Regulatory Alerts2023-06-21 | 2023-12187Quality Control Standards for Automated Valuation Models
Six federal financial regulators, including the OCC, Federal Reserve, FDIC, NCUA, CFPB, and FHFA, have proposed a unified rule to implement Dodd-Frank Act mandates for automated valuation models (AVMs) used in mortgage lending and securitization. The proposal requires covered institutions to establish robust policies, procedures, and control systems that ensure AVM-generated property valuations maintain high confidence, prevent data manipulation, mitigate conflicts of interest, and undergo random sampling and nondiscrimination compliance. By standardizing these quality control standards across mortgage originators and secondary market issuers, the rule aims to enhance the accuracy, reliability, and fairness of computerized real estate appraisals used in credit decisions.