Racial Bias in Automated Home Appraisals Targeted in New Rule

Federal regulators are eyeing new standards for companies using automated valuation models in home appraisals as part of the Biden administration’s efforts to curtail racial biases in the appraisal industry.

Six federal agencies issued a proposed rule Thursday that would require companies using automated tools in home appraisals to establish policies to guard against manipulation of data and conflicts of interest, and to ensure compliance with anti-discrimination laws.

Home appraisal companies would also need to set standards to ensure they have a high level of confidence in estimates of a home’s value that the automated tools produce, and to conduct ...