Fed agencies propose new rule to combat home appraisal bias

Agencies seek public comment on proposed rule for quality control of automated valuation models. The Federal Housing Finance Agency and five other regulatory agencies have proposed a rule requiring originators to adopt quality control standards for automated valuation models (AVMs). The agencies encouraged the public and industry participants to submit their comments on the AVM rule with the goal of combating racial bias in home appraisals. AVMs are software-based pricing models used to determine property value and automate the process. However, an FHFA report in 2022 discovered discriminatory statements in some algorithmic appraisals. The proposed rule would implement policies, practices, procedures, and control systems to ensure that AVMs adhere to quality control standards designed to comply with non-discrimination laws, ensuring fair and accurate appraisals. The six agenc