WASHINGTON, D.C.— Shayna Olesiuk, Director of Banking Policy, released the following statement on six federal banking regulators finalizing a rule to implement quality control standards for automated valuation models (AVMs) that are used to determine residential mortgage loan collateral values.
“Computerization, digitalization, and automation have infiltrated nearly all parts of American life, and the process of obtaining a mortgage is no exception. While the use of individual human appraisers is still common and appropriate for many real estate transactions (if done appropriately not to discriminate or otherwise violate the law), the availability of data and computer programs have increasingly allowed for the automation of the real estate appraisal process. Unfortunately with this rule, the banking agencies missed the opportunity to fully protect Americans involved in the homebuying process.
“Regulators must remain vigilant to detect discriminatory lending practices to ensure that all borrowers are treated fairly. As AVMs become more complex and employ more data, bias and discrimination become more difficult to detect. While the new rule is a step in the right direction relative to the prior guidance, it does not do enough to correct the serious lack of specificity on minimum acceptable standards. The agencies’ new rules are toothless because it leaves it up to the banks to determine what sort of guidelines are best for their size and complexity.
“The agencies should have corrected the serious lack of specificity on minimum acceptable standards before the rule was finalized. Allowing individual lenders to determine appropriate levels for compliance with quality control standards and expecting multiple regulatory agencies to coordinate and assess compliance is impractical, irresponsible, and dangerous. The American people deserve to receive consistent protection against discrimination, data manipulation, and conflicts of interest, not simply be left to trusting that banks will do the right thing because banks have proved time and again that they cannot be trusted.”
You can find our comment letter on this topic here.
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