Credit Suisse, Deutsche Bank Securities, Inc. and Merrill Lynch & Co. will serve as the lead underwriters for Reference REMIC R011. Co-managers of the transaction will be Citigroup Global Markets, Inc., Morgan Stanley and RBS Greenwich Capital. The transaction will also involve a selling group.

Information about the REMIC, of which the GMC is a part, is available in the Offering Circular Supplement on the Mortgage Securities page of the company’s Web site at http://www.freddiemac.com/mbs. The Offering Circular Supplement can be obtained by entering “R011″ in the REMIC Prospectus Lookup box. Copies of the Offering Circular Supplement can also be obtained from the underwriters at the following addresses:

Credit Suisse
Prospectus Department
11 Madison Avenue
New York, New York 10010-3629
(212) 325-2580

Deutsche Bank Securities, Inc.
Attn: Syndication Operations
60 Wall Street
New York, New York 10005
(212) 474-6936

Merrill Lynch, Pierce, Fenner & Smith Incorporated
Prospectus Department
44B Colonial Drive
Piscataway, New Jersey 08854
(732) 885-2760

This announcement is not an offer to sell any Freddie Mac securities. Offers for any given security are made only through applicable offering circulars and related supplements, which incorporate Freddie Mac’s Information Statement and related supplements.

Freddie Mac’s press releases sometimes contain forward-looking statements. A description of factors that could cause actual results to differ materially from the expectations expressed in these and other forward-looking statements can be found in the company’s Information Statement dated March 23, 2007, and related Information Statement Supplements, which are available on the Investor Relations page of the company’s Web site at http://www.freddiemac.com/investors.

Freddie Mac is a stockholder-owned company established by Congress in 1970 to support homeownership and rental housing. Freddie Mac fulfills its mission by purchasing residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage-related securities and debt instruments in the capital markets. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than four million renters in America.

Later in my career, I spent 4.5 years working in secondary marketing of mortgages and better understood what had happened in 1998 and how the market has changed. Here’s my take on the future of sub-prime.

1) The number of mortgage lenders doing ONLY sub-prime lending are contracting and it will get worse for them.  In 1998, sub-prime mortgage backed securities were traded outside of the typical MBS market and were rated similar to junk bonds. All it took was a little bit of risk in that segment and new capital dried up.

Today, sub-prime loans are much more diversely securitized. Fannie Mae and Freddie Mac’s participation in buying subprime loans the last couple of years means that some sub-prime loans are tucked into conventional MBS issues.

Your true sub-prime securities are getting crushed right now and that means those lenders who ONLY do sub-prime and can’t diversify that paper are hurting. You can see why H&R Block is trying desperately to divest themselves of the financial albatross that Option One (a subprime wholesale lending company) has become for them.

2) The choices in sub-prime loans will diminish. Probably the biggest change you will see between now and next year is a MAJOR reduction in the use of 2/28 loans (2 year fixed rate loans). Federal regulators are looking at requiring lenders to qualify applicants on a 2/28 loan at the fully indexed rate after the first adjustment. Let me put that in numeric terms.

A 2/28 loan today could be at 7.00% for 2 years, often with a penalty for paying off early.  What regulators are considering is requiring the buyer qualify at the rate which this loan will change to after 24 months.  That same 7.00% 2/28 ARM would adjust based on the 6 month LIBOR (5.420) PLUS a margin of 6.00%-7.00% and a 5% cap on the first adjustment. That means the rate would go from 7.00% today to 11.42% at adjustment if the LIBOR stays the same. And regulators want to require lenders to qualify the borrower at that 11.42% rate.

The impact will be to kill the 2/28 in favor of the 3/27 which is probably .50% higher in that start rate for the first 3 years.

3) Lenders who have diversified and do all kinds of mortgages are best positioned to absorb these changes and continue to put the “top echelon” of sub-prime loans into less risky securities. 

4) In the short-term, mortgage brokers will be hurt hardest. Because lenders are increasingly taking losses on sub-prime loans, they are more likely to have more conservative guidelines for loans brokered to them vs. those originated by their own employees.

I’ve already seen several examples of loans that brokers can’t get approved but the broker is “losing” the deal to the same company through their retail group. There is no secret that loan fraud has a higher incidence rate in loans attained via a broker vs. their own employee (loan officer) which is why investment property financing has been harder of late although there have been hardly any guideline changes.

Tom, the biggest difference I see in this market over 1998 is that today, the largest sub-prime lenders are major financial institutions. If Option One were a stand-alone company they would be having a fire sale in my opinion. Because they are owned by H&R Block they have resources to make it through a short-term “hit”.

Long-term, sub-prime lending won’t go away becuase it is a much needed segment to provide homeownership opportunities. If Congress will allow HUD to lend to 100% that will really cut into sub-prime lending initiatives and offer a true low-rate and cost alternative.

Write your congressman!

For the second consecutive year, Freddie Mac’s list of Tier One servicers includes a credit union. Hoosier Hills Credit Union in Bedford, Indiana received a Tier One Gold ranking, making it the fourth credit union to ever achieve Tier One status.

Freddie Mac ranks its servicers against monthly performance benchmarks for investor reporting, minimizing credit losses, and helping delinquent borrowers avoid foreclosure. Tier One Platinum rankings are given to larger servicers for attaining at least two quarters of Tier One (superior) performance in a year, while Gold servicers are smaller lenders who achieve a Tier One rating in Investor Reporting for two quarters in a calendar year, a Tier One rating in Default Management based on an averaged annual calculation, and maintain on average at least one seriously delinquent loan per month.

Both Tier One Platinum and Tier One Gold servicers receive a range of financial and professional rewards plus national recognition. Servicers who sustain Tier One Gold and/or Tier One Platinum status for four consecutive years with no material foreclosure timeline penalties are inducted into Freddie Mac’s annual Hall of Fame and receive additional incentives.

Altogether the Tier One recipients serviced approximately 76 percent of Freddie Mac’s 10.4-million loan portfolio in 2006.

2006 Tier One Platinum Servicers
The 2006 Tier One Platinum recipients are: Arvest Mortgage Company; Bank of America Consumer Real Estate; Bank of Oklahoma, N.A.; Chase Home Lending; CitiMortgage, Inc.; Colonial Savings, F.A.; Countrywide Home Loans, Inc.; Doral Financial Corporation; EverHome Mortgage Company; Fidelity Bank; First Federal Savings Bank (Rochester, IN); First Horizon Home Loan Corporation; Flagstar Bank, FSB; GMAC Mortgage; HSBC Mortgage Corporation (USA); IndyMac Bank, FSB; M&T Bank; National City Mortgage Company; PHH Mortgage Corporation; Provident Funding Associates; Regions Mortgage; Sovereign Bank; SunTrust Mortgage, Inc.; Taylor, Bean and Whitaker Mortgage Corp.; U.S. Bank Home Mortgage; Wachovia Mortgage Corporation; WaMu; and Wells Fargo Home Mortgage.

2006 Tier One Gold Servicers
The 2006 Tier One Gold Servicers include: AMCORE Bank, N.A.; Busey Bank; Chemical Bank; HomeStar Bank; Hoosier Hills Credit Union; Johnson Bank; Liberty Savings Bank, FSB; R-G Crown Bank, FSB; Sidney Federal Savings and Loan Association; The Farmers Bank; and TIB – The Independent Bankers Bank.

2006 Hall of Fame Inductees
The 2006 Hall of Fame inductees for both Tier One Platinum and Gold servicers include AMCORE Bank, N.A.; Bank of America Consumer Real Estate; Chase Home Lending; Colonial Savings, F.A.; Countrywide Home Loans, Inc.; Doral Financial Corporation; First Horizon Home Loan Corporation; HSBC Mortgage Corporation (USA), M&T Bank; National City Mortgage Company; PHH Mortgage Corporation, Sovereign Bank; SunTrust Mortgage, Inc.; U.S. Bank Home Mortgage; and Wells Fargo Home Mortgage.

Freddie Mac is a stockholder-owned company established by Congress in 1970 to support homeownership and rental housing. Freddie Mac fulfills its mission by purchasing residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage-related securities and debt instruments in the capital markets. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than four million renters in America. http://www.freddiemac.com/

A live webcast of the speech will be available through a link on Freddie Mac’s Investor Relations Web page at http://www.freddiemac.com/investors. The webcast archive will be available beginning at approximately 4:00 p.m., Eastern Time, on Friday, February 9, 2007, and will remain available for 90 days.

Freddie Mac is a stockholder-owned company established by Congress in 1970 to support homeownership and rental housing. Freddie Mac fulfills its mission by purchasing residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage-related securities and debt instruments in the capital markets. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than four million renters in America. http://www.freddiemac.com/

The OFHEO sets the maximum loan limit that Fannie Mae and Freddie Mac (otherwise known as the “enterprises”) can purchase and/or “guaranty”. This is what is known as the “conforming” loan limit and mortgages above $417,000 are typically called “jumbo” or “non-conforming” loans.

The OFHEO also announced they will be issuing guidance for lenders for 2008 limits sometime in early 2007. There have been concerns over the conforming limit being lowered due to declines in property values nationally.

To read the press release, click here to visit the OFHEO website.

“Inflation, though down somewhat from its level earlier this year, remains uncomfortably elevated. Financial market prices imply that inflation will continue its gradual but persistent downward track during the forecast period,” claims Warsh.

For mortgage bankers this means that there continues to be uncertainty in the mortgage backed securities market which drives long term fixed interest rates. While all projections are made on various and complex modeling, there is never any true prediction of what the market will do. Forecasting is forecasting and whether it is inflation or snow storms, there’s just no telling.

Mr. Warsh also heaped criticism on the oversight, or lack thereof, concerning the GSEs, Fannie Mae and Freddie Mac. He sees the recent changes in the democrat vs. republican mix in Congress to make oversight and consesus in policy making regarding the GSE’s roles more difficult. As a result, he cautions against the two mortgage giants increasing their portfolio rapidly. This is not without merit as other articles have speculated that the GSE’s are interested in acquiring a market share of Pay-Option-ARM servicing while the federal government is revising disclosure requirements for these kinds of loans.

Ken Stampe
MortgageNewsReview

“The regulatory guidelines are definitely going to dampen growth or reverse the growth” that private-label MBS have seen over the mortgage bond programs of Fannie Mae and Freddie Mac, Marriott told reporters.

Regulators including the Federal Reserve and the Office of the Comptroller of the Currency recently finalized rules for underwriting exotic loans, including qualifying borrowers at the highest payments they would have to make over the life of the loan.

Financial institutions from Countrywide Financial Corp. to Lehman Brothers Holdings Inc. protested the rules earlier this year, saying they would stifle the market for loans that make houses more affordable.

The surge in popularity of payment-option adjustable-rate mortgages, which allow the borrower to pay no principal and wrap a portion of monthly interest back into the balance of the loan, has helped steer the flow of new mortgages toward Wall Street securitizations since Fannie Mae and Freddie Mac did not have the ability or will to purchase them.

The market shift toward private-label issues from agency MBS will be interrupted only until Wall Street firms adapt, Marriott said. But the trend will see “some reversal” in the next 12 to 18 months, he added.

Accounting overhauls at the government-sponsored enterprises also distracted them from keeping up with the new products developed by lenders, said Michael Perry, chief executive officer at IndyMac Bank.

Fannie Mae and Freddie Mac “have been dealing with a lot of issues ancillary” to their mortgage businesses, Perry said on the panel, which also included Fannie Mae Chief Executive Donald Mudd and Freddie Mac CEO Richard Syron.

Syron said the tables may be turning based on the regulatory guidance. The mortgage bond market is also at risk because Wall Street capital has flooded the market and reduced the return on riskier securities.

“How the regulators approach (exotic mortgages) is going to be a major determinant of what the GSEs have” for share of the bond market, he said.

Still, the GSEs will not regain the same degree of dominance they once enjoyed, said Fannie Mae’s Mudd.

© Reuters 2006. All Rights Reserved.