They should really be doing this in the geographic areas with the most foreclosures. Los Angeles County has very few HUD foreclosures (mainly because no one used FHA prior to reform in 2007). Borrowers are just going to use different loan products now so HUD won't end up getting anymore revenue...seems like a stupid move strategically by HUD. I highly doubt this will drastically increase their revenues unless the goal of this is to get people to stop using FHA loans (which it might be for political reasons). If this is the governments plan, homeowners prepare to get seriously screwed by private mortgage lending industry in coming months/years.