OCC, Federal Reserve, FDIC, NCUA, CFPB, and FHFA Issue Proposed Rulemaking on Quality Control Standards for Automated Valuation Models

The Office of the Comptroller of the Currency Federal Reserve, Federal Deposit Insurance Corporation, National Credit Union Administration, Consumer Financial Protection Bureau, and Federal Housing Finance Agency (collectively, the agencies) invite comment on a proposed rule to implement the quality control standards for automated valuation models (AVMs) by mortgage originators and secondary market issuers. These standards are mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act in determining the collateral worth of a mortgage secured by a consumer’s principal dwelling.

Under the proposal, the agencies would require institutions that engage in certain credit decisions or securitization determinations do the following:

  • Adopt policies, practices, procedures, and control systems to ensure that AVMs used in these transactions to determine the value of mortgage collateral adhere to quality control standards designed to ensure a high level of confidence in the estimates produced by AVMs
  • Protect against the manipulation of data
  • Seek to avoid conflicts of interest
  • Require random sample testing and reviews
  • Comply with applicable nondiscrimination laws.

Comment Deadline: Comments should be received on or before August 21, 2023.