On February 23, 2022, the US Consumer Financial Protection Bureau (“CFPB” or “Bureau”) took the first step in an eventual rulemaking by publishing an outline of proposals and alternatives under consideration to prevent algorithmic bias in automated valuation models (AVMs). AVMs are software-based tools used to determine the value of real estate as an alternative or supplement to traditional appraisals. The CFPB’s proposals are part of the mandate to promulgate interagency regulations under section 1125 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), which the Dodd-Frank Act added. Section 1125 sets quality control standards for AVMs and requires the CFPB, Federal Reserve Board (Board), Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration (NCUA), and the Federal Housing Finance Agency (FHFA) to promulgate regulations to implement these quality control standards.
Read more in Mayer Brown’s Legal Update.