WASHINGTON — Sen. Wayne Allard, R-Colo., plans to introduce legislation this week that would reduce the homeownership tax on FHA loans by providing rebates of excess premiums to FHA-insured borrowers.

Congress suspended the insurance rebates in 1990 and mandated that the FHA Mutual Mortgage Insurance Fund maintain a capital reserve of 2% by 2000.

According to a recent report by the General Accounting Office, the reserve ratio exceeded 3.2% in 1999. Sen. Allard said that report indicates the rebate program should be reinstated.

Sen. Allard’s Homeowners Rebate Act would raise the reserve requirement to 3% and restore the rebates for at least seven years, as long as the ratio stays above 3%.

A spokesman for the senator said the bill could be introduced as early as today.

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