The Hyperion Strategic Mortgage Income Fund, Inc. Reports No Exposure to Troubled Sub-Prime MBS

Market Wire, March, 2007

The Hyperion Strategic Mortgage Income Fund, Inc. ("HSM" or the "Fund") (NYSE: HSM) today provided information on its sub-prime MBS holdings. As of January 31, 2007, less than 2.4% of HSM's $209 million total market value was allocated to sub-prime MBS. The Fund has no exposure to 2006 sub-prime mortgages, which have been largely responsible for the recent negative headlines due to unusually high delinquencies. The Fund's sub-prime MBS holdings were originated between 2004 and early 2005.

"We deliberately allocated away from the sub-prime RMBS sector in early 2006 when our research team identified a deteriorating trend in the fundamentals of these securities," commented Clifford Lai, Chairman of the Hyperion Strategic Mortgage Income Fund. Mr. Lai concluded: "Our extensive research capabilities and market expertise have enabled us to preserve shareholder value by strategically and prudently allocating our investments toward asset classes with a desired risk-reward profile."

The Hyperion Strategic Mortgage Income Fund, Inc. is managed by Hyperion Brookfield Asset Management, Inc, a registered investment advisor located in New York City. The firm was founded in 1989 to provide relative value driven fixed income investment strategies to institutional and retail investors. To complement its Core Fixed Income, High Yield, and specialized MBS strategies, Hyperion Brookfield offers customized services for insurance clients. Hyperion Brookfield manages in excess of $20 billion for a client base including pension funds, financial institutions, mutual funds, insurance companies, REITs and foundations. Hyperion Brookfield is a subsidiary of Brookfield Asset Management Inc, a global asset manager focused on property, power and other infrastructure assets with approximately US$70 billion of assets under management.

Note: This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Expressions which are predictions of or indicate future events and trends and which do not relate to historical matters identify forward-looking statements. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the company to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those set forward in the forward- looking statements include general economic conditions and interest rates. Hyperion Brookfield and the Fund undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Contacts: Hyperion Brookfield Asset Management, Inc. Marion Hayes Assistant Vice President (212) 549-8413 Email: mhayes@hyperionbrookfield.com Website: www.hyperionbrookfield.com