Primary Market Gets Breather

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The LIHTC primary investment market got a breather in February, as Fannie Mae and Freddie Mac in filings with the Securities and Exchange Commission reported that the Federal Housing Finance Agency has told them they may not sell or dispose of their existing LIHTC investments. As a result of this, and no prospects of returning to profitability in the near future, the two GSEs wrote down to zero the remaining value of their LIHTC portfolios Ð $5 billion for Fannie Mae and $3.4 billion for Freddie Mac.      

There has been some speculation that the GSEs might try to somehow support the LIHTC market in other ways, such as acting as a guarantor of tax credit investments originated or sold by others. Freddie Mac official Kim Griffith, though, said the company isn’t exploring this kind of possible role, or any other activity involving housing credits “other than trying to be as active as we can on the debt side.” A Fannie Mae spokesman said the company is “looking for ways” to work with tax credit syndicators but wouldn’t provide details.