After the U.S. Treasury rejected the mortgage investor’s request to sell the investments, Fannie Mae said in its third-quarter earning report that it will need to write down the $5.2 billion investment to zero if “we no longer have the intent and ability to sell or otherwise transfer” the low-income housing tax credits.
The Treasury found that an agreement to sell nearly half of Fannie Mae’s credits would cost taxpayers more than the former giant, now operating under government conservatorship, would gain from the deal. The company argues that if it writes down those assets in the fourth quarter, it will increase the company’s draw on a $200 billion lifeline from the Treasury.
“We are evaluating whether Treasury’s decision changes our prior determination that we continue to have the intent and ability to sell or otherwise transfer the credits,” wrote the company in today’s filing with the Securities and Exchange Commission. “While our conservator has directed us to continue to explore options to sell or transfer these investments for value consistent with our mission, we believe this will be difficult given current constraints and market conditions.”
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