Following on the heels of popular legislation that eliminated private mortgage insurance premiums, the federal government today will announce a similar program for homeowners who hold Federal Housing Administration-backed mortgages. The plan would also cut FHA's upfront insurance premium to 1.50%, from 2.25%, of original loan amount. Taken together, the typical FHA homeowner would save on average $1,500 over the life of a $100,000 loan, said Matt Franklin, deputy chief of staff of the Housing and Urban Development Department, FHA's parent agency. The plan is modeled after legislation passed in 1998 that eliminated premiums on private mortgage insurance, known as PMI, once homeowners reached 22% equity in their homes. But unlike the PMI legislation, FHA will continue to insure mortgages even after the annual premiums are eliminated, Franklin said. Rep. James V. Hansen (R-Utah) introduced a bill last month that would terminate FHA insurance payments under the same rules as for PMI. Mortgage insurance exists to protect lenders from defaults. The FHA mortgage insurance fund has $16 billion in reserves. Last year, FHA insured nearly 1.3 million home loans with a combined value of $125 billion, mostly to first-time home buyers. HUD Secretary Andrew Cuomo will announce the program during a speech before the Mortgage Bankers Assn. convention in San Francisco. The FHA program would take effect Jan. 1.