GSE UPDATE AND MERS eREGISTRY MBA ’ s Legal Issues In Mortgage Technology Conference San Diego, California December 2, 2005 James A. Newell Associate General Counsel Freddie Mac

2 2 Data Integrity Loan Prospector Selling System Data Standards Data Security Web-based Platform Servicing System Default Management System Industry eMortgage Vision Building Blocks of Freddie Mac Technology

3 Value Proposition Freddie Mac Or Other Investor »Increased speed of funding with eNote »Improved data accuracy and quality »Reduced loan delivery cost (handling & storage) »Elimination of back-office processing (automated note certification) »Potential prevention of predatory lending (HUD-1 Smart Docs) »Improved fraud detection and examination

4 Value Proposition Lenders and Other Industry Players »Faster securitization: Warehouse line cost reduced for lender »Velocity lending: Elimination of note endorsements »Shorter duration gap and interest rate risk »Facilitates product bundling »Facilitates data storage and retrieval »Automates servicing loan setup

5 Our Guiding Philosophy The eMortgage solution belongs to our customers who can control: »The vendor selection »The functionality of the solution »The investor(s) to which it connects »The user experience of their internal and external customers as they interact with the solution. Freddie Mac will provide the connections and functionality that are inherent to us purchasing the loan in the most efficient way. Freddie Mac believes in the value of open standards.

Open Standards Service Ordering: MI Credit Valuation Flood Hazard Title eOrigination eDoc Prep eClosing Delivery eNote Registry eRecording eVault MISMO XML Data Transactions And eDocs # Title / Closing eDocs # Buyer / Sller * Servicing eSignatures eNote Registration & Transfer Messages QC LenderFreddie Mac Non Performing QC Fraud Collateral Evaluation Other AUS QC Electronic Document / Electronic Note Infrastructure Freddie Mac Proprietary Best-in-class technology vendor or lender Key Freddie Mac Role Publish policies Publish specifications Build integration Supply call features (e.g. Underwriting decision, fraud tools, delivery purchase edits, etc) Test, verify and support integration processes 6

7 Supporting Open Standards Contributing to MISMO eMortgage standards initiatives including data, SMART Document, eClosing Legal WG. Participating in continuing development of MERS eRegistry Supporting implementation of SPeRS deliverables. Participating member of the PRIA.

8 Implementation Plan Collaborate with technology vendors and our customers to create integrated solutions for streamline electronic document and data flow. Leverage the infrastructure of our new web-based selling system and best-in-class electronic document and electronic mortgage solutions. Incremental approach to deploying new processes to minimize disruption.

9 Where We Are Now eMortgage Specifications Guide (EOY 2005) »Sets forth requirements and guidance for Sellers that wish to create or manage mortgage loans using Electronic Records and Electronic Signatures. Guidelines for: »Acceptable signatures »Creating and using natively electronic documents »Storing and sharing documents electronically »Creating, delivering and managing electronic notes and other collateral documents Incorporated uniform language in the eNote in conjunction with Fannie Mae

10 Summary To enable Freddie Mac and our customers to reduce loan costs through the use of widely accepted electronic mortgage documents and data. To take thoughtful approach, inclusive of all parties, relevant to our mission, and makes good business sense. Facilitate the mortgage industry’s adoption of eMortgage capability through leadership in industry standards organizations.