GSEs’ LIHTC Portfolio Selling Activities Since 2008

Posted on April 16, 2014

screen_shot_2014-04-09_at_4.43.00_pmAs reported in the March 2014 issue of the Tax Credit Advisor, Fannie Mae and Freddie Mac have gradually sold their interests in LIHTC investments since being placed in conservatorship, however, the massive sale that was expected by many throughout the LIHTC industry has entirely subsided.*

After the two GSEs were placed in conservatorship, LIHTC industry professionals worried that the GSEs would try to sell large portions of their LIHTC portfolios in the secondary market and cause demand and prices to drop for new LIHTC product. However, when Fannie attempted to sell $3 billion of its portfolio in 2009, it was barred by the U.S. Treasury. Freddie was barred from a similar major sale of its LIHTC investments. Both GSEs ultimately wrote down the value of their LIHTC assets to zero as they were unable to utilize the credits.

However, since returning to profitability, Fannie and Freddie have restored the value of their remaining LIHTC assets to their balance sheets. Although the prohibition of a major sale has remained in place,

This policy has two exceptions:


  1. The GSEs are able to sell LIHTC partnership interests in response to a shortfall in an underlying project or in a fund in which they invest
  2. As individual properties within a fund reach Year 15 of the initial LIHTC compliance period and are sold by the syndicator.


Fannie Mae has sold off about $1 billion in LIHTC investments since it was placed in conservatorship which has helped raise funds to cover shortfalls in underlying LIHTC projects or at the upper-tier/fund level in which Fannie is an investor. While Fannie could engage in future sales of its remaining LIHTC investments, Freddie’s leadership is not aware of new efforts to sell its housing credit investments.

TCAM continues to monitor developments at the GSEs and its potential impact on the LIHTC industry. For the latest relevant updates, contact Allen Feliz ( — (617) 542-1200.


*Source: Tax Credit Advisor Magazine, March 2014 Issue. For TCA Magazine online, click here: Tax Credit Advisor

Topics: Federal Housing Programs,  LIHTC