Fannie awaits Treasure approval of tax-credit sale

 Fannie Mae announced about a deal to sell $2.6 billion in unused low-income-housing tax credits. The names of the buyers are not disclosed but the deal has been already approved by its federal regulator, the Federal Housing Finance Agency, in a filing Thursday with the Securities and Exchange Commission.

But the Treasury Department paves the way for the possible collision between two government agencies because it has yet to approve the deal. It is due to find out how best the government should run Fannie and Freddie Mac, its smaller rival, the two mortgage-finance companies that it took over through a legal procedure known as conservatorship one year ago.

The Treasury has to consider whether to allow Goldman Sachs Group Inc. and Warren Buffett's Berkshire Hathaway Inc. to purchase Fannie's tax credits which are nearly worthless to Fannie. Moreover, they require the company to post losses every quarter as their value declines.

The amount of Fannie’s low-income-housing tax credits total $5.2 billion at the end of September. The losses related to affordable-housing-tax-credit and related investments total $520 million in the third quarter. 

It is notable that Freddie has a nearly $4 billion tax-credit portfolio.

This situation clearly shows the political and policy challenges which the government meets as it looks to conserve both companies' capital while balancing larger policy and political goals.

The Federal Housing Finance Agency stated that its support of the deal is explained with its commitment to conserving the assets of the companies and simultaneous support of the multifamily housing market while not missing an opportunity to bring new tax credit buyers to the market.

The Treasure Department representative said it was reviewing the deal but that it "would only approve the action if it was clearly in the interest of taxpayers."