Six federal regulatory agencies have jointly requested public comment on a proposed rule designed to ensure the credibility and integrity of models used in real estate valuations.
In a statement, the agencies said the proposed rule would “implement quality control standards for automated valuation models (AVMs) used by mortgage originators and secondary market issuers in valuing real estate collateral securing mortgage loans.”
Under the proposed rule, the agencies would require institutions that engage in covered transactions to adopt policies, practices, procedures, and control systems to ensure that AVMs adhere to quality control standards designed to ensure the credibility and integrity of valuations.
“The proposed standards are designed to ensure a high level of confidence in the estimates produced by AVMs; help protect against the manipulation of data; seek to avoid conflicts of interest; require random sample testing and reviews; and promote compliance with applicable nondiscrimination laws,” said the regulators.
The agencies requesting public comment are the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corp., the Federal Housing Finance Agency, the Federal Reserve, the National Credit Union Administration and the Office of the Comptroller of the Currency.
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