Fannie Regulator Clears Sale of Tax Credits

The Federal Housing Finance Agency has cleared Fannie Mae to sell roughly $2.6 billion in low-income housing tax credits to unidentified third-party investors believed to include Goldman Sachs & Co. and Berkshire Hathaway. In a new SEC filing, Fannie notes that it has a "nonbinding letter of intent" to transfer its equity interests in the LIHTCs for an undisclosed amount. Fannie says it will sell them for "a price that exceeds their current carrying value. Upon completion of the contemplated transfer, the unrelated third-party investors would be entitled to receive substantially all of the tax benefits from our LIHTC investments for a specified period of time." Fannie says its regulator told it that it would not object to the sale. The FHFA is now asking for Treasury's approval on the deal. Fannie says that if it cannot sell the tax credits it will take an other-than-temporary impairment charge "to reduce" their carrying value to zero.