The National Credit Union Administration (NCUA) and other federal financial regulators issued a proposed rule regarding Automated Valuation Models (AVMs) Thursday, part of several efforts announced by President Joe Biden’s administration to address racial bias in home valuations.
The proposed rule would require institutions that engage in covered transactions to adopt policies, practices, procedures, and control systems to ensure that AVMs adhere to quality control standards designed to ensure the credibility and integrity of valuations.
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.
The White House fact sheet also notes:
The Credit Union National Association (CUNA) has noted in numerous letters to Congress that systemic bias in home appraisals undermines long-term U.S. financial security, and noted credit unions rely on appraisals for accurate and unbiased opinions on home market values.