Garrett: U.S. support for housing market to be withdrawn slowly

(Reuters) - Government support for the housing market should be cautiously withdrawn and not be rushed, Scott Garrett, the incoming chairman of the U.S. House Financial Services subcommittee, told the Wall Street Journal.

"We recognize that some things can be done overnight and other things cannot be," Garrett, a Republican representative for New Jersey's 5th Congressional district told the Journal.

Garrett, who would oversee housing finance giants Fannie Mae and Freddie Mac upon assuming charge, told the Journal that he has "not established a specific time frame for winding them down."

"You have to recognize what the impact would be on the fragile housing market as it stands right now," Garrett told the Journal.

Many Republican lawmakers had earlier blamed Fannie Mae and Freddie Mac for paving the way for irresponsible lending that led to the historic boom and the bust of U.S. housing markets and wanted to include housing finance reforms in the financial rules rewrite.

However, several Republicans now concede that a speedy exit may not be practical, because Fannie Mae and Freddie Mac have such a dominant position in the nation's housing market, the paper said.

Fannie, Freddie along with the Federal Housing Administration and the Department of Veterans Affairs have guaranteed nearly 90 percent of home loans made in the first three quarters of 2010, the newspaper said, citing trade publication Inside Mortgage Finance.

(Reporting by Sakthi Prasad in Bangalore; Editing by Lincoln Feast)