On April 1, 2003, HUD published a proposed rule to amend the regulations for the Federal Housing Administration (FHA) Credit Watch Termination Initiative. Specifically, HUD proposed to provide for a fully computerized Credit Watch status notification process through use of the FHA Neighborhood Watch Early Warning System; remove the regulatory "cap" on the default and claim rates for placing a mortgagee on Credit Watch status; prohibit a mortgagee that has received a notice of proposed termination from establishing a new branch in the lending area covered by the proposed termination; provide that the default and claim thresholds underlying the Credit Watch Termination Initiative apply to both underwriting and originating mortgagees; codify the definition of "underserved area" that is currently used under the Credit Watch Termination Initiative; provide that the date of mortgage origination will be considered to be the date the loan transaction commences amortization, rather than the date of endorsement for FHA mortgage insurance; specify the timeframes for the informal conference that may be requested by a mortgagee prior to termination; and describe the procedures a terminated mortgagee must follow to have its origination approval agreement reinstated.This interim rule follows publication of the April 1, 2003, proposed rule, and takes into consideration the public comments on the proposed rule. In addition, this rule further clarifies the applicability of the Credit Watch Termination Initiative to underwriting mortgagees, and requests comments on the regulatory provisions regarding underwriting mortgagees.