Agencies Issue Final Rule to Help Ensure Credibility and Integrity of Automated Valuation Models — 2024-07-17

Six federal regulatory agencies today issued a final rule, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, designed to help ensure the credibility and integrity of models used in valuations for certain mortgages secured by a consumer’s principal dwelling. In particular, the rule will implement quality control standards for automated valuation models (AVMs) used by mortgage originators and secondary market issuers in valuing those homes. The final rule is substantially similar to the proposal issued in June 2023. Under the final rule, the agencies will require institutions that engage in certain transactions secured by a consumer’s principal dwelling to adopt policies, practices, procedures, and control systems designed to: ensure a high level of confidence in estimates; seek to avoid conflicts of interest; require random sample testing and reviews; and Driven in part by advances in database and modeling technology and the availability of larger property datasets, AVMs are being