This final rule makes changes to the Department's Mortgagee Review Board (Board) regulations to clarify and better reflect statutory directives and amend current practice, and to modify the Board's procedures governing hearings. This rule also removes provisions that unnecessarily duplicate the authorizing statute and clarifies the authority and duties of the Board in taking administrative action against mortgagees approved by the Federal Housing Administration. This rule separates and clarifies the grounds for administrative action and the factors considered by the Board in evaluating whether to take administrative action, as well as requiring the mortgagee to address these factors in its response to the Board's notice of violation. This rule follows publication of a March 28, 2008, proposed rule on which HUD received one public comment. At this final rule stage, HUD has decided to adopt the proposed rule with minor changes, as described below.