June 02, 2023

NCUA, federal regulators issue AVM proposed rule

Govt building columnsThe NCUA and five other federal regulators are seeking comment on a proposed rule related to automated valuation models (AVMs) that NAFCU had called on the NCUA to prioritize. The agencies indicated the rule is “designed to ensure the credibility and integrity of models used in real estate valuations.”

The NCUA, CFPB, FDIC, Federal Reserve, Federal Housing Finance Agency (FHFA), and Office of the Comptroller of the Currency jointly issued the proposed rule, which was included again on rulemaking agendas released earlier this year.

The proposed rule would implement Dodd-Frank’s four quality control standards for the use of AVMs by mortgage originators and secondary market issuers as part of the process of determining the collateral worth of a mortgage secured by a principal dwelling.

The proposed standards are designed to:

  • ensure a high level of confidence in the estimates produced by AVMs;
  • help protect against the manipulation of data;
  • seek to avoid conflicts of interest;
  • require random sample testing and reviews; and
  • promote compliance with applicable nondiscrimination laws.

NAFCU will review the proposed rule and solicit member feedback. Comments are due to the regulators 60 days after it is published in the Federal Register.