The federal banking regulators and the Consumer Financial Protection Bureau (CFPB) released their final rule on quality control standards for automated valuation models (AVMs). The final rule follows the general framework proposed by the regulators, which is taken directly from the Sec.1125 of the Dodd-Frank Wall Street Reform and Consumer Protection Act with the addition of a fourth criteria for fair housing.
The final rule applies to institutions that use AVMs for credit determinations and mortgage securitization to adopt policies, practices, procedures, and control systems. The final rule is designed to:
The final rule does make clarifications and adjustments to the proposed rule that reflect input from the public. NAR submitted a comment on the proposed rule. The final rule reflects some of NAR’s recommendations:
Regarding providing to consumers copies of valuations used in connection with appraisal waiver decisions, the comment is on a matter outside the scope of this rulemaking. The agencies also note that the CFPB’s rules in Regulation B implementing ECOA generally require creditors to provide applicants for first-lien loans on a dwelling with copies of written valuations developed in connection with an application. ‘While some AVMs may use proprietary methods, the [2013 ECOA Valuations Final Rule] does not require the disclosure of these methods per se; rather, the [2013 ECOA Valuations Final Rule] requires disclosure of the written valuations developed by the AVMs which are provided to the creditors.’
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