Mortgagee Letter 2010-03 is being issued to advise that the Department of Housing and Urban Development (HUD) will be using its regulatory authority to terminate a mortgagee's authorization to underwrite single family loans in geographic areas where the lender has a high rate of early defaults and claims. Effective with this Mortgagee Letter, HUD will systematically review all Direct Endorsement (DE) underwriting mortgagees' defaults (loans 90 or more days' delinquent) and claim rates on loans during the initial 24 months from the date of the commencement of the amortization. HUD, at its option, will exercise its authority to terminate the underwriting authority (Authority) of DE mortgagees with excessive default and claim rates.