The Obama administration has blocked Goldman Sachs' bid to buy a significant amount of low-income housing tax credits (LIHTCs) from struggling Fannie Mae, according to several sources.

While a sale may have cut the government costs related to Fannie Mae, there was reportedly concern that it would have drained more revenue as Goldman used the tax credits against its profits.

In a recent third-quarter report to the Securities and Exchange Commission (SEC), Fannie Mae said it had entered into a nonbinding letter of intent to transfer equity interests in its LIHTC investments. “Under the terms of the transaction as currently contemplated, we would transfer to unrelated third-party investors approximately one-half of our LIHTC investments for a price that exceeds their current carrying value,” said the report.

As of Sept. 30, the carrying value of Fannie Mae's LIHTC investments was $5.2 billion.

The Treasury Department on Nov. 6 notified Fannie Mae that it is not consenting to the transaction.

“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 our LIHTC investments for value,” said Fannie Mae in an SEC filing Nov. 9. “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.”

The company went on to say, “While we have not made any decision with respect to whether an impairment of these assets is required under generally accepted accounting principles, if we are unsuccessful in selling or otherwise transferring these investments for value, we are likely to record additional other-than-temporary impairment in the fourth quarter of 2009 that could reduce the carrying value of our LIHTC investments to zero.”

Fannie Mae does not identify Goldman Sachs or any other firm as the buyer of its LIHTCs, and Goldman Sachs has been mum on the deal