On December 17, 2004, HUD published an interim rule implementing certain regulations for the Federal Housing Administration (FHA) Credit Watch Termination Initiative. Under the initiative, FHA systematically reviews the early default and claim rates of mortgagees that have been approved to participate in the FHA single family mortgage insurance programs. Mortgagees with excessive default and claim rates are considered to be on Credit Watch status and, in cases of more severe performance deficiencies, HUD may terminate the mortgagee's loan origination approval authority. Credit Watch status constitutes a warning to a mortgagee that its default and claim rates are in excess of permissible levels and that failure to achieve improvement may lead to the termination of its origination approval agreement. The final rule follows publication of the December 17, 2004, interim rule, takes into consideration the public comments received on the interim rule, and makes no changes at this final rule stage.