On June 24th the CFPB, Federal Reserve, NCUA, OCC and the Federal Housing Finance Agency issued a Final Rule regarding quality control standards for AVMs. For those institutions that use AVMs to determine the value of a consumer’s principal dwelling, the Rule requires they have policies, procedures, practices and controls to:
- Ensure a high level of confidence in the estimates produced;
- Protect against the manipulation of data;
- Avoid conflicts of interest;
- Require random sample testing and reviews; and, comply with applicable antidiscrimination laws.
The CFPB also stated:
While these computer models can provide critical insight for buyers, sellers, and lenders, they cannot be inaccurate or discriminatory. It can be tempting to think that computer models can take bias out of the equation, but they can’t….The new rule is part of our efforts to ensure that the appraisal system is fair, nondiscriminatory, and free of conflicts of interest.
Once the Final Rule is published in the Federal Register, it will be effective approximately 12 months later.
Published
2024/07/03
