Financial fallout at mortgage giant Fannie Mae (FNM) continues to develop following the $19.8bn quarterly net loss, with the agency's conservator confirming Fannie may sell as much as $2.6bn of low-income housing tax credits to investors and is requesting another $15bn in support from the US Treasury Department. The Federal Housing Finance Agency (FHFA) is supporting without objection an effort by Fannie to sell a portion of its Low-Income Housing Tax Credits (LIHTC) to investors. FHFA acts as conservator of both Fannie and brother government-sponsored enterprise (GSE) Freddie Mac (FRE). FHFA issued a public statement Thursday supporting the transfer of LIHTC investments. More than a year earlier, FHFA in September 2008 issued a statement affirming the importance of the GSEs' LIHTC portfolio. At the time, FHFA indicated a liquidation of the portfolio by either GSE was not intended at the time of conservatorship. "Since then, in the interest of providing support to the LIHTC market and conserving the assets of the corporations, FHFA has authorized each company to seek utilizations of their LIHTC portfolios provided they met those goals – to be supportive of the market’s valuation of such assets and to recognize value for the conservatorships," said FHFA acting director Edward DeMarco in Thursday's statement. DeMarco added: "To that end, FHFA has informed Fannie Mae that a possible transfer of a portion of its LIHTC investments to unrelated third-party investors is consistent with FHFA’s ongoing efforts to conserve Enterprise assets and with the Enterprise’s multifamily housing mission." Fannie indicated in its earnings statement it would transfer "approximately one-half" of the LIHTC investments  to unrelated third-party investors. As of September 30, the carrying value of Fannie's LIHTC investments totaled $5.2bn, indicating the amount that would be transferred to investors would come to around $2.6bn. "Upon completion of the contemplated transfer, the unrelated third-party investors would be entitled to receive substantially all of the tax benefits from our LIHTC investments for a specified period of time," Fannie said in the quarterly earnings statement. "At a specified future date, the percentage of tax benefits the investors would receive would automatically be reduced and the percentage of tax benefits we would receive would be increased by the same amount. In addition, we could have the obligation to reacquire all or a portion of the transferred interests." FHFA, acting as Fannie's conservator, requested Treasury's approval of the transfer under the senior preferred stock purchase agreement, but had not received approval as of November 5. FHFA also submitted a request to Treasury for another $15bn -- to cover Fannie's net worth deficit as of September 30 -- through the senior preferred stock purchase agreement. Write to Diana Golobay.