Proposed Rule on Quality Control Standards for AVMs Summary
Updated 09/14/2023
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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