CFPB Issues New Rule On Use Of Artificial Intelligence Models In Mortgage Lending

On June 24, 2024, the Consumer Financial Protection Bureau (CFPB) announced that it had approved a new rule about the use of algorithms and artificial intelligence (AI) for home appraisals and valuations. The new rule was promulgated by the CFPB, the Federal Reserve, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Federal Housing Finance Agency, pursuant to Dodd-Frank's direction that the CFPB and other financial supervisory agencies create regulations to implement quality control standards for "automated valuation models" (AVMs). Dodd-Frank defines AVMs as "any computerized model used by mortgage originators and secondary market issuers to determine the collateral worth of a mortgage secured by a consumer's principal dwelling." See 12 U.S.C. § 3354(d).