Consumer Financial Protection Bureau Proposes Rule to Regulate AI Home Appraisals
Summary
On June 1, 2023, the Consumer Financial Protection Bureau (CFPB) proposed a rule that would ensure that automated home valuations are fair and nondiscriminatory. Covered institutions using models to determine home value decisions would have to take steps to boost confidence in valuation estimates and protect against data manipulation. The proposed rule would also require companies to have policies and processes to avoid conflicts of interest, conduct random sample testing and reviews, and comply with nondiscrimination laws. The proposed rule was created in conjunction with the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Federal Housing Finance Agency, National Credit Union Administration, and Office of the Comptroller of the Currency and supports the Interagency Task Force on Property Appraisal and Valuation Equity. The proposal follows previously issued guidance requiring lenders using black-box credit models to provide specific and accurate explanations for denying applications.
