2. Table of Contents
Section Page
I Freddie Mac Overview 2
II U.S. Housing Market 10
III Credit Guarantee Business 24
IV Investment Management Business 33
V Global Debt Funding Program 42
VI Mortgage Funding 48
For more information about Freddie Mac and its business, please see the company’s filings with the Securities and Exchange Commission,
including the company’s Registration Statement on Form 10, dated July 18, 2008, which are available on the Investor Relations page of the
company’s Web site at www.FreddieMac.com/investors and the Securities and Exchange Commission’s Web site at www.sec.gov.
1
4. Congress created Freddie Mac to provide stability, liquidity,
and affordability to the U.S. residential mortgage market
U.S. Residential
Mortgage Market
Mortgage Mortgage
Freddie Mac
Securitization Investments
Mortgage-backed Debt
Global Capital
Securities Securities
Markets
“A primary purpose is to provide stability in the secondary market for home mortgages including mortgages
securing housing for low and moderate income families. This can be accomplished through both portfolio
purchasing and selling activities, as well as through the securitization of home mortgages.”1
3
1House of Representatives report on FIRREA, No. 54, 101st Congress, 1st Session, Part 3 at 2 (1989).
5. Freddie Mac is a central part of the U.S. housing market
$ Trillions
U.S. Residential Mortgage Debt Outstanding
25
2007 $ Trillions
$19.7
20 FRE/FNM Total Portfolio 5.0
FRE/FNM Eligible 10.4
Total US Residential Mortgages 12.0
15
$13.3
$12.4
$12.2
$12.0
$11.2
$10.1
10
$5.5
5 $3.7
$2.9
0
1990 1995 2000 2005 2006 2007 2008 2009 2010 2015
Est. Est. Est. Est.
FRE/FNM Total Portfolio Total U.S. Residential Mortgages FRE/FNM Eligible
Sources: Freddie Mac Total Portfolio: Monthly Volume Summary, January 2008; Fannie Mae Total Portfolio: Monthly Summary, January 2008,
“Book of Business”; Total US Residential MDO: Federal Reserve Board’s Flow of Funds Accounts, December 11, 2008. The MDO forecast for
2008 through 2011 is based on the December 2008 forecast of Freddie Mac’s Chief Economist. Forecasted figures for 2012 through 2015 are 4
from the Homeownership Alliance, based on an 8.25% annual growth rate, and assume a constant FHA & VA share of MDO; FRE/FNM Eligible
MDO: Nets out an assumed 15% jumbo share of single-family conventional MDO.
6. Our credit guarantee business has accounted for most of
our growth
Total mortgage portfolio
UPB
$ Billions
$2,200
$2,103
2,200
2,000 $1,827
1,800 $1,685
$1,506 $1,395
1,600
$1,415
$1,317
1,400
$1,827
1,200
1,000
800
600
$432
400 $805
200
$373
0
1 1 1
2002 2003 2004 2005 2006 2007 2008 YTD
Outstanding Guaranteed PCs and Structured Securities
Retained Portfolio (PCs & Structured Securities)
Retained Portfolio (Non-Freddie Mac Mortgage-Related Securities & Mortgage Loans)
1 Includes PCs and Structured Securities Freddie Mac held in connection with PC market-making and support activities accomplished through the
Securities Sales & Trading Group business unit and the Money Manager program. These programs ceased in the fourth quarter of 2004.
Source: Data as of period end. Data for 2002-2004 is based on Freddie Mac’s Information Statements dated September 24, 2004 and June 14, 5
2005. Data for 2005-2007 is based on Freddie Mac’s Registration Statement on Form 10 dated July 18, 2008. Data for 2008 is based on Freddie
Mac’s November 2008 Monthly Volume Summary. Figures for 2008 are subject to change.
7. Housing and Economic Recovery Act of 2008
The Housing and Economic Recovery Act of 2008 was signed into law by President
Bush on July 30, 2008
» The Act is a comprehensive housing stimulus package containing GSE reform,
FHA modernization, and foreclosure prevention measures, among other
provisions
» The Act consolidates the regulation of Freddie Mac, Fannie Mae, and the
Federal Home Loan Banks into a single new regulator called the Federal
Housing Finance Agency (FHFA)
Implementation of many provisions of the new law will occur over time through the
public rulemaking process
The Act requires FHFA to consult with the Federal Reserve with respect to the risk
posed to the financial system before issuing any regulations, guidelines, and orders
regarding safe and sound operations, prudential management and operations
standards, capital requirements, and portfolio standards
» This consultative requirement expires on December 31, 2009
6
8. Key provisions of the Act
Under the Act, FHFA has authority to:
» Assess our safety and soundness
» Regulate our portfolio investments
» Change our minimum and risk-based capital levels
» Approve new products before they are initially offered
In addition, the Act:
» Allows increases in GSE loan limits based on changes in a new housing price index
established by FHFA, beginning January 1, 2009
• In high-cost areas, increases the limits to the lesser of 115% of the median home
price or 150% of the limit, currently $625,500 for a 1-unit single-family home
» Establishes a new affordable housing regime
» Requires the GSEs to set aside and transfer, in each fiscal year, an amount equal to 4.2
basis points of the unpaid principal balance of total new business purchases to two new
housing funds
Provides Treasury authority to purchase GSE obligations and securities, under certain
conditions, until December 31, 2009
7
9. Conservatorship
The Director of the Federal Housing Finance Agency (FHFA) has placed Freddie Mac and
Fannie Mae in conservatorship in order to restore the balance between the GSEs’ safety and
soundness and mission
» Treasury Secretary Paulson stated that the primary mission of the GSEs is to
proactively work to increase the availability of mortgage finance, including consideration
of mortgage affordability
FHFA is the Conservator for both GSEs
» The Conservator assumes all power of the Boards, management and shareholders
» FHFA has appointed a new CEO to lead each GSE
» FHFA has stated that the GSEs will continue business as usual during the
conservatorship
FHFA has indicated that the conservatorship goals include:
» Restoring confidence in the GSEs
» Enhancing the GSEs’ capacity to fulfill their missions
» Mitigating systemic risk that contributes to market instability
FHFA has indicated that a GSE’s conservatorship will end when the Director determines that
it has been restored to a safe and solvent condition
On October 9, 2008, FHFA announced that has suspended the capital classification of both
GSEs during the conservatorship, in light of the United States Treasury Senior Preferred
Stock Purchase Agreement
8
10. Treasury Actions
Treasury has announced additional actions:
» Entering into a Senior Preferred Stock Purchase Agreement with each GSE
• Each Agreement provides a commitment for a maximum amount funded of $100
billion for the GSE
• As consideration, each GSE has issued to Treasury senior preferred stock and a
warrant to acquire 79.9% of the GSE’s common stock
» Creating a GSE Credit Facility
• Short-term facility is available to Freddie Mac, Fannie Mae and the Federal Home
Loan Banks
• Funding under the facility would be provided directly by Treasury to Freddie Mac in
exchange for eligible collateral consisting of guaranteed agency MBS
• Facility available until December 31, 2009
» Announcing an MBS Purchase Program
• Treasury will purchase GSE MBS in the open market
• Program will begin in September 2008 and expire on December 31, 2009
• Scale of program will be based on developments in the capital markets and housing
markets
9
12. Single-family mortgage debt is protected in relation to
total value of housing stock
$ Trillions
25
20
$8.5
Trillion
Value of Housing Stock1
15
10 $7.1 Trillion
(2001)
$10.6
Home Equity
Trillion
5
Single Family Mortgage Debt 2
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
1 Value of Housing Stock: Federal Reserve Board’s Flow of Funds Accounts, December 11, 2008, Table B.100 (line #50). Note this figure
includes homes with and without underlying mortgages. Home equity is the difference between the value of the housing stock and the
amount of single-family debt.
11
2 Single-family Mortgage Debt Outstanding: Federal Reserve Board’s Flow of Funds Accounts, December 11, 2008, Table B.100 (line #33).
Source: Federal Reserve Board’s Flow of Funds Accounts. 2008 data as of September 30, 2008.
13. U.S. nominal house prices declined sharply
Annual national house price growth
Percent
16
14
12
10
8
4.7%: 1952-2008
6
Average Growth Rate
4
2
0
-2
-4
- Recession Year
-6
1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008
Forecast
Note: Growth rates for 1952 to 2007 are calculated using the annual average of certain third party and Freddie Mac indices. The forecasted growth
12
rate for 2008 is calculated using a Freddie Mac index.
Sources: E. H. Boeckh and Associates, Bureau of Labor Statistics, U.S. Census Bureau and Freddie Mac.
14. Inventories of homes for sale remain above recent levels
Months Supply of
Homes for Sale
15
14
Existing Homes
13
12
11
10
9
8
7
6
5
4 New Homes
3
2
1
0
1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
- Recession
13
Sources: Census Bureau and National Association of Realtors. 2008 data as of November 30, 2008.
15. Fewer refinances imply a 27 percent drop in mortgage
originations in 2008
Total single-family mortgage originations
$ Billions
4,000
Refinance Originations
Home Purchase Originations
3,000
2,000
1,000
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Est. Est.
14
Source: U.S. Department of Housing and Urban Development, Federal Financial Institutions Examination Council, Federal Housing Finance Board.
2008 data based on the December 2008 forecast of Freddie Mac’s Office of the Chief Economist.
16. National home prices have continued to decline1
Quarterly home price change
Percent
5
3.8
4 3.4
3 2.5
1.7
1.7
2
1.2
0.7
1 0.4
0
(0.3)
(1)
(0.9)
(1.1)
(1.4)
(2) (1.8)
(3)
(4)
(3.9) (3.9)
(5)
1Q 2005 3Q 2005 1Q 2006 3Q 2006 1Q 2007 3Q 2007 1Q 2008 3Q 2008
1 National home prices use the internal Freddie Mac index, which is value-weighted based on Freddie Mac’s single-family portfolio.
15
Source: Freddie Mac.
17. 43 states and Washington DC had home price declines from 3Q
2007 to 3Q 20081
United States -10.5%
-4.3 -2.6
2.4
-0.9 -4.8
-7.2 -8.1
-5.8 -4.6 -1.9 -6.5
4.1
-3.9 -12.7
-0.1
-2.7 -6.7
-1.0
RI –11.7
-1.5 -5.7
-9.3 -5.1
-26.8 -2.9
-6.7 CT –6.1
-6.1 1.5
-4.4 -10.3 DC –6.5
-3.5
-1.4 -0.1
-27.7
-0.8
-2.6
1.4
-19.2 -1.5 0.0
-3.4
>= 0%
-5.2
-1.3 0.7
-5 to 0%
0.7 -2.5
-0.5
-10 to -5%
-20.8
-20 to -10%
-3.2
< -20%
1 National home prices use the internal Freddie Mac index, which is value-weighted based on Freddie Mac’s single-family portfolio.
16
Source: Freddie Mac.
18. Subprime and Alt-A shares of the market quintupled
between 2001 and 2006, then declined sharply
2001 2006 2008 YTD
5%
3% 14% 8%
3%
8%
33% 17%
7%
13%
57%
3% 64%
20% 1%
7%
16%
20%
$2.2 trillion $3.0 trillion $1.8 trillion
Conventional, Jumbo Prime Subprime Alt-A FHA & VA Home Equity
Conforming Prime Loans
17
Source: Inside Mortgage Finance (by dollar amount) and Freddie Mac. 2008 data is as of September 30, 2008.
19. Recent Alt-A and subprime originations are performing far
worse than earlier originations
Cumulative 60-days or more delinquency rate as a share of the number of loans originated
Alt-A Subprime
Percent (% )
Percent (% )
30
11
10
25
9
8
20
7
6
15
5
4
10
3
2 5
1
0 0
0 4 8 12 16 20 24 28 32 36 40 44 48 0 4 8 12 16 20 24 28 32 36 40 44 48
Age in Months Age in Months
2002 2003 2004 2005 2006 2007
18
Source: Loan Performance, a subsidiary of First American Real Estate Solutions.
21. Subprime ARM defaults are 21 times those on prime fixed-
rate mortgages
Loans 90 days or more delinquent or in foreclosure
Percent
25
Subprime
- Recession
ARM
20
15
Subprime
10
FRM
FHA & VA
5
Prime Conventional ARM
Prime Conventional FRM
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
20
Source: Mortgage Bankers Association. Quarterly data not seasonally adjusted (Q1 1998 – Q2 2008).
22. Annual MBS issuance by product type
Subprime Alt-A
Percent $ Billions
$ Billions Percent
500 25 500 25
450 450
400 20 400 20
350 350
300 15 300 15
250 250
200 10 200 10
150 150
100 5 100 5
50 50
0 0 0 0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2000 2001 2002 2003 2004 2005 2006 2007 2008
YTD YTD
Subprime MBS Issuance Alt-A MBS Issuance
Percent of Total MBS Issuance Percent of Total MBS Issuance
21
Source: Inside MBS & ABS – October 10, 2008 edition, Freddie Mac and Fannie Mae. Data as of September 30, 2008.
23. Jumbo-conforming spreads spiked to record levels in
December 2008
Effective jumbo-conforming interest rate spread
Basis points
200
180 Record: 184 bps
12/09/08
160
Most recent: 169 bps
140 12/26/08
120
100
80
60
40
20
0
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Note: Effective spread adds fees and points to the interest rate.
22
Source: HSH Associates. Data as of December 26, 2008.
24. Mortgage rates on conforming jumbo loans
30-year fixed mortgage rates
Percent
8
7
6
5
Jan Jan Feb Feb Feb Mar Mar Apr Apr May May Jun Jun Jul Jul Aug Aug Aug Sep Sep Oct- Oct-
4 18 1 15 29 14 28 11 25 9 23 6 20 3 18 1 15 29 12 26 10 24
30-Year Conforming 30-Year Conforming Jumbo 30-Year Non-Conforming Jumbo
23
Source: HSH Associates. Points and fees are added to interest rates.
26. Our GSE market share remains near historical levels
Freddie Mac share of
Freddie Mac’s GSE market share
PC/MBS issuances1
(Percent)
50
45%
45
43% 43% 43%
41%
40%
40
37%
35
30
2002 2003 2004 2005 2006 2007 2008
YTD
1For 2006, 2007 and 2008, Freddie Mac’s share of PC/MBS issuances is calculated as Freddie Mac’s issuance activities for Total Guaranteed PCs
and Structured Securities Issued divided by the sum of such issuances and Fannie Mae’s Total MBS Issuances.
25
Source: Freddie Mac and Fannie Mae Monthly Summaries. 2008 data as of November 30, 2008. Figures for 2008 are subject to change.
27. We fulfill our mission through a diversity of mortgage
products
Total mortgage portfolio purchases Total mortgage portfolio
Eleven months ended November 30, 2008 As of November 30, 2008
$369.1 Billion $1.9 Trillion
20-year
Fixed Rate 20-year Fixed
30-year Fixed
Rate
2% Rate
15-year 4% 15-year Fixed
64%
Fixed Rate
30-year Rate
8%
Fixed Rate 13%
72%
IO
6% ARM
IO
3% 8%
ARM
4%
Option ARM
1%
Multifamily
Balloon
Conventional
1%
6%
Multifamily
Other
Conventional
3%
Other 4%
1%
26
Note: Excludes non-Freddie Mac mortgage-related securities.
Source: Freddie Mac.
28. Significant homeowner equity supports the credit quality
of our single-family portfolio
Average estimated loan-to-value1 ratio of our single-family portfolio
adjusted to reflect current market prices
Average Estimated Current
LTV (Percent)
70
68%
65%
65
63% 63%
61% 61% 61%
60%
60
58%
57%
56%
55
50
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Sept 30,
2008
1 Based on the unpaid principal balance of the single-family mortgage portfolio, excluding Structured Transactions backed by Ginnie Mae Certificates
and certain Structured Transactions that are backed by non-Freddie Mac mortgage-related securities. Current market values are estimated by adjusting
the value of the property at origination based on changes in the market value of homes since origination. Estimated current LTV ratio range is not
applicable to purchases we made during 2008, includes the credit-enhanced portion of the loan and excludes any secondary financing by third parties. 27
Source: Freddie Mac’s Form 10-Q dated November 14, 2008. Data as of period end.
29. Freddie Mac’s portfolio is well diversified1
North Central
19% Northeast
West
24%
26%
Southwest
Southeast
13%
18%
1 Based on unpaid principal balances.
28
Source: Freddie Mac’s Form 10-Q dated November 14, 2008. Data as of September 30, 2008.
30. Estimated sensitivity of credit losses to an immediate 5%
decline in house prices1
Net Present Value
($ Millions)
6,000
5,500
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
6/30/2007 9/30/2007 12/31/2007 3/31/2008 6/30/2008 9/30/2008
Before credit enhancements 2 After credit enhancements 3
1 Based on the single-family mortgage portfolio, excluding Structured Securities backed by Ginnie Mae Certificates.
2 Assumes that none of the credit enhancements currently covering our mortgage loans has any mitigating impact on our credit losses.
29
3 Assumes we collect amounts due from credit enhancement providers after giving effect to certain assumptions about counterparty default rates.
Source: Freddie Mac’s Form 10-Q dated November 14, 2008.
31. Credit delinquencies and losses continue to increase
90-day single-family delinquencies1 Total credit losses2
Basis Points
Basis Points
130 20
120 18
110 16
100 14
90 12
80 10
70 8
60 6
50 4
40 2
30 0
2004 2005 2006 2007 Sept 30, 2004 2005 2006 2007 2008
2008 YTD
1 Based on mortgage loans in our retained portfolio and total guaranteed PCs and Structured Securities issued, excluding Structured Transactions,
Structured Securities backed by Ginnie Mae Certificates and mortgage loans whose contractual terms have been modified under an agreement
with the borrower and the borrower is less than 90 days delinquent under the modified terms.
2Calculated as annualized credit losses divided by the average total mortgage portfolio, excluding non-Freddie Mac mortgage-related securities
30
and that portion of Structured Securities that is backed by Ginnie Mae Certificates. 2008 YTD is for nine months ended September 30, 2008.
Source: Freddie Mac’s Form 10-Q dated November 14, 2008.
32. Delinquencies are low relative to the industry
90-day or more delinquencies
Basis Points
300 287
250 235
199
200
167
152
150 134
122
93
100 77
65
50
0
2003 2004 2005 2006 2007 1Q 2Q 3Q Oct Nov
2008 2008 2008 2008 2008
MBA Prime Conventional Mortgage Delinquencies
1
Freddie Mac Total Single-Family 90-day or More Delinquencies
1Based on mortgage loans in our retained portfolio and total guaranteed PCs and Structured Securities issued, excluding Structured Transactions,
Structured Securities backed by Ginnie Mae Certificates and mortgage loans whose contractual terms have been modified under an agreement
31
with the borrower and the borrower is less than 90 days delinquent under the modified terms.
Source: Mortgage Bankers Association and Freddie Mac. Data as of period end.
33. Single-family delinquency rates by region
(In Basis Points) 3Q 2007 4Q 2007 1Q 2008 2Q 2008 3Q 2008
1
Non-credit enhanced delinquency rates
1 North Central 39 48 52 59 72
2 Northeast 31 39 45 53 69
3 Southeast 43 59 76 98 131
4 Southwest 27 32 33 38 46
5 West 26 42 59 80 108
2
Total single-family delinquency rate
6 Total portfolio 51 65 77 93 122
1 Presentation
of non-credit-enhanced delinquency rates with the following regional designation: West (AK, AZ, CA, GU, HI, ID, MT, NV, OR,
UT, WA); Northeast (CT, DE, DC, MA, ME, MD, NH, NJ, NY, PA, RI, VT, VA, WV); North Central (Il, IN, IA, MI, MN, ND, OH, SD, WI);
Southeast (AL, FL, GA, KY, MS, NC, PR, SC, TN, VI); and Southwest (AR, CO, KS, LA, MO, NE, NM, OK, TX, WY).
2 Based on mortgage loans in our retained portfolio and total guaranteed PCs and Structured Securities issued, excluding Structured
Transactions, Structured Securities backed by Ginnie Mae Certificates and mortgage loans whose contractual terms have been modified
32
under an agreement with the borrower and the borrower is less than 90 days delinquent under the modified terms.
Source: Freddie Mac’s Form 10-Q dated November 14, 2008. Data as of period end.
36. Retained portfolio growth depends on market conditions
Retained portfolio growth
UPB
$ Billions
90 $85
$78
80
$70
70
$57
60
50
40
30
$17
20
$7
10
-$6
0
-10
2002 2003 2004 2005 2006 2007 2008
YTD
Note: Data represents net growth of the Retained portfolio based on unpaid principal balances.
Source: Data for 2002-2004 is based on Freddie Mac’s Information Statements dated September 24, 2004 and June 14, 2005. Data for 2005-2007 35
is based on Freddie Mac’s SEC Registration Statement on Form 10 dated July 18, 2008. Data for 2008 is based on Freddie Mac’s November 2008
Monthly Volume Summary. Figures for 2008 are subject to change.
37. Freddie Mac’s Retained portfolio is diversified among a
number of product types
Retained portfolio1 Non-FRE MBS1
Mortgage
Loans CMBS
14% 25%
Freddie Mac
Non-Freddie
Subprime
Multi-class
Mac MBS
30%
Structured
35%
Securities
18%
Alt-A
& Other
Ginnie Mae 18%
<1%
Manufactured
Freddie Mac
Housing
Single Class
Fannie Mae
<1%
PCs
22%
Mortgage
33%
Revenue Bonds
5%
1 Based on unpaid principal balances. Exclude mortgage-related securities traded, but not yet settled.
36
Source: Freddie Mac. Data as of September 30, 2008.
38. Retained portfolio composition
Retained portfolio
$737 billion
Mortgage
Loans
14%
Agency
($100 B)
8%
($57 B)
Non-Agency
Backed by
PCs and Subprime Loans
Structured 11%
Securities ($80 B)
51%
Non-Agency
($375 B)
Backed by Alt-A
and Other
Other
Loans
Non-Agency
6%
11%
($46 B)
($79 B)
Note: Credit ratings for most non-agency mortgage-related securities are designated by no fewer than two nationally recognized statistical rating
organizations. Approximately 66% and 96% of total non-agency mortgage-related securities held at September 30, 2008 and December 31, 2007,
respectively, were AAA-rated as of those dates, based on the lowest rating available.
37
Source: Freddie Mac’s Form 10-Q dated November 14, 2008. Data based on unpaid principal balances as of September 30, 2008 and exclude
mortgage-related securities traded, but not yet settled.
39. The majority of our convexity is hedged upfront
Example of how we limit the negative convexity
embedded in our Retained portfolio assuming the
convexity risk of the mortgage universe
Asset Dynamically
Selection Rebalanced
Mortgage Swaptions
Structuring
Callable
Debt
Hedging activities executed upon purchase of mortgage
38
Note: Figure above is an example only. It is not intended to represent percentages of Freddie Mac’s Retained portfolio hedged by each instrument.
41. Interest-rate risk is well controlled
Average monthly PMVS-Level Average monthly duration gap
$ Millions Months
$571 $576
600
6
5
500
4
$438 $437
3
$395 $394
$390
$378 $385
400
2
$354
$348
$331
1
300 $271
0
-1
200 -2
-3
100 -4
-5
0 -6
Nov Dec Jan Feb Mar Apr May June July Aug Sep Oct Nov Nov Dec Jan Feb Mar Apr May June July Aug Sep Oct Nov
07 07 08 08 08 08 08 08 08 08 08 08 08 07 07 08 08 08 08 08 08 08 08 08 08 08
Note: 2007 and 2008 figures based on Freddie Mac’s November 2008 Monthly Volume Summary. Figures for 2008 are subject to change.
40
Source: Freddie Mac.
42. Callable debt is an integral part of our interest-rate risk
management framework
Callable debt outstanding as a share of fixed-rate assets1
Percent
50
49
48
47
46
45
44
43
2004 2005 2006 2007 1Q 2008 2Q 2008 3Q 2008
1Excludes callable debt with expired options. 41
Source: Freddie Mac.
44. Freddie Mac’s suite of debt products
Debt securities outstanding
$ Billions
900
10
800
251
700
5
600
78
500
206
400
300
200
312
100
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Short-term Debt Callable Debt
MTN Bullet Debt Subordinated Debt
US$ Reference Notes® €Reference Notes®
Note: All figures represent face amounts in USD billions based on trade date. These figures could differ significantly from proceeds, amortized
43
principal amount and book value figures, particularly for zero-coupon securities.
Source: Freddie Mac. 2008 data as of December 31, 2008.
45. Refinancing our maturing debt requires substantial
issuance of debt
Freddie Mac long-term debt maturities1
$ Billions
250
200
Other Debt Securities
Reference Notes
150
149
100
52
46
50 27
33
14
53 51 49
4
35 13
26
24 5 17
11
9
0
2009 2010 2011 2012 2013 2014 2015 2016 >2017
1Freddie Mac long-term debt maturity figures excluding subordinated debt.
44
Note: All figures represent face amounts in USD billions based on the settlement date.
Source: Freddie Mac. Data as of December 31, 2008.
46. Short-term debt balances have grown but remain within
historical levels
Total short-term as a % of
Total short-term debt outstanding
total debt outstanding
$ Billions
40%
350
300
35%
250
200
30%
150
100 25%
50
20%
0
Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul-
Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul-
02 02 03 03 04 04 05 05 06 06 07 07 08 08
02 02 03 03 04 04 05 05 06 06 07 07 08 08
Rapid Portfolio Growth Periods
45
Source: Freddie Mac. Data as of December 31, 2008.
47. Our debt funding program accesses diverse pools of
global capital
Geographical area Investor type
Insurance &
Other Pension
2% 6%
Europe
Central Bank
Bank
14%
42%
10%
Other
12%
Asia
33%
N. America
51% Investment
Manager
30%
Note: Data reflects orders placed in our US$ Reference Notes® securities syndicated bond deals.
46
Source: Freddie Mac. Data for the 12 months ended December 31, 2008.
48. Agencies vs FDIC guaranteed bank paper
Freddie Mac FDIC Guaranteed Bank Paper
Unlimited secured short-term borrowing FDIC has unlimited borrowing authority at
facility through Treasury Treasury
Funding
$100 billion of preferred capital from U.S. FDIC guarantee on members’ debt
Treasury
Short-term borrowing facility reverts to $2.25 FDIC borrowing reverts to $30 billion on
billion on December 31, 2009 December 31, 2009
Expiration
$100 billion of preferred capital agreement is Valid on debt issued from now until June 30,
indefinite in duration 2009, with coverage ending in June 2012
Risk Weight 20% (possibly lowered to 10%) Yet to be decided
Mandate for some local entities and banks New instrument with no precedence
Structural
allows them to invest in Agencies in addition
Considerations to Treasuries
Traditional investors already hold a large Attractive for investors looking to diversify from
Diversification pool of Agencies Agencies
Liquidity Issues with > $1 billion are liquid To be determined
Repo Easy to repo Repo market needs to be established
Offer tailored, flexible investment and Less flexible maturity structure
Flexibility maturity dates and size
Over $1 trillion of short-term debt maturing Maximum of $1.4 trillion of debt could be
New Supply for Freddie Mac, Fannie Mae & Home Loan guaranteed by the FDIC
through Dec ‘09 Bank combined
47
Sources: Freddie Mac, Barclays Capital and Morgan Stanley
50. U.S. mortgage securities are the largest fixed-income
sector
Outstanding public and private bond market debt – $33.2 Trillion
Treasury 1 2
Agency Debt
($5.5)
($3.2)
Municipal 17% 10%
($2.7)
8%
3
4
MBS
Corporate
($8.9)
Debt
27%
($6.1)
18%
4
Asset-Backed
Money Market 5
($2.8)
($4.0)
8%
12%
1 Interest-bearing marketable public debt.
2 Includes Freddie Mac, Fannie Mae, Federal Home Loan Banks, Tennessee Valley Authority and Farm Credit System.
3 MBS include Ginnie Mae, Fannie Mae and Freddie Mac mortgage-backed securities, CMOs and private-label MBS/CMOs.
4 Securities Industry and Financial Markets Association estimates.
5 Includes commercial paper, bankers acceptances and large time deposits. Beginning in 2006, bankers’ acceptance are excluded.
49
Note: Percentages may not add up to 100% due to rounding.
Source: Securities Industry and Financial Markets Association as of September 30, 2008.
51. MBS – a major investment vehicle
Amount Outstanding
$ Billions
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
1970 1975 1980 1985 1990 1995 2000 2005 2006 2007 2Q 2008
GSE, Ginnie Mae & Private-Label MBS Treasury Securities Non-GSE Corporate Bonds
50
Sources: Federal Reserve Board and Securities Industry and Financial Markets Association. 2008 data as of June 30, 2008.
52. To-be-announced (TBA) market
Buyer and seller decide on general trade parameters
» Term
» Agency
» Coupon
» Settlement date
» Par amount
» Price
Buyer does not know which pools will actually be delivered until two days before
settlement
Seller is obligated to provide pool information by 3 p.m. two days prior to settlement
(“48-Hour Rule”)
Pools must satisfy Securities Industry and Financial Markets Association (SIFMA)
good delivery guidelines
51
53. Secondary market securities
Pass-throughs or participation certificates (PCs)
» Securitization structure where a GSE or other entity ‘passes’ the amount
collected from the borrowers every month to the investor, after deducting fees
and expenses
CMOs or REMICs
» Collateralized Mortgage Obligations or Real Estate Mortgage Investment
Conduits
» Multiclass securities backed by mortgage loans, pools of mortgages, or even
existing CMOs or REMICs
Strips
» Separation of coupons from a bond, where the coupons become a security and
the remaining face-value bond becomes another security
• Interest-only (IO)
• Principal-only (PO)
52
54. Pass-through formation
TBA Market
P
Loan A i
P Pass-through
Loan B i
P
Freddie PC
Loan C P
i
.
i
.
P
.
i
Loan X Pass-through
Freddie Giant
P
PC
Loan A i
P P
Loan B Pass-through
i i
P
Loan C i Freddie PC
.
.
P
.
i
Loan X
53
55. REMIC formation
Tranche A
Pass-Through
Tranche B
P
Freddie PC
i
Tranche C
.
REMIC Trust
.
.
. Tranche D
.
.
Freddie REMIC
Tranche E
Tranche D
P
i
Pass-Through
Tranche E
F
Freddie Giant
PC Tranche G
54
56. Sequential REMIC tranches
Note: Chart shows how principal (darker shading) and interest (lighter shading) would be allocated to each of three hypothetical
55
sequential tranches if no repayments were made on the underlying mortgages.
57. Strip formation
Pass-through Principal-only
P
Freddie PC PO
P
i
Strip Trust
.
.
.
Freddie Giant
PC
P
Pass-through Interest-only
i
i
Freddie PC IO
56
58. Reference REMIC securities offer liquidity, transparency
and predictability
Liquidity
» Broad dealer sponsorship and secondary market support
Transparency
» Primary issuance through syndicated offerings
» Secondary market support through Freddie Mac REMIC Dealer Group
» PCs underlying the offered GMC are disclosed prior to pricing
Predictability
» Calendar-based monthly optional issuance windows
» Maximum of three Reference REMICs issued per quarter
» Average life extension limited by shortened stated final maturity date
57
60. Freddie Mac mortgage securities products
Gold PCs
» Pass-through securities representing an undivided interest in a pool of
residential mortgages
Giant PCs
» Pass-through securities that are created by consolidating smaller PCs into
larger Giant PCs
ARM PCs
» Mortgage-backed securities representing an undivided interest in a pool of
residential adjustable-rate mortgages
Multifamily PCs
» PCs backed by loans covering residences with five or more units designed
principally for residential use
59
61. Freddie Mac mortgage securities products
REMICs
» Customized mortgage structures created from mortgage pass-through
securities by redistributing cash flows to cater to a variety of market demands
Reference REMICs®
» A structured alternative to a traditional 30- or 15-year mortgage-backed
security and built on the success of Freddie Mac’s guaranteed maturity class
(GMC) product
Strips
» Formed from Giant PCs of either Freddie Mac Gold PCs or GNMA certificates
and generally represent the Interest-only (IO) and Principal-only (PO) cash flow
components of a pool
60
62. Composition of Freddie Mac’s single-family pass-through
securities1
Conforming-
Option ARMs
jumbo
<1%
<1%
Balloons/Resets FHA/VA
1% <1%
ARMs/ RHS and other
Adjustable-Rate federally
5% guaranteed loans
<1%
Interest-Only
9%
15-year fixed-rate
14%
2
30-year fixed-rate
71%
1Based on unpaid principal balances of the securities and excludes mortgage-related securities traded, but not yet settled. Also includes long-term standby
commitments for mortgage assets held by third parties that require that we purchase loans from lenders when these loans meet certain delinquency criteria.
2Portfolio balances include $1.9 billion and $1.8 billion of 40-year fixed-rate mortgages as well as $68.7 billion and $72.2 billion of 20-year fixed-rate mortgages
at September 30, 2008 and December 31, 2007, respectively. 61
Source: Freddie Mac’s Form 10-Q dated November 14, 2008. Data as of September 30, 2008.
63. Agency CMO issuance
Agency CMO Issuance Agency CMO Outstanding
$ Billions $ Billions
400 1,400
1,200
300
1,000
800
200
600
400
100
200
0 0
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Freddie Mac Fannie Mae Ginnie Mae Freddie Mac Fannie Mae Ginnie Mae
62
Source: Bloomberg. Data as of December 31, 2008.
64. Composition of collateral underlying Freddie Mac’s
REMICs issued
ARM
Other
20-year
1%
<1%
5%
Balloon
<1%
15-year
12%
30-year
82%
63
Source: Freddie Mac. Data as of September 30, 2008.
65. Reference REMIC® securities – a structured mortgage-
backed securities investment option
Calendar-based issuance of REMIC securities with a guaranteed maturity class
(GMC) offered through a syndicate underwriting group
Stated final maturity date guaranteed by Freddie Mac.
» Average issue size of $1.5 billion
Integrated into Freddie Mac’s Reference suite of products, Reference Bills® and
Reference Notes®, featuring:
» Liquidity
» Transparency
» Calendar-based predictability
Designed to further Freddie Mac’s housing mission by broadening the investor base
for mortgage-backed securities
64
66. Reference REMIC securities offer an unmatched array of
attractive features
Reference REMIC securities are an outstanding compliment to traditional
REMICs and TBA pass-through securities currently offered by Freddie Mac.
Freddie Mac
Prepayment Syndicated
Reference ABS
Linked Notes Callables
REMIC
√ √
Some
TradeWeb Eligibility
√ √
Some
Daily Closing Prices
√ √
Guaranteed Shortened Final Maturity
√ √ √
Some
Syndicate Led
√
Issuance Calendar
√ √
Fully Collateralized by Mortgages/MBS
√
Collateral Disclosed Pre-Pricing
√ √
Re-REMIC/MACR Eligible
√ √
No Upsize (or quot;Tappingquot;) Post-Pricing
65
67. Reference REMIC® securities access diverse pools of global
capital
Geographical area Investor type
Other
Europe
4%
1%
Bank
27%
Asia
36%
Investment
Manager
37%
N. America
63%
Other Central Bank
<1% 18%
Insurance &
Pension
14%
Note: Data reflects orders placed in Freddie Mac’s Reference REMIC® securities.
66
Source: Freddie Mac. Data as of December 31, 2008.