The Consumer Financial Protection Bureau published a 42-page paper that outlines options for ensuring that computer models used to help determine home valuations are accurate and fair.
The CFPB acknowledges that computer models and algorithms are additional tools for mortgage lenders and appraisers to improve valuation accuracy. However, automated valuation models can pose fair lending risks to homebuyers and homeowners, says the CFPB, which further noted that without proper safeguards, flawed versions of these models could digitally redline certain neighborhoods and further embed and perpetuate historical lending, wealth and home value disparities.
A Small Business Review Panel will be formed by the CFPB to assess the options discussed in the paper and determine their potential impact on small businesses before any rulemaking occurs.
The CFPB has invited public feedback from small businesses, including mortgage brokers and mortgage companies, by May 13, 2022. Comments can be emailed to 2022-SBREFA-AVM@cfpb.gov. To view the CFPB’s proposals, visit https://bit.ly/3v91oXo