Six federal regulatory agencies issued a final rule on July 17, 2024, aimed at ensuring the credibility and integrity of models used in valuations for certain mortgages secured by a consumer’s principal dwelling. This action is pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act. The rule will implement quality control standards for automated valuation models (AVMs) utilized by mortgage originators and secondary market issuers.
The final rule closely mirrors the proposal issued in June 2023. Institutions engaging in transactions secured by a consumer’s principal dwelling are now required to adopt policies, practices, procedures, and control systems designed to:
- Ensure a high level of confidence in estimates;
- Protect against data manipulation;
- Avoid conflicts of interest;
- Require random sample testing and reviews; and
- Comply with nondiscrimination laws.
Advances in database and modeling technology, along with larger property datasets, have led to an increased use of AVMs in real estate valuation processes. While these advances may reduce costs and turnaround times, it remains crucial that institutions using AVMs take appropriate steps to ensure the credibility and integrity of valuations produced. Adherence to quality control standards designed to comply with applicable nondiscrimination laws is also emphasized.
The final rule will become effective on the first day of the calendar quarter following 12 months after its publication in the Federal Register.
For further details or media inquiries:
- CFPB: Mike Robinson, 202.597.4022
- FDIC: Julianne Fisher Breitbeil, 202.898.6993
- FHFA: Nick Jacobs, 202.649.3618
- FRB: Meg Nelson, 202.452.2955
- NCUA: Joseph Adamoli, 703.518.6572
- OCC: Stephanie Collins, 202.649.6870
The National Credit Union Administration (NCUA) is an independent federal agency created by Congress to regulate, charter, and supervise federal credit unions while managing the National Credit Union Share Insurance Fund which insures deposits for over 135 million account holders.
For media inquiries related to NCUA:
Joe Adamoli
JAdamoli@ncua.gov
703.518.6572