On February 23, the CFPB outlined a proposal for upcoming joint rulemaking to
prevent algorithmic bias in automated home valuation models
(AVMs). Here, the CFPB is specifically focused on the
potential for AVMs to pose fair lending risks to homebuyers and
homeowners. The CFPB issued the outline pursuant to a
requirement under the Small Business Regulatory Enforcement
Fairness Act that includes “collecting small entities'
advice and recommendations on the potential impacts of the
proposals under consideration and feedback on regulatory
alternatives to minimize these impacts.”
Dodd-Frank Act amended the Financial Institutions Reform,
Recovery, and Enforcement Act (FIRREA) to instruct the CFPB,
Federal Reserve Board, OCC, FDIC, NCUA, and FHFA to jointly develop
regulations requiring AVMs to meet the following five quality
control standards: (i) ensure a high level of confidence in
the estimates, (ii) protect against the manipulation of data, (iii)
avoid conflicts of
