate-income families involving a reasonableeconomic return that may be less than the return earned on other activities) and (iv) to promote access tomortgage credit throughout the United States (including central cities, rural areas and other underservedareas) by increasing the liquidity of mortgage investments and improving the distribution of investment capitalavailable for residential mortgage Ñnancing. Neither the United States nor any agency or instrumentality ofthe United States (other than Freddie Mac) is obligated, either directly or indirectly, to fund the mortgagepurchase or Ñnancing activities of Freddie Mac.

The principal activity of Freddie Mac consists of the purchase of Ñrst lien, conventional, residentialmortgages, including both whole loans and participation interests in such mortgages. Its mortgage purchasesare primarily Ñnanced by sales of single-class guaranteed mortgage-related securities, primarily various typesof mortgage participation certiÑcates (""PCs''). Freddie Mac guarantees the payment of interest due on PCsand the principal of the underlying mortgages. Freddie Mac also Ñnances mortgage purchases with debtsecurities, other liabilities and equity capital. In addition, Freddie Mac invests in mortgages and mortgage-related securities, and engages in other activities that support its mortgage purchases, investment andÑnancing activities.

Freddie Mac is subject to two primary types of risk in the conduct of its business: credit risk associatedwith the mortgages it purchases and the institutions with which it does business; and interest-rate risk thatprincipally results from mismatches between the maturities of the assets and liabilities associated with itsmortgage portfolio. Freddie Mac also is subject to operational risk associated with losses that may occur due tohuman error, system failure (including failures related to the Year 2000 date change), fraud or circumventionof internal controls. For a discussion of the impact and management of these risks, see ""Management'sDiscussion and Analysis of Financial Condition and Results of Operations'' in the Information Statement.

The principal oÇce of Freddie Mac is in McLean, Virginia. Freddie Mac has regional oÇces that areprimarily responsible for the performance of various marketing activities and quality control procedures. TheseoÇces are located in Atlanta, Georgia; Chicago, Illinois; Dallas, Texas; McLean, Virginia; New York, NewYork and Woodland Hills, California.

A more detailed discussion of the business of the Corporation appears under ""Business'' in theInformation Statement. The preceding description of the business of Freddie Mac is qualiÑed in its entirety bythat discussion.

USE OF PROCEEDS

The Corporation will apply the net proceeds from the sale of Preferred Stock to its general funds to beused for general corporate purposes, including the purchase of residential mortgages, the redemption of sharesof preferred stock previously issued by the Corporation, the repayment of outstanding indebtedness and therepurchase of outstanding shares of the Corporation's stock. The precise amounts and timing of the applicationof the proceeds will depend upon the funding requirements of the Corporation.

The Corporation engages in Ñnancing transactions continuously. The amount and nature of suchtransactions are dependent upon a number of factors, including the volume of mortgage prepayments andmortgages purchased by the Corporation, as well as general market conditions.

5

CAPITALIZATION

The following table sets forth the capitalization of the Corporation at June 30, 1998 and as adjusted toreÖect the sale of the Preferred Stock oÅered hereby and the sale of the 5.1% Non-Cumulative PreferredStock being oÅered for sale pursuant to an oÅering circular dated September 18, 1998. This table should beread in conjunction with the Ñnancial statements of the Corporation and other information contained in theInformation Statement.

June 30, 1998

AsActual Adjusted(1)

(dollars in millions)

Debt Securities:Notes and bonds payable due within one year:

Discount notes, medium-term notes and securities sold underagreements to repurchase ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $106,694 $106,694

Current portion of long-term debtÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,757 4,757

111,451 111,451Notes and bonds payable due after one year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 88,424 88,424

Total debt securities, net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 199,875 199,875Subordinated Borrowings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 439 439Minority Interest in Real Estate Investment Trusts(2) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,619 3,619Stockholders' Equity(3):

6.72% Non-Cumulative Preferred Stock, $1.00 par value and $25.00 redemption value(4) 300 300Variable Rate, Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption

value(5) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 250 2506.125% Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption value(6) 287 2876.14% Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption value(7) 600 6005.81% Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption value(8) 150 1505% Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption value(9)ÏÏÏÏ 400 4005.1% Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption value(10) Ì 400Variable Rate, Non-Cumulative Preferred Stock, $1.00 par value and $50.00 redemption

value(10) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 150Common stock, $0.21 par value ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 152 152Additional paid-in capitalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 23 17Retained earnings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7,421 7,421Net unrealized gain on certain investments reported at fair value, net of taxes ÏÏÏÏÏÏÏÏÏÏÏ 159 159Less: treasury stock, at cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (1,329) (1,329)

Total stockholders' equityÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8,413 8,957

Total capitalization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $212,346 $212,890

(1) ""As adjusted'' reÖects anticipated proceeds of $150 million from the issuance of 3 million shares of Preferred Stock, anticipatedproceeds of $400 million from the issuance of 8 million shares of 5.1% Non-Cumulative Preferred Stock and the deduction of $5.8million in estimated transaction costs. The actual costs may diÅer.

(2) Represents preferred stock ownership interest in Freddie Mac's real estate investment trust subsidiaries.(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) Optional redemption on or after September 30, 1998. It is likely that the proceeds from the sale of the Preferred Stock will be used

in part to redeem this issue.(5) Optional redemption on or after June 30, 2001.(6) Optional redemption on or after December 31, 2001.(7) Optional redemption on or after June 30, 2002.(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.

See Notes 7 and 8 to the 1996 Consolidated Financial Statements included in the Information Statementfor further information about Freddie Mac's debt securities, subordinated borrowings and stockholders' equity.Amounts of debt securities and subordinated borrowings are net of unamortized discounts, premiums andhedging gains or losses.

The Corporation engages in transactions aÅecting stockholders' equity (including repurchases of itscommon stock and redemptions of its preferred stock) from time to time and issues or retires debentures,notes and other debt obligations on an ongoing basis. Accordingly, on any date subsequent to June 30, 1998,stockholders' equity may diÅer, and the amount of debt obligations outstanding will diÅer, and may diÅersubstantially, from the Ñgures contained in the capitalization table above.

6

SELECTED FINANCIAL DATA

The following selected Ñnancial data for the years 1993 through 1997 have been summarized or derivedfrom the audited Ñnancial statements or the internal accounting records of the Corporation. These data arequaliÑed in their entirety by, and should be read in conjunction with, the detailed information, auditedÑnancial statements and notes to Ñnancial statements that are presented in the Information Statement. Thefollowing selected Ñnancial data for the six months ended June 30, 1998 and June 30, 1997 have beensummarized or derived from unaudited Ñnancial statements which are included in the Information StatementSupplement dated August 14, 1998 or from internal accounting records, but in the opinion of management ofthe Corporation, all adjustments necessary for a fair presentation have been included. Adjustments includedherein are of a normal, recurring nature.

At or For the SixMonths Ended

June 30, At or For the Year Ended December 31,

1998 1997 1997 1996 1995 1994 1993

(dollars in millions, except per share amounts)

Balance SheetRetained portfolio, gross ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 196,634 $ 149,249 $ 164,421 $ 137,755 $ 107,424 $ 72,828 $ 55,698Total assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 229,991 $ 184,003 $ 194,597 $ 173,866 $ 137,181 $ 106,199 $ 83,880Debt securities, net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 199,875 $ 161,396 $ 168,574 $ 156,491 $ 119,328 $ 92,053 $ 48,510Total liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 217,102 $ 171,742 $ 182,407 $ 166,271 $ 130,297 $ 99,368 $ 77,406Capital base:

Stockholders' equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 8,413 $ 7,507 $ 7,521 $ 6,731 $ 5,863 $ 5,162 $ 4,437Reserve for mortgage losses(1) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 720 685 694 680 683 733 760

Primary capital baseÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 9,133 $ 8,192 $ 8,215 $ 7,411 $ 6,546 $ 5,895 $ 5,197Subordinated borrowingsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 439 504 521 490 633 1,226 1,483

Adjusted total capital base ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 9,572 $ 8,696 $ 8,736 $ 7,901 $ 7,179 $ 7,121 $ 6,680

Mortgage Participation CertiÑcates (""PCs'')(2)ÏÏÏÏÏÏÏ $ 609,791 $ 567,187 $ 579,385 $ 554,260 $ 515,051 $ 491,325 $ 454,906Freddie Mac PCs held in the retained portfolio ÏÏÏÏÏÏÏ $ 129,104 $ 92,992 $ 103,400 $ 81,195 $ 56,006 $ 30,670 $ 15,877Primary capital ratio(3) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.29% 1.24% 1.23% 1.15% 1.10% 1.04% 0.99%Adjusted total capital ratio(4)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.35% 1.32% 1.30% 1.22% 1.20% 1.26% 1.28%Return on common equity(5) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 24.4% 22.8% 23.1% 22.6% 22.1% 23.3% 22.3%Return on average assets and contingencies(6)ÏÏÏÏÏÏÏÏ 0.12% 0.10% 0.21% 0.20% 0.19% 0.18% 0.16%Mortgage Purchase and Financing ActivitiesMortgage purchasesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 124,862 $ 51,174 $ 121,490 $ 128,565 $ 98,386 $ 124,246 $ 229,706Number of mortgages purchasedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,081,226 457,015 1,085,046 1,232,540 934,890 1,256,566 2,315,162Mortgage PC settlements:

Single-classÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 113,218 $ 50,457 $ 114,258 $ 119,702 $ 85,877 $ 117,110 $ 208,724Multiclass (REMICs) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 70,748 $ 39,818 $ 84,366 $ 34,145 $ 15,372 $ 73,131 $ 143,336

Long-term debt:Issued ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 29,040 $ 17,313 $ 31,132 $ 33,852 $ 29,643 $ 22,744 $ 24,784Retired ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (26,557) (8,306) (21,879) (20,819) (11,082) (6,462) (9,924)

Net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 2,483 $ 9,007 $ 9,253 $ 13,033 $ 18,561 $ 16,282 $ 14,860

Income StatementNet interest income on earning assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1,049 $ 893 $ 1,882 $ 1,542 $ 1,298 $ 1,047 $ 808Management and guarantee income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 650 $ 646 $ 1,298 $ 1,249 $ 1,185 $ 1,173 $ 1,077Income before income taxes and extraordinary itemÏÏÏÏ $ 1,123 $ 932 $ 1,964 $ 1,797 $ 1,586 $ 1,482 $ 1,128Net income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 807 $ 669 $ 1,395 $ 1,243 $ 1,091 $ 983 $ 786Earnings per common share:(7)

Basic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1.11 $ 0.90 $ 1.90 $ 1.65 $ 1.42 $ 1.27 $ 1.02Diluted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1.10 $ 0.89 $ 1.88 $ 1.63 $ 1.41 $ 1.26 $ 1.01

Weighted average common shares outstanding(in thousands):(7)Basic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 678,138 689,716 684,937 709,453 721,288 722,663 721,685Diluted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 683,139 696,445 691,701 714,878 725,114 726,108 725,167

Dividends per common share(7)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 0.24 $ 0.20 $ 0.40 $ 0.35 $ 0.30 $ 0.26 $ 0.22Dividend payout ratio on common stock ÏÏÏÏÏÏÏÏÏÏÏÏÏ 21.51% 22.29% 21.08% 21.26% 21.09% 20.47% 21.63%Ratio of earnings to Ñxed charges(8) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.17:1 1.17:1 1.18:1 1.19:1 1.23:1 1.31:1 1.32:1Ratio of earnings to combined Ñxed charges and

preferred stock dividends(8) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.16:1 1.16:1 1.16:1 1.18:1 1.22:1 1.30:1 1.30:1

(1) ""Reserves for losses on retained mortgages'' and ""Reserves for losses on Mortgage Participation CertiÑcates.''(2) Includes Freddie Mac PCs held in the retained portfolio.(3) ""Primary capital base'' divided by the sum of ""Total assets'' and ""PCs'' less ""Freddie Mac PCs held in the retained portfolio.''(4) ""Adjusted total capital base'' divided by the sum of ""Total assets'' and ""PCs'' less ""Freddie Mac PCs held in the retained portfolio.''(5) ""Net income'' less preferred stock dividends, divided by the simple average of the beginning and ending balances of ""Stockholders' equity,'' net of

preferred stock (at redemption value).(6) ""Net income'' divided by the simple average of the beginning and ending balances of ""Total assets'' and ""PCs'' less ""Freddie Mac PCs held in the

retained portfolio.''(7) Per share amounts and weighted average common shares outstanding reÖect a four-for-one stock split eÅective December 31, 1996.(8) Earnings represent consolidated pre-tax income plus consolidated Ñxed charges, less interest capitalized. Fixed charges include interest (including

amounts capitalized) and the portion of net rental expense deemed representative of interest.

7

REGULATION AND GOVERNMENTAL RELATIONSHIPS

From time to time, Freddie Mac's statutory, structural and regulatory relationships with the federalgovernment may be subject to review or modiÑcation. While Freddie Mac's GSE status is often advantageousfor the Corporation, proposals have been advanced that could adversely aÅect Freddie Mac's fulÑllment of itsstatutory purposes, as well as the Corporation's results of operations. A more detailed discussion of FreddieMac's regulatory and governmental relationships appears under ""Regulation and Governmental Relation-ships'' in the Information Statement.

DESCRIPTION OF PREFERRED STOCK

The description of the Preferred Stock set forth below does not purport to be complete and is qualiÑed inits entirety by the CertiÑcate of Designation, which will be in substantially the form attached as Appendix A.

General

Under Û306(f) of the Freddie Mac Act, Freddie Mac is authorized to issue an unlimited number ofshares of preferred stock. The shares of Preferred Stock being oÅered hereby will have a par value of $1.00 pershare. The Preferred Stock will be created pursuant to the CertiÑcate of Designation.

First Chicago Trust Company, New York, New York, will be the transfer agent, dividend disbursingagent and registrar for the Preferred Stock.

Authorized Issuance

Freddie Mac has been authorized by its Board of Directors to issue the shares of Preferred Stock oÅeredhereby. The Board of Directors may increase the authorized number of shares at any time, without the consentof the holders of Preferred Stock.

Dividends

Dividends on shares of the Preferred Stock will not be mandatory. Holders of Preferred Stock will beentitled to receive non-cumulative, quarterly cash dividends which will accrue from but not includingSeptember 23, 1998 and will be payable on March 31, June 30, September 30 and December 31 of each year(each, a ""Dividend Payment Date''), commencing December 31, 1998, when, as and if declared by the Boardof Directors in its sole discretion, out of funds legally available for dividend payments. Dividends will accrue ata variable per annum rate (not greater than 7.5% per annum) equal to (a) the sum of LIBOR, determinedquarterly as described under ""Determination of LIBOR,'' and 1.0%, divided by (b) 1.377, with the resultingdividend per share being rounded to the nearest cent (with one-half cent rounded up). If a Dividend PaymentDate is not a ""Business Day,'' the related dividend will be paid on the next Business Day with the same forceand eÅect as though paid on the Dividend Payment Date, without any increase to account for the period fromsuch Dividend Payment Date through the date of actual payment. For these purposes, ""Business Day'' meansa day other than (i) a Saturday or a Sunday, (ii) a day on which New York City banks are closed or (iii) aday on which the oÇces of Freddie Mac are closed. Dividends will be paid to holders of record on the recorddate Ñxed by the Board of Directors, not to be earlier than 45 days or later than 10 days preceding theapplicable Dividend Payment Date. If declared, the initial dividend, which will be for the period from but notincluding September 23, 1998 through and including December 31, 1998, will be 4.7204% or $0.649055 pershare and will be payable on December 31, 1998. Thereafter, the dividend payable to holders of PreferredStock will vary from Dividend Period to Dividend Period. The ""Dividend Period'' relating to a DividendPayment Date will be the period from but not including the preceding Dividend Payment Date through andincluding the related Dividend Payment Date. Freddie Mac will calculate the dividend rate for each DividendPeriod based on LIBOR determined as of two London Business Days (deÑned as any day, other than aSaturday or Sunday, on which banks are open for business in London) prior to the Ñrst day of such DividendPeriod (each, a ""Determination Date''). Each dividend will be calculated on the basis of the actual number ofdays elapsed, assuming a year of 360 days, and the dividend rate will be applied to the $50 per shareredemption value.

8

The Preferred Stock will rank prior to the Voting Common Stock, par value $0.21 per share, of FreddieMac (the ""Common Stock'') with respect to dividends, to the extent provided in the CertiÑcate ofDesignation. No dividend may be declared or paid or set apart for payment on the Common Stock (or anyother junior stock) unless dividends have been declared and paid or set apart (or ordered to be set apart) onthe Preferred Stock in respect to the then-current Dividend Period. The Preferred Stock will rank on a paritywith the 5.1% Non-Cumulative Preferred Stock being issued on September 23, 1998, the 5% Non-CumulativePreferred Stock issued on March 23, 1998 and currently outstanding, the 5.81% Non-Cumulative PreferredStock issued on October 27, 1997 and currently outstanding, the 6.14% Preferred Stock issued on June 3, 1997and currently outstanding, the 6.125% Non-Cumulative Preferred Stock issued on November 1, 1996 andcurrently outstanding, the Variable Rate, Non-Cumulative Preferred Stock issued on April 26, 1996 andcurrently outstanding and the 6.72% Non-Cumulative Preferred Stock issued on August 2, 1993 and currentlyoutstanding (collectively, the ""Existing Preferred Stock'') with respect to dividends.

Dividends on the Preferred Stock will not be cumulative. If a dividend is not paid on the Preferred Stock,the holders of the Preferred Stock will have no claim in respect of such non-payment so long as no dividend ispaid on the Common Stock (or any other junior stock) or the Existing Preferred Stock for the then-currentperiod.

The Board of Directors may, in its discretion, choose to pay dividends on the Preferred Stock without thepayment of any dividends on the Common Stock.

No dividends will be declared or paid or set apart for payment on any shares of the Preferred Stock if atthe same time any arrears or default exists in the payment of dividends on any outstanding class or series ofstock of Freddie Mac ranking prior to the Preferred Stock with respect to the payment of dividends. At thetime of issuance of the Preferred Stock, no class or series of stock of Freddie Mac ranking prior to thePreferred Stock will exist.

Holders of shares of the Preferred Stock will not be entitled to any dividends, whether payable in cash orproperty, other than as described above and will not be entitled to interest, or any sum in lieu of interest, inrespect of any dividend payment. See ""Regulatory Matters'' for a description of possible regulatory restrictionson Freddie Mac's payment of dividends.

Changes in the Dividends-Received Percentage

If, prior to September 23, 2000, one or more amendments to the Code are enacted that reduce thepercentage of the dividends-received deduction (currently 70 percent) as speciÑed in section 243(a)(1) of theCode or any successor provision (the ""Dividends-Received Percentage''), certain adjustments may be made inrespect of the dividends payable by the Corporation, and Post Declaration Date Dividends and RetroactiveDividends (as such terms are deÑned below) may become payable, as described below.

The amount of each dividend payable (if declared) per share of Preferred Stock for dividend paymentsmade on or after the eÅective date of such change in the Code will be adjusted by multiplying the amount ofthe dividend payable described above under ""Dividends'' (before adjustment) by a factor, which will be thenumber determined in accordance with the following formula (the ""DRD Formula''), and rounding the resultto the nearest cent (with one-half cent rounded up):

1-.35(1-.70)

1-.35(1-DRP)

For the purposes of the DRD Formula, ""DRP'' means the Dividends-Received Percentage (expressed as adecimal) applicable to the dividend in question; provided, however, that if the Dividends-Received Percentageapplicable to the dividend in question is less than 50%, then the DRP will equal .50. If the amount of anydividend payable on the Preferred Stock is adjusted through such application of the DRD Formula, theresulting dividend rate may exceed 7.5% per annum. No amendment to the Code, other than a change in thepercentage of the dividends-received deduction set forth in section 243(a)(1) of the Code or any successorprovision, or a change in the percentage of the dividends-received deduction for certain categories of stock,which change is applicable to the Preferred Stock, will give rise to an adjustment. Notwithstanding the

9

foregoing provisions, if, with respect to any such amendment, the Corporation receives either an unqualiÑedopinion of nationally recognized independent tax counsel selected by the Corporation or a private letter rulingor similar form of assurance from the Internal Revenue Service (the ""IRS'') to the eÅect that such anamendment does not apply to a dividend payable on the Preferred Stock, then such amendment will not resultin the adjustment provided for pursuant to the DRD Formula with respect to such dividend. The opinionreferenced in the previous sentence must be based upon the legislation amending or establishing the DRP orupon a published pronouncement of the IRS addressing such legislation. Unless the context otherwiserequires, references to dividends in this OÅering Circular will mean dividends as adjusted by the DRDFormula. The Corporation's calculation of the dividends payable as so adjusted shall be Ñnal and not subject toreview.

Notwithstanding the foregoing, if any such amendment to the Code is enacted after the dividend payableon a Dividend Payment Date has been declared but before such dividend is paid, the amount of the dividendpayable on such Dividend Payment Date will not be increased; instead, additional dividends (the ""PostDeclaration Date Dividends''), equal to the excess, if any, of (x) the product of the dividend paid by theCorporation on such Dividend Payment Date and the DRD Formula (where the DRP used in the DRDFormula would be equal to the greater of the Dividends-Received Percentage applicable to the dividend inquestion and .50) over (y) the dividend paid by the Corporation on such Dividend Payment Date, will bepayable (if declared) to holders of Preferred Stock on the record date applicable to the next succeedingDividend Payment Date, in addition to any other amounts payable on such date.

If any such amendment to the Code is enacted and the reduction in the Dividends-Received Percentageretroactively applies to a Dividend Payment Date as to which the Corporation previously paid dividends on thePreferred Stock (each, an ""AÅected Dividend Payment Date''), the Corporation will pay (if declared)additional dividends (the ""Retroactive Dividends'') to holders of Preferred Stock on the record dateapplicable to the next succeeding Dividend Payment Date (or, if such amendment is enacted after thedividend payable on such Dividend Payment Date has been declared, to Holders of Preferred Stock on therecord date applicable to the second succeeding Dividend Payment Date following the date of enactment) inan amount equal to the excess of (x) the product of the dividend paid by the Corporation on each AÅectedDividend Payment Date and the DRD Formula (where the DRP used in the DRD Formula would be equal tothe greater of the Dividends-Received Percentage and .50 applied to each AÅected Dividend Payment Date)over (y) the sum of the dividend paid by the Corporation on each AÅected Dividend Payment Date. TheCorporation will make only one payment of Retroactive Dividends for any such amendment. Notwithstandingthe foregoing provisions, if, with respect to any such amendment, the Corporation receives either anunqualiÑed opinion of nationally recognized independent tax counsel selected by the Corporation or a privateletter ruling or similar form of assurance from the IRS to the eÅect that such amendment does not apply to adividend payable on an AÅected Dividend Payment Date for the Preferred Stock, then such amendment willnot result in the payment of Retroactive Dividends with respect to such AÅected Dividend Payment Date. Theopinion referenced in the previous sentence must be based upon the legislation amending or establishing theDRP or upon a published pronouncement of the IRS addressing such legislation.

Notwithstanding the foregoing, no adjustment in the dividends payable by the Corporation will be made,and no Post Declaration Date Dividends or Retroactive Dividends will be payable by the Corporation, inrespect of the enactment of any amendment to the Code on or after September 23, 2000.

In the event that the amount of dividends payable per share of the Preferred Stock is adjusted pursuant tothe DRD Formula and/or Post Declaration Date Dividends or Retroactive Dividends are to be paid, theCorporation will give notice of each such adjustment and, if applicable, any Post Declaration Date Dividendsand Retroactive Dividends to the holders of Preferred Stock.

Determination of LIBOR

""LIBOR'' means, with respect to a Dividend Period relating to a Dividend Payment Date (in thefollowing order of priority):

10

(i) the rate (expressed as a percentage per annum) for Eurodollar deposits having a three-monthmaturity that appears on Bridge Telerate Capital Markets Report Page 3750 or any successor to suchpage (""Telerate Page 3750'') as of 11:00 a.m. (London time) on the related Determination Date;

(ii) if such rate does not appear on Telerate Page 3750 as of 11:00 a.m. (London time) on therelated Determination Date, LIBOR will be the arithmetic mean (if necessary rounded upwards to thenearest whole multiple of 1/128%) of the rates (expressed as percentages per annum) for Eurodollardeposits having a three-month maturity that appear on Reuters Monitor Money Rates Page LIBO or anysuccessor to such page (""Reuters Page LIBO'') as of 11:00 a.m. (London time) on such DeterminationDate;

(iii) if such rate does not appear on Reuters Page LIBO as of 11:00 a.m. (London time) on therelated Determination Date, Freddie Mac will request the principal London oÇces of four leading banksin the London interbank market to provide such banks' oÅered quotations (expressed as percentages perannum) to prime banks in the London interbank market for Eurodollar deposits having a three-monthmaturity as of 11:00 a.m. (London time) on such Determination Date. If at least two quotations areprovided, LIBOR will be the arithmetic mean (if necessary rounded upwards to the nearest wholemultiple of 1/128%) of such quotations;

(iv) if fewer than two such quotations are provided as requested in clause (iii) above, Freddie Macwill request four major New York City banks to provide such banks' oÅered quotations (expressed aspercentages per annum) to leading European banks for loans in Eurodollars as of 11:00 a.m. (Londontime) on such Determination Date. If at least two such quotations are provided, LIBOR will be thearithmetic mean (if necessary rounded upwards to the nearest whole multiple of 1/128%) of suchquotations; and

(v) if fewer than two such quotations are provided as requested in clause (iv) above, LIBOR will beLIBOR determined with respect to the Dividend Period immediately preceding such current DividendPeriod.

If the rate for the Eurodollar deposits having a three-month maturity that initially appears on TeleratePage 3750 or Reuters Page LIBO, as the case may be, as of 11:00 a.m. (London time) on the relatedDetermination Date is superseded on Telerate Page 3750 or Reuters Page LIBO, as the case may be, by acorrected rate before 12:00 noon (London time) on such Determination Date, the corrected rate as sosubstituted on the applicable page will be the applicable LIBOR for such Determination Date.

Absent manifest error, Freddie Mac's determination of LIBOR and its calculation of the applicabledividend rate for each Dividend Period will be Ñnal and binding. Investors may obtain the dividend rates forthe current and preceding Dividend Periods by writing, calling or e-mailing the Investor Inquiry Departmentat Freddie Mac at 8200 Jones Branch Drive, McLean, Virginia 22102 (outside Washington, D.C. metropoli-tan area, phone 800/336-FMPC; within Washington, D.C. metropolitan area, phone 703/450-3777; e-mail:Investor Inquiry@freddiemac.com).

Optional Redemption

The Preferred Stock will not be redeemable prior to September 30, 2003. On or after that date andsubject to any further limitations which may be imposed by law, Freddie Mac may redeem the PreferredStock, in whole or in part, at any time or from time to time, out of funds legally available therefor, at theredemption price of $50.00 per share plus an amount equal to the amount of the dividend, if any (calculated asprovided in the CertiÑcate of Designation), that would otherwise be payable for the then-current DividendPeriod accrued through and including the date of such redemption. If less than all of the outstanding shares ofthe Preferred Stock are to be redeemed, Freddie Mac will select shares to be redeemed from the outstandingshares not previously called for redemption by lot or pro rata (as nearly as possible) or by any other methodwhich Freddie Mac in its sole discretion deems equitable.

Freddie Mac will give notice of any such redemption by mail to holders of the Preferred Stock not lessthan 30 days and not more than 60 days prior to the date Ñxed by Freddie Mac for such redemption. Eachsuch notice will state the number of shares of Preferred Stock being redeemed, the redemption price, the

11

redemption date and the place at which a holder's certiÑcate(s) representing shares of the Preferred Stockmust be presented upon such redemption.

See ""Regulatory Matters'' for a description of possible regulatory restrictions on Freddie Mac'sredemption of the Preferred Stock.

From and after the redemption date, the shares of Preferred Stock called for redemption will no longer bedeemed outstanding, and all rights of the holders thereof as holders of the Preferred Stock will cease.

Regulatory Matters

Neither Freddie Mac's right to declare dividends on nor its right to redeem the Preferred Stock iscurrently subject to prior regulatory approval. Under the Federal Housing Enterprises Financial Safety andSoundness Act of 1992 (the ""GSE Act''), the exercise of these rights may be subject to regulatory approvalonly if the Corporation fails to meet applicable capital standards.

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

The GSE Act has required the Corporation to maintain ""core capital'' in an amount that equals orexceeds the levels established under the minimum and critical capital standards since the GSE Act wasenacted. In June 1996, the Director (the ""Director'') of the OÇce of Federal Housing Enterprise Oversight(""OFHEO'') issued a Ñnal minimum capital regulation that interprets the minimum capital standard andimplements a calculation methodology similar to the methodology OFHEO applied on an interim basis sincethe GSE Act was enacted.

The GSE Act does not require the Corporation to maintain ""total capital'' at a level that equals orexceeds the risk-based capital standard until the Director issues a Ñnal risk-based capital regulationestablishing the risk-based capital stress test (and the risk-based capital level cannot be determined from theGSE Act alone). OFHEO issued a portion of the proposed regulation in June 1996, and OFHEO has statedthat it expects to issue the remainder of the proposed regulation in a second proposal, and to issue the Ñnalregulation after it has considered comments on both portions of the proposed regulation. Freddie Mac's risk-based capital requirement cannot be estimated from the Ñrst proposal alone. The Ñnal risk-based capitalregulation becomes eÅective when issued but, until the risk-based capital regulation has been in eÅect for oneyear, the Director must base any determination of the Corporation's capital adequacy solely on whether thecore capital of the Corporation is equal to or exceeds the minimum and critical capital levels.

Subject to the applicability of the risk-based capital standard described above, the Corporation may pay adividend without prior OFHEO approval if the payment would not decrease the total capital of theCorporation to an amount less than the risk-based capital level for the Corporation and would not decrease thecore capital level to an amount less than the minimum capital level for the Corporation. Beginning one yearafter the Ñnal risk-based capital regulation is issued, if the Corporation's total capital is less than the risk-basedcapital level, but its core capital equals or exceeds the minimum capital level, the Corporation is prohibitedfrom making a dividend payment that would decrease its core capital to an amount less than the minimumcapital level. At any time, if the Corporation's core capital is less than the minimum capital level, theCorporation may make a dividend payment only if the Director determines that the dividend payment satisÑescertain statutory standards and if the Director approves the payment, and under these circumstances theCorporation is prohibited from making any dividend payment that would decrease the Corporation's corecapital to less than the critical capital level.

In addition to the preceding requirements that relate directly to the payment of dividends, the Directorhas authority, under certain conditions, to require the Corporation to submit for the Director's approval acapital restoration plan or to restrict the Corporation's activities, either of which also could aÅect the paymentof dividends. SpeciÑcally, if the Director determines, after the risk-based capital regulation has been in eÅectfor one year, that the Corporation fails to meet the risk-based capital standard, or if the Director determines,at any time, that the Corporation fails to meet the minimum capital standard, the Corporation will be requiredto submit for the Director's approval a capital restoration plan setting forth a feasible plan for restoring theCorporation's capital level. In addition, if the Corporation at any time fails to meet the minimum capital

12

standard, the Director is authorized to impose various limitations on the Corporation's activities. If, at anytime, the Director determines that the Corporation fails to meet the critical capital standard, the Director mayappoint a conservator for the Corporation.

If the Director does not approve a required capital restoration plan or determines that the Corporation hasfailed to make reasonable eÅorts to comply with such a plan, then the Director may treat the Corporation asnot meeting capital standards that it otherwise meets and take the actions authorized when the Corporationdoes not meet such standards. Similarly, if the Director determines that the Corporation is engaging inconduct not approved by the Director that could result in a rapid depletion of core capital or that the value ofthe property subject to mortgages held or securitized by the Corporation has decreased signiÑcantly, theDirector is authorized to treat the Corporation as not meeting capital standards that it otherwise meets.

If the Corporation fails to meet or is treated by the Director as not meeting applicable capital standardsand the Director has reasonable cause to believe that the Corporation or any executive oÇcer or director of theCorporation is engaging in or about to engage in any conduct (which could include the payment of dividends)that threatens to result in a material depletion of the Corporation's core capital, then the Director is authorizedto commence proceedings pursuant to which, after a hearing, the Director could issue a cease and desist orderprohibiting such conduct. If the Director determines that the conduct in question is likely to cause a signiÑcantdepletion of core capital, the Director can issue such an order without a hearing, which would be eÅective untilcompletion of the cease-and-desist proceedings, and can do so without regard to whether the Corporationmeets all applicable capital standards.

The Director has the authority to require the Corporation to submit a report to the Director regarding anycapital distribution (including any dividend) declared by the Corporation before the Corporation makes thedistribution.

The foregoing discussion with respect to the payment of dividends is equally applicable to Freddie Mac'sredemption of the Preferred Stock and is based on Freddie Mac's understanding and interpretations of therelevant provisions of the GSE Act. OFHEO has not yet issued any deÑnitive guidance as to its interpretationsof these provisions of the GSE Act. Until OFHEO has provided such guidance, there can be no assurance thatthe foregoing discussion will be consistent with OFHEO's interpretation in every respect. A more detaileddiscussion of the regulatory oversight of Freddie Mac's capitalization and the terms used above appears under""Regulation and Governmental Relationships Ì Regulation of Freddie Mac Ì OFHEO Oversight'' in theInformation Statement.

No Preemptive Rights and No Conversion

No holder of the Preferred Stock will have any preemptive right to purchase or subscribe for any othershares, rights, options or other securities of any class of Freddie Mac which at any time may be sold or oÅeredfor sale by Freddie Mac. The holders of shares of Preferred Stock will not have any right to convert suchshares into or exchange such shares for any other class or series of stock or obligations of Freddie Mac.

No Voting Rights

Section 306(f) of the Freddie Mac Act prohibits the holders of Preferred Stock from voting with respectto the election of any member of the Board of Directors. Except as set forth under ""Amendments'' below, theholders of the Preferred Stock will not be entitled to vote.

Liquidation Rights

Upon any voluntary or involuntary dissolution, liquidation or winding up of Freddie Mac, after paymentor 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 Preferred Stock will be entitled to receive out of the assets ofFreddie Mac available for distribution to stockholders, before any payment or distribution is made on theCommon Stock (or any other junior stock), the amount of $50.00 per share plus an amount equal to thedividend (calculated as provided in the CertiÑcate of Designation) for the then-current quarterly DividendPeriod accrued through and including the date of such liquidation payment. In the event of the dissolution,

13

liquidation or winding up of Freddie Mac, the rights of the Preferred Stock are on a parity with those of theExisting Preferred Stock. If the assets of Freddie Mac available for distribution in such event are insuÇcientto pay in full the aggregate amount payable to holders of the Preferred Stock, the Existing Preferred Stock andany other class or series of stock ranking on a parity upon liquidation with the Preferred Stock and the ExistingPreferred Stock, the assets will be distributed to the holders of Preferred Stock, the Existing Preferred Stockand such parity 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 amountin respect of a dissolution, liquidation or winding up of Freddie Mac until holders of any classes or series ofstock of Freddie Mac ranking prior to the Preferred Stock upon liquidation have been paid all amounts towhich such classes or series are entitled.

A consolidation, merger or combination of Freddie Mac with or into any other corporation or entity, orthe sale of all or substantially all of the property or business of Freddie Mac, will not be deemed to be aliquidation, dissolution or winding up of Freddie Mac for purposes of these provisions on liquidation rights.

Additional Classes or Series of Stock

Freddie Mac will have the right to create and issue additional classes or series of stock ranking prior to, ona parity with or junior to the Preferred Stock, as to dividends, liquidation or otherwise, without the consent ofholders of the Preferred Stock.

Amendments

Without the consent of the holders of the Preferred Stock, Freddie Mac will have the right to amend,alter, supplement or repeal any terms of the Preferred Stock to cure any ambiguity, to correct or supplementany term which may be defective or inconsistent with any other term or to make any other provisions so longas such action does not materially and adversely aÅect the interests of the holders of the Preferred Stock.Otherwise, the terms of the Preferred Stock may be amended, altered, supplemented or repealed only with theconsent of the holders of at least two-thirds of the outstanding shares of Preferred Stock. On matters requiringtheir consent, holders of the Preferred Stock will be entitled to one vote per share.

NYSE Listing

Application has been made to list the Preferred Stock on the NYSE. Approval of such application will besubject, among other things, to satisfactory distribution of the Preferred Stock.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The Preferred Stock and payments thereon are generally subject to taxation by the United States andother taxing jurisdictions to the same extent and in the same manner as stock of and payments thereon by anyother corporation. The following discussion addresses some of the U.S. federal income tax consequences thatmay result from ownership of the Preferred Stock by a U.S. person who holds the Preferred Stock as a capitalasset. For this purpose, a U.S. person is an individual who is a citizen or resident of the United States forfederal income tax purposes, a corporation, partnership or other type of entity organized under the laws of theUnited States or any State (other than a partnership that is not treated as a U.S. person under any applicableTreasury regulations), an estate whose income is subject to U.S. federal income tax regardless of its source, ora trust if a court within the United States is able to exercise primary supervision of the administration of thetrust 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 inexistence on August 20, 1996, and treated as U.S. persons prior to such date, that elect to continue to betreated as U.S. persons, also will be U.S. persons. This discussion does not purport to address all rules whichmay apply to particular investors. Investors are encouraged to consult their own tax advisors regarding thefederal, state, local and foreign tax considerations applicable to an investment in the Preferred Stock.

14

This discussion reÖects current federal income tax laws and regulations and administrative and judicialinterpretations thereof. Changes to any of these subsequent to the date of this OÅering Circular may aÅect thetax consequences described herein.

Dividends

Distributions on the Preferred Stock which are paid out of current earnings and proÑts, or earnings andproÑts accumulated after 1984, generally constitute dividends taxable as ordinary income. To the extent thatthe amount of any distribution paid on a share of Preferred Stock exceeds the current or accumulated earningsand proÑts for federal income tax purposes attributable to that share, such excess will be treated Ñrst as areturn of capital (rather than as ordinary income) and will be applied against and reduce the holder's adjustedtax basis in that share of Preferred Stock. Any such amount in excess of the holder's adjusted tax basis willthen be taxed as capital gain. For purposes of the remainder of this discussion, it is assumed that dividendspaid 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. Thedividends-received deduction is available only with respect to a dividend received on stock held for more than45 days (or more than 90 days in the case of a dividend on preferred stock attributable to periods aggregatingin excess of 366 days), including the day of disposition but not the day of acquisition. This holding period mustbe satisÑed during the 90-day period (180-day period in the case of a preferred stock dividend attributable toperiods aggregating in excess of 366 days) beginning on the date which is 45 (90) days before the date onwhich the stock becomes ex-dividend with respect to the dividend. The length of time that a corporateshareholder is deemed to have held stock for these purposes is reduced for periods during which theshareholder's risk of loss with respect to the stock is diminished by reason of the existence of certain options,contracts to sell, short sales or other similar transactions. The amount of such deduction generally will equal70 percent of the amount of the dividends received, subject to reduction in certain events, including where aholder has indebtedness outstanding that is directly attributable to an investment in the Preferred Stock. Forthis purpose, indebtedness of a depository institution attributable to deposits received in the ordinary course ofits 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 increasedby 75 percent of the amount by which a corporation's adjusted current earnings exceeds its alternativeminimum taxable income prior to the addition of the applicable tax preference item. The amount of anydividend that is included in a corporate shareholder's adjusted current earnings will not be reduced by anydividends-received deduction otherwise allowable with respect to that dividend.

Dispositions, Including Redemptions

Any sale, exchange, redemption (except as discussed below) or other disposition of the Preferred Stockgenerally will result in taxable gain or loss equal to the diÅerence between the amount received and theshareholder's adjusted tax basis in the Preferred Stock. Such gain or loss generally will be capital gain or lossand will be long-term capital gain or loss if the holding period for the Preferred Stock exceeds one year.

A redemption of Preferred Stock may be treated as a dividend, rather than as payment in exchange forthe Preferred Stock, unless the redemption is ""not essentially equivalent to a dividend'' with respect to theholder within the meaning of section 302(b)(1) of the Code. In applying this standard, the holder must takeinto account not only the Preferred Stock and other stock of Freddie Mac that it owns directly, but also thePreferred Stock and other stock of Freddie Mac that it constructively owns within the meaning of section 318of the Code. A redemption payment made to a holder will be ""not essentially equivalent to a dividend'' if itresults in a ""meaningful reduction'' in the holder's aggregate stock interest in Freddie Mac. Because of theambiguities in applying this rule, each holder should consult its own tax advisor to determine whether aredemption 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.

15

Information Reporting and Backup Withholding

Payments of dividends on shares of Preferred Stock held of record by U.S. persons other thancorporations and other exempt holders are required to be reported to the IRS.

Backup withholding of U.S. federal income tax at a rate of 31 percent may apply to payments made withrespect to shares of Preferred Stock, as well as payments of proceeds from the sale of shares of PreferredStock, 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 arenot exempt recipients, whereas corporations and certain other entities generally are exempt recipients.

LEGAL INVESTMENT CONSIDERATIONS

Section 106 of the Secondary Mortgage Market Enhancement Act of 1984 (""SMMEA'') provides thatany person, trust, corporation, partnership, association, business trust or business entity created pursuant to orexisting under the laws of the United States or any state (including the District of Columbia and Puerto Rico)is authorized to purchase, hold and invest in securities issued or guaranteed by Freddie Mac (including theshares of Preferred Stock) to the same extent that the investor is authorized to purchase, hold or invest inobligations issued or guaranteed as to principal and interest by the United States or any agency orinstrumentality thereof. Prior to October 4, 1991, states were authorized by SMMEA to enact legislationwhich speciÑcally referred to Û106 and either prohibited or limited an investor's authority to purchase, hold orinvest in securities issued or guaranteed by Freddie Mac. 15 U.S.C. Û77r-1. Certain states enacted suchlegislation limiting to varying extents the ability of certain entities (in most cases, insurance companies) toinvest in securities issued or guaranteed by Freddie Mac, including the shares of Preferred Stock.

Notwithstanding the preceding paragraph, investors should consult their own legal advisors in determin-ing whether and to what extent the shares of Preferred Stock constitute legal investments for such investorsand whether and to what extent the shares of Preferred Stock can be used as collateral for various types ofborrowings. The foregoing does not take into consideration the application of statutes, regulations, orders,guidelines or agreements generally governing investments made by a particular investor, including but notlimited to ""prudent investor'' provisions, safety and soundness conditions and percentage-of-assets limits. Inaddition, Ñnancial institutions should consult their legal advisors or regulators in determining the appropriatetreatment of the shares of Preferred Stock under any applicable risk-based capital or similar rules. Institutionswhose investment activities are subject to legal investment laws and regulations or to review by regulatoryauthorities may be subject to restrictions on investments in the shares of Preferred Stock. An institution underthe jurisdiction of 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 UnionAdministration, the Department of the Treasury or any other federal or state agency with similar authorityshould review any applicable regulations, policy statements and guidelines before purchasing or pledging theshares of Preferred Stock.

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UNDERWRITING

Subject to the terms and conditions set forth in an underwriting agreement (the ""UnderwritingAgreement''), the Corporation has agreed to sell to each of the Underwriters named below, and each of theUnderwriters, for whom Goldman, Sachs & Co. are acting as representatives, has severally agreed to purchasefrom the Corporation the respective number of shares of Preferred Stock set forth opposite its name below.

Number of SharesUnderwriter of Preferred Stock

Goldman, Sachs & Co. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,530,000Bear, Stearns & Co. Inc. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 210,000Blaylock & Partners, L.P. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 210,000Lehman Brothers Inc. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 210,000Merrill Lynch, Pierce, Fenner & Smith

IncorporatedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 210,000J.P. Morgan Securities Inc. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 210,000Morgan Stanley & Co. Incorporated ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 210,000Salomon Smith Barney Inc. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 210,000

TotalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,000,000

Under the terms of the Underwriting Agreement, the several Underwriters are committed to take and payfor all of the shares of Preferred Stock oÅered hereby, if any are taken.

The Underwriters propose to oÅer the Preferred Stock in part directly to the public at the initial oÅeringprice set forth on the cover page of this OÅering Circular and in part to certain dealers at such price less aconcession not in excess of $0.30 per share. The Underwriters may allow, and such dealers may reallow, aconcession not in excess of $0.25 per share on sales to certain brokers and dealers. After the shares ofPreferred Stock are released for sale to the public, the oÅering price and other selling terms may from time totime be varied by the Underwriters.

The Corporation has granted the Underwriters an option exercisable for 30 days after the date of thisOÅering Circular to purchase up to an aggregate of 450,000 additional shares of Preferred Stock solely tocover overallotments, if any. If the Underwriters exercise their overallotment option, the Underwriters haveseverally agreed, subject to certain conditions, to purchase approximately the same percentage thereof that thenumber of shares to be purchased by each of them, as shown in the foregoing table, bears to the 3,000,000shares of Preferred Stock oÅered.

Prior to this oÅering, there has been no public market for the Preferred Stock. Application has been madeto list the Preferred Stock on the NYSE. Trading of the Preferred Stock on the NYSE is expected tocommence within a fourteen-day period after the initial delivery of the Preferred Stock. The Underwritershave advised the Corporation that they intend to make a market in the Preferred Stock prior to thecommencement of trading on the NYSE, but are not obliged to do so and may discontinue any such marketmaking at any time without notice.

In connection with the oÅering, the Underwriters may purchase and sell the Preferred Stock in the openmarket. These transactions may include over-allotment and stabilizing transactions and purchases to coversyndicate short positions created in connection with the oÅering. Stabilizing transactions consist of certain bidsor purchases for the purpose of preventing or retarding a decline in the market price of the Preferred Stock;and syndicate short positions involve the sale by the Underwriters of a greater number of shares of PreferredStock than they are required to purchase from Freddie Mac in the oÅering. The Underwriters also may imposea penalty bid, whereby selling concessions allowed to syndicate members or other broker-dealers in respect ofthe securities sold in the oÅering for their account may be reclaimed by the syndicate if such shares ofPreferred Stock are repurchased by the Underwriters in stabilizing or covering transactions. These activitiesmay stabilize, maintain or otherwise aÅect the market price of the Preferred Stock, which may be higher thanthe price that might otherwise prevail in the open market; and these activities, if commenced, may be

17

discontinued at any time. These transactions may be eÅected on the NYSE, in the over-the-counter market orotherwise.

The Corporation has agreed to indemnify the Underwriters against certain liabilities in connection withthe oÅering and sale of the Preferred Stock.

Certain of the Underwriters, dealers or agents may engage in transactions with, and perform services for,the Corporation in the ordinary course of business.

RATING

Moody's has assigned the Preferred Stock a rating of ""aa3.'' A rating of ""aa'' is the second highest ratingthat Moody's assigns to preferred stock. An issue which is rated ""aa'' is considered by Moody's to be a ""high-grade preferred stock.'' According to Moody's, this rating indicates that ""there is a reasonable assurance theearnings and asset protection will remain relatively well maintained in the foreseeable future.'' The numericalmodiÑer ""3'' indicates that the issue ranks in the lower end of the generic rating category of ""aa.'' S&P hasassigned the Preferred Stock a rating of ""AA¿.'' A rating of ""AA'' is the second highest rating that S&Passigns to preferred stock. An issue which is rated ""AA'' is considered by S&P to be a ""high-quality, Ñxed-income security.'' According to S&P, this rating indicates that ""the capacity to pay preferred stock dividendsis very strong, although not as overwhelming as for issues rated AAA.'' The addition of the minus (¿) signindicates that the issue ranks in the lower end of the generic rating category ""AA.'' A security rating is not arecommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by theassigning rating organization.

INDEPENDENT PUBLIC ACCOUNTANTS

The Consolidated Financial Statements of the Corporation included in the Information Statement havebeen audited by Arthur Andersen LLP, independent public accountants, as indicated in their report withrespect thereto.

LEGAL MATTERS

The validity of the Preferred Stock will be passed upon for the Corporation by Maud Mater, Esq.,Executive Vice President-General Counsel and Secretary of the Corporation. As of August 30, 1998,Ms. Mater was the beneÑcial owner of 67,581 shares of Common Stock and options covering an additional140,358 shares of Common Stock. Ms. Mater was elected to Ñll a vacancy on Freddie Mac's Board ofDirectors until an external candidate is identiÑed for recommendation for election at the next AnnualStockholders' Meeting or substitution by the Board of Directors prior to the next Annual Stockholders'Meeting. Certain legal matters relating to the Preferred Stock will be passed upon for the Underwriters byCleary, Gottlieb, Steen & Hamilton.

18

Appendix A

FREDDIE MAC

CERTIFICATE OF CREATION, DESIGNATION, POWERS,PREFERENCES, RIGHTS, PRIVILEGES, QUALIFICATIONS,LIMITATIONS, RESTRICTIONS, TERMS AND CONDITIONS

ofVARIABLE RATE, NON-CUMULATIVE PREFERRED STOCK

(Par Value $1.00 Per Share)

I, MAUD MATER, Secretary of the Federal Home Loan Mortgage Corporation, a government-sponsored enterprise of the United States of America (""Freddie Mac'' or the ""Corporation''), do herebycertify that, pursuant to authority vested in the Board of Directors of Freddie Mac by Section 306(f) of theFederal Home Loan Mortgage Corporation Act, as amended (12 U.S.C. Û1455(f)), the Board of Directorsadopted FHLMC Resolution 98-05 on March 6, 1998 and adopted FHLMC Resolution 98-32 on Septem-ber 11, 1998, which resolutions are now, and at all times since such date have been, in full force and eÅect, andthat the Chairman and Chief Executive OÇcer, pursuant to the authority delegated to him by suchresolutions, approved the Ñnal terms of the public issuance and sale of the preferred stock of Freddie Macdesignated above.

The Variable Rate, 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 ""Variable Rate, Non-Cumulative Preferred Stock,'' shall have a par value of $1.00 pershare and shall consist of 3 million shares.* The Board of Directors shall be permitted to increase theauthorized number of such shares at any time. The Non-Cumulative Preferred Stock shall rank prior to theVoting Common Stock of Freddie Mac (the ""Common Stock'') to the extent provided in this CertiÑcate andshall rank, both as to dividends and upon liquidation, on a parity with the 5.1% Non-Cumulative PreferredStock issued on September 23, 1998, the 5% Non-Cumulative Preferred Stock issued on March 23, 1998, the5.81% Non-Cumulative Preferred Stock issued on October 27, 1997, the 6.14% Non-Cumulative PreferredStock issued on June 3, 1997, the 6.125% Non-Cumulative Preferred Stock issued on November 1, 1996, theVariable Rate, Non-Cumulative Preferred Stock issued on April 26, 1996 and the 6.72% Non-CumulativePreferred Stock issued on August 2, 1993 (collectively, the ""Existing Preferred Stock'').

2. Dividends

(a) The 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 availabletherefor, non-cumulative, cash dividends at a variable per annum rate (not greater than 7.5% per annum)equal to (i) the sum of LIBOR (as deÑned in clause (b) below) and 1.0%, divided by (ii) 1.377, with theresulting dividend per share being rounded to the nearest cent (with one-half cent being rounded up), withouttaking into account any adjustments referred to in clause (c) below. Dividends on the Non-CumulativePreferred Stock shall accrue from but not including September 23, 1998 and are payable when, as and ifdeclared by the Board of Directors quarterly on March 31, June 30, September 30 and December 31 of eachyear (each, a ""Dividend Payment Date'') commencing on December 31, 1998. If a Dividend Payment Date isnot a ""Business Day,'' the related dividend shall be paid on the next Business Day with the same force andeÅect as though paid on the Dividend Payment Date, without any increase to account for the period from suchDividend Payment Date through the date of actual payment. For these purposes, ""Business Day'' means a dayother than (i) a Saturday or Sunday, (ii) a day on which New York City banks are closed or (iii) a day on

* Plus up to 450,000 additional shares pursuant to Underwriters' overallotment option.

A-1

which the oÇces of Freddie Mac are closed. If declared, the initial dividend, which will be for the period frombut not including September 23, 1998 through and including December 31, 1998, will be 4.7204% or$0.649055 per share and will be payable on December 31, 1998. Thereafter, the dividend payable to holders ofNon-Cumulative Preferred Stock will vary from Dividend Period to Dividend Period. The ""Dividend Period''relating to a Dividend Payment Date shall be the period from but not including the preceding DividendPayment Date (or from but not including September 23, 1998, in the case of the Ñrst Dividend PaymentDate) through and including the related Dividend Payment Date. Freddie Mac will calculate the dividend ratefor each Dividend Period based on LIBOR determined as of two London Business Days (deÑned as any day,other than a Saturday or Sunday, on which banks are open for business in London) prior to the Ñrst day ofsuch Dividend Period (each a ""Determination Date''). Each dividend shall be calculated on the basis of theactual number of days elapsed, assuming a year of 360 days, and the dividend rate shall be applied to the $50per share redemption value. Each such dividend shall be paid to the holders of record of outstanding shares ofthe Non-Cumulative Preferred Stock as they appear in the books and records of Freddie Mac on such recorddate as shall be Ñxed in advance by the Board of Directors, not to be earlier than 45 days nor later than 10 dayspreceding the applicable Dividend Payment Date. No dividends shall be declared or paid or set apart forpayment on the Common Stock or any other class or series of stock ranking junior to or (except as hereinafterprovided) on a parity with the Non-Cumulative Preferred Stock with respect to the payment of dividendsunless dividends have been declared and paid or set apart (or ordered by the Board of Directors to be setapart) for payment on the outstanding Non-Cumulative Preferred Stock in respect of the then-currentDividend Period; provided, however, that the foregoing dividend preference shall not be cumulative and shallnot in any way create any claim or right in favor of the holders of Non-Cumulative Preferred Stock in theevent that Freddie Mac shall not have declared or paid or set apart (or the Board of Directors shall not haveordered to be set apart) dividends on the Non-Cumulative Preferred Stock in respect of any prior DividendPeriod. In the event that Freddie Mac shall not pay any one or more dividends or any part thereof on theNon-Cumulative Preferred Stock, the holders of the Non-Cumulative Preferred Stock shall not have anyclaim in respect of such non-payment so long as no dividend is paid on any junior or parity stock in violation ofthe next preceding sentence.

(b) ""LIBOR'' means, with respect to a Dividend Period relating to a Dividend Payment Date (in thefollowing order of priority):

(i) the rate (expressed as a percentage per annum) for Eurodollar deposits having a three-monthmaturity that appears on Bridge Telerate Capital Markets Report Page 3750 or any successor to suchpage (""Telerate Page 3750'') as of 11:00 a.m. (London time) on the related Determination Date;

(ii) if such rate does not appear on Telerate Page 3750 as of 11:00 a.m. (London time) on therelated Determination Date, LIBOR shall be the arithmetic mean (if necessary rounded upwards to thenearest whole multiple of 1/128%) of the rates (expressed as a percentage per annum) for Eurodollardeposits having a three-month maturity that appear on Reuters Monitor Money Rates Page LIBO or anysuccessor to such page (""Reuters Page LIBO'') as of 11:00 a.m. (London time) on such DeterminationDate;

(iii) if such rate does not appear on Reuters Page LIBO as of 11:00 a.m. (London time) on therelated Determination Date, Freddie Mac shall request the principal London oÇces of four leading banksin the London interbank market to provide such banks' oÅered quotations (expressed as percentages perannum) to prime banks in the London interbank market for Eurodollar deposits having a three-monthmaturity as of 11:00 a.m. (London time) on such Determination Date. If at least two quotations areprovided, LIBOR shall be the arithmetic mean (if necessary rounded upwards to the nearest wholemultiple of 1/128%) of such quotations;

(iv) if fewer than two such quotations are provided as requested in clause (iii) above, Freddie Macshall request four major New York City banks to provide such banks' oÅered quotations (expressed aspercentages per annum) to leading European banks for loans in Eurodollars as of 11:00 a.m. (Londontime) on such Determination Date. If at least two such quotations are provided, LIBOR will be thearithmetic mean (if necessary rounded upwards to the nearest whole multiple of 1/128%) of suchquotations; and

A-2

(v) if fewer than two such quotations are provided as requested in clause (iv) above, LIBOR shallbe LIBOR determined with respect to the Dividend Period immediately preceding such current DividendPeriod.

If the rate for Eurodollar deposits having a three-month maturity that initially appears on Telerate Page3750 or Reuters Page LIBO, as the case may be, as of 11:00 a.m. (London time) on the related DeterminationDate is superseded on Telerate Page 3750 or Reuters Page LIBO, as the case may be, by a corrected ratebefore 12:00 noon (London time) on such Determination Date, such corrected rate as so substituted on theapplicable page shall be the applicable LIBOR for such Determination Date.

(c) If, prior to September 23, 2000, one or more amendments to the Internal Revenue Code of 1986, asamended (the ""Code''), are enacted that reduce the percentage of the dividends-received deduction asspeciÑed in section 243(a)(1) of the Code or any successor provision (the ""Dividends-Received Percent-age''), certain adjustments may be made in respect of the dividends payable by the Corporation, and PostDeclaration Date Dividends and Retroactive Dividends (as such terms are deÑned below) may becomepayable, as described below.

The amount of each dividend payable (if declared) per share of Non-Cumulative Preferred Stock fordividend payments made on or after the eÅective date of such change in the Code will be adjusted bymultiplying the amount of the dividend payable pursuant to clause (a) of this Section 2 (before adjustment)by a factor, which shall be the number determined in accordance with the following formula (the ""DRDFormula''), and rounding the result to the nearest cent (with one-half cent rounded up):

1-.35(1-.70)

1-.35(1-DRP)

For the purposes of the DRD Formula, ""DRP'' means the Dividends-Received Percentage (expressed as adecimal) applicable to the dividend in question; provided, however, that if the Dividends-Received Percentageapplicable to the dividend in question is less than 50%, then the DRP will equal .50. In the event anadjustment to any dividend payable on the Non-Cumulative Preferred Stock is made pursuant to thisSection 2(c), the resulting dividend rate may exceed 7.5% per annum. No amendment to the Code, other thana change in the percentage of the dividends-received deduction set forth in section 243(a)(1) of the Code orany successor provision, or a change in the percentage of the dividends-received deduction for certaincategories of stock, which change is applicable to the Preferred Stock, will give rise to an adjustment.

Notwithstanding the foregoing provisions, if, with respect to any such amendment, the Corporationreceives either an unqualiÑed opinion of nationally recognized independent tax counsel selected by theCorporation or a private letter ruling or similar form of assurance from the Internal Revenue Service (the""IRS'') to the eÅect that such an amendment does not apply to a dividend payable on the Non-CumulativePreferred Stock, then such amendment shall not result in the adjustment provided for pursuant to the DRDFormula with respect to such dividend. The opinion referenced in the previous sentence shall be based uponthe legislation amending or establishing the DRP or upon a published pronouncement of the IRS addressingsuch legislation. Unless the context otherwise requires, references to dividends herein shall mean dividends asadjusted by the DRD Formula. The Corporation's calculation of the dividends payable as so adjusted shall beÑnal and not subject to review.

Notwithstanding the foregoing, if any such amendment to the Code is enacted after the dividend payableon a Dividend Payment Date has been declared but before such dividend is paid, the amount of the dividendpayable on such Dividend Payment Date shall not be increased. Instead, additional dividends (the ""PostDeclaration Date Dividends''), equal to the excess, if any, of (x) the product of the dividend paid by theCorporation on such Dividend Payment Date and the DRD Formula (where the DRP used in the DRDFormula would be equal to the greater of the Dividends-Received Percentage applicable to the dividend inquestion and .50) over (y) the dividend paid by the Corporation on such Dividend Payment Date, shall bepayable (if declared) to holders of Non-Cumulative Preferred Stock on the record date applicable to the nextsucceeding Dividend Payment Date, in addition to any other amounts payable on such date.

A-3

If any such amendment to the Code is enacted and the reduction in the Dividends-Received Percentageretroactively applies to a Dividend Payment Date as to which the Corporation previously paid dividends on theNon-Cumulative Preferred Stock (each, an ""AÅected Dividend Payment Date''), the Corporation shall pay(if declared) additional dividends (the ""Retroactive Dividends'') to holders on the record date applicable tothe next succeeding Dividend Payment Date (or, if such amendment is enacted after the dividend payable onsuch Dividend Payment Date has been declared, to holders on the record date applicable to the secondsucceeding Dividend Payment Date following the date of enactment) in an amount equal to the excess of(x) the product of the dividend paid by the Corporation on each AÅected Dividend Payment Date and theDRD Formula (where the DRP used in the DRD Formula would be equal to the greater of the Dividends-Received Percentage and .50 applied to each AÅected Dividend Payment Date) over (y) the sum of thedividend paid by the Corporation on each AÅected Dividend Payment Date. The Corporation will make onlyon