Mortgage Lenders Face Checks on Automated Valuation Models (1)

Home mortgage lenders will have to meet a new set of standards designed to ensure that their tech-fueled appraisals don’t build in flaws that might produce faulty estimates or discriminate against borrowers.

The Federal Reserve and five other federal agencies announced the new demands in a final rule on Wednesday, saying they’re intended to “help ensure the credibility and integrity” of models used in home valuations for certain mortgages. The regulation will introduce quality-control standards for automated-valuation models used by mortgage originators and secondary-market issuers, the agencies said in a statement.

The rule is very similar to the June 2023 ...