James B. Lockhart III, the former regulator of the Federal Housing Finance Agency (FHFA) has said that the government investment in Fannie Mae and Freddie Mac is "too far along," making it difficult to relieve the companies from government control and transfer them back to their private investors.

He said, "I would love to figure out how to get there, but I think we may be too far along the line of government involvement." Lockhart is now vice chairman for Invesco Ltd.'s WL Ross & Co.

Fannie Mae and Freddie Mac had received $110.6 billion of taxpayer's money to survive after they were held by the federal agency 17 months ago due to their risk of failing. The companies are the largest sources of money for U. S. home loans.

Lockhart, who ran the FHFA and its predecessor agency from 2006 until August 2009 had spoken against putting the companies into conservatorship in 2008 and had also tried to stop the more drastic step of receivership.

He defended FHFA's actions during the financial crisis and said that impact would have been much worse if the agency hadn't helped companies at that time.

He said he was disappointed by remarks by Treasury Secretary Henry Paulson that characterized the agency as weak during the discussions on Fannie Mae and Freddie Mac.

The agency had to consider that the companies could have sued the agency and thus had to get their voluntarily consent on the conservatorships. "Any new structure for the companies must wait until the housing market recovers" he added.

The US government has used Fannie Mae and McLean, Freddie Mac to carry out programs aimed at reviving the housing market. Lockhart expects the housing market to stabilize but also says that the prices may fall.

The US budget on February 1 did not include plans to pull out of the companies and according to a treasury official the proposal is expected in few months.