Callable REMICs (CPC)

Freddie Mac Callable REMIC securities are structured multiclass securities (issued in any type of REMIC structure) with theadded feature that they are subject to a third-party call option. Callable REMICs are created in one of two forms, each involvinguse of Freddie Mac Callable Pass-Through Certificates (CPC). More than $17.5 billion in CPCs were issued in 2002.

Introduced in 1995, Freddie Mac’s CPCs are issued as related pairs of “Callable” and “Call” classes. The callable class willreceive all of the principal and interest (P&I) cash flow from an underlying pool of collateral, typically consisting of Gold PCsformed into a Giant PC. Gold PCs, Giants, existing REMIC structures and GNMA pools are all examples of eligible collateralfor CPCs. The call class holder receives none of the cash flow, but rather, has the right to direct Freddie Mac to redeem thecallable class by giving appropriate notice and by paying Freddie Mac the funds it uses to actually redeem the callable class. Inexchange, the call class holder receives the underlying collateral.

Structures

By integrating the CPC structure into the REMIC securities, Freddie Mac is able to issue Callable REMICs. Callable REMICsare created either by a) using a CPC callable class as collateral for a REMIC issuance, or b) using a REMIC class as collateralfor a CPC issuance.

Structure #1: REMIC backed by CPCs

The first callable REMIC structure consists of the issuance of REMIC regular classes backed by a CPC callable class. Theprincipal and interest cash flow on the callable class will be passed through to the REMIC class investors. When the call isexercised, the callable class and the REMIC regular classes will be redeemed, and the call class investor will receive theunderlying collateral.

Mortgage Funding

FreddieMac

We Open Doors®

Focus on:

Callable Passthrough Certificate (CPC) REMIC

Underlying CollateralA

B

C

R

Gold PCs, etc.A1

CallableClass

B1Call

Class

CallOption

P & I P & I

The holder of the B1 call class will not receive payments of principal and interest, but will have the right to direct Freddie Mac

to redeem, beginning on a specified payment date, the outstanding principal amount of the A1 callable class (at the CPC level)

and concurrently, all of the regular classes at the REMIC level, at the stated redemption price as specified in the Offering

Circular. The redemption price will normally equal 100% of the A1 callable class’ unpaid principal amount, plus interest to the

date of redemption. Once the redemption is complete, the B1 call class investor will receive the underlying collateral.

Structure #2: CPC Callable and Call Classes Backed by REMIC Classes

The second callable REMIC structure consists of one or more pairs of CPC callable and call classes that are backed by a

REMIC regular class. Each callable class is entitled to receive the cash flow from a distinct REMIC regular class until the

related call is exercised. When a call is exercised, the callable class is redeemed and the call class investor receives the

underlying REMIC regular class.

The holder of the B1 call class will not receive payments of principal and interest, but will have the right to direct Freddie Mac

to redeem, beginning on a specified payment date, the outstanding principal amount of the A1 callable class, at the stated

redemption price, as specified in the Offering Circular. The redemption price will equal normally 100% of the A1 callable class’

unpaid principal amount, plus interest to the date of redemption. Once the redemption is complete, the B1 call class investor

will then receive the A regular REMIC class.

Exercising the Call Option

Freddie Mac must be notified by at least the

preceding calendar month (or up to three to five days

prior to the record date occurring that month) of the

call holder’s intent to call the callable class. Upon a

redemption of the REMIC class (or callable class

backed by REMIC class), each holder of a callable

class will receive the outstanding principal amount

of that holder’s security plus 30 days’ interest at its

applicable class coupon on such principal amount.

The call class holder’s right to exercise the call will

be subject to several conditions. First, the call class

holder can exercise the call only after expiration of

a lock-out period, which is generally one year after

issuance. Also, the call cannot be exercised unless

the market price of the collateral that the call class

holder will receive is par or above at the time the

call is exercised.

Factor Availability

Factor availability is dependent on the underlying collateral of the Callable Passthrough Security. For CPCs backed by Gold PC

securities, Giants, or Gold REMICs, factors will be disclosed for the callable classes on or about the fifth business day of each

month. For CPCs backed by GNMA collateral, factors will be disclosed for the callable classes on or about the ninth business

day of the month.

A

B

C

R

A1CallableClass

B1Call

Class

CallOption

P & I

REMIC CPC

Tax Issues

For a discussion on tax issues, see Freddie Mac’s “Focus on Tax Considerations of Callable REMIC Classes” in the Offering

Circular.

Record/Payment Date

Freddie Mac will pay principal and interest for callable REMIC classes that use Gold PCs as collateral for the CPCs on the 15th

of each month, to the holder of record as of the close of business on the last day of the month prior to payment. Generally, for

CPCs that use GNMA pools as collateral, Freddie Mac will pay principal and interest on the second business day after the 15th

calendar day of each month to the holder of record as of the close of business on the last day of the month prior to payment;

however, the payment date may vary per transaction.

Customer Support:

Freddie Mac takes pride in providing timely customer support. A variety of resources are available to provide investors with the

most comprehensive information about their gold PC securities.

Investor Inquiry (800) 336-3672; Investor_Inquiry@FreddieMac.com:

Knowledgeable securities information specialists are available from 9:00 a.m. to 5:00 p.m., Eastern Standard Time, and will:

3 Answer questions about Freddie Mac Gold PC securities and structured products

3 Explain how to access factors and coupons for existing mortgage securities as well

www.FreddieMac.com/mbs:

A convenient and easy-to-use single source of information for the mortgage securities community, Freddie Mac’s mortgage

securities website provides quality information about Freddie Mac securities, including:

• Details about our products

• Product-specific CUSIP lookup

• Mortgage securities data and subscription services

• Legal documentation and tax information for mortgage securities

FMAC <GO>:

A wide range of information and data is available on Freddie Mac’s Bloomberg site. View recently priced REMICs, collateral

availability, reference pools, callable REMIC supply, estimated REMIC production, and other mortgage securities issuance

reports. Product information, structured product fees, announcements regarding Freddie Mac’s passthrough and REMIC products.

PC prefixes are also available.

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This fact sheet 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.

For additional information about Freddie Mac’s Callable REMICs,contact a Transaction Manager at (866) 903-2767.

Publication FS029Updated August 2003

www.freddiemac.com/mbs

To execute a Callable REMIC:

Contact a Freddie Mac Transaction Manager at (866) 903-2767 or one of our REMIC dealers:

Banc of America LLC

Bear Stearns & Co. Inc.

CS First Boston Corporation

Countrywide Securities

First Tennessee National Corporation

Freddie Mac SS&TG

Goldman Sachs & Co.

Greenwich Capital Markets, Inc.

J.P. Morgan Chase & Co.

Lehman Brothers

Merrill Lynch & Co.

Morgan Keegan & Co., Inc.

Morgan Stanley

Nomura Securities

Salomon Smith Barney

UBS Warburg LLC