Cuomo Says FHA Will Cut the Cost of Mortgage Insurance; FHA Reforms Will Save Families a Billion Dollars Annually.

SAN FRANCISCO, Oct. 30 /PRNewswire/ --

U.S. Housing and Urban Development Secretary Andrew Cuomo today released the details of a plan that will save more than one million homeowners with Federal Housing Administration-insured mortgages in excess of $1 billion annually in insurance costs.

Cuomo said that the FHA's Homebuyer Savings Plan will reduce up-front insurance premiums by one-third, eliminate annual premiums after a homeowner has built 22 percent equity in the home, and pay premium refunds to current FHA borrowers. Cuomo made the announcement to an estimated 6,000 attendees of the 87th Annual Mortgage Bankers Association Convention in San Francisco.

"After four years of reforming FHA, today we are putting the fruits of our success to work for American families," Cuomo said. "The Homebuyer Savings Plan will lower the cost of homeownership and help families take a giant step toward sharing in the American dream."

The Homebuyer Savings Plan will reduce the premium requirement from 2.25 percent to 1.5 percent of the original loan amount. As a result, a family with a typical $100,000 FHA-backed mortgage will save $750; for larger mortgages the initial savings may be as much as $1,650.

Cuomo also announced that the Plan will eliminate entirely FHA's annual premium of .5 percent (or 50 basis points) on all loans once homeowners build 22 percent equity…