Treasury denies Fannie Mae tax credit plan

WASHINGTON

Government controlled mortgage provider Fannie Mae said Monday the U.S. Treasury has blocked its plans to sell more than $2.5 billion in low-income housing tax credits.

In a regulatory filing Monday, Fannie Mae, formally known as Federal National Mortgage Assoc., said it had planned to transfer equity interest in the credits to investors.

The Treasury, however, blocked the move saying it would result in a loss of tax revenue greater than the savings to the government.

Fannie Mae said it was evaluating whether it must record the credits as an impairment in the fourth quarter.

As of Sept. 30, the value of the credits was $5.2 billion. If recorded as an impairment, Fannie Mae's net worth would be reduced by that amount.

(This version CORRECTS amount of tax credits in lead paragraph.)