Regulatory Alerts2024-08-07 | 2024-16197Quality Control Standards for Automated Valuation Models
Six federal financial regulators—the OCC, Federal Reserve Board, FDIC, NCUA, CFPB, and FHFA—have issued a final rule implementing Dodd-Frank Act mandates for automated valuation models (AVMs). The regulation requires mortgage originators and secondary market issuers to establish tailored policies, procedures, and control systems ensuring that AVMs used in credit decisions and securitizations deliver reliable valuations, prevent data manipulation, mitigate conflicts of interest, undergo random testing, and comply with nondiscrimination laws. By adopting a flexible, risk-based framework effective October 2025, the rule enables institutions to manage third-party AVM vendors and existing fair lending obligations without imposing rigid structural mandates.