Proposed Rule on Quality Control Standards for AVMs Summary
This tool summarizes the proposed rule issued by the OCC, Federal Reserve Board, FDIC, NCUA, and FHFA to implement the quality control standards mandated by the Dodd-Frank Act for the use of automated valuation models (AVMs) by mortgage originators and secondary market issuers to determining the collateral worth of a mortgage secured by a consumer’s principal dwelling. This rule:
- Applies specifically to the usage of AVMs in the context of determining the value of a consumer’s principal dwelling that collateralizes a mortgage.
- Outlines the scope of the rule which would extend to collateral value determinations in the context of loan modifications and changes to existing loans.
- Requires covered parties to adopt and maintain policies, practices, procedures, and control systems to ensure that AVMs used in covered transactions adhere to quality control standards designed to ensure a high level of confidence in the estimates produced; protect against the manipulation of data; seek to avoid conflicts of interest; require random sample testing and review and comply with nondiscrimination laws.
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