BankerCollege

The recent regulatory developments in real estate evaluations and AVMs reflect a concerted effort to enhance the accuracy, fairness,   and transparency of property valuations. These changes are expected to benefit both consumers and financial institutions by promoting a more reliable and equitable mortgage lending process.

Real estate evaluations are a critical component of the mortgage lending process, providing an estimate of a property's market value. These evaluations are essential for lenders to determine the amount of credit they can extend to borrowers. Recently, there have been significant developments in the regulatory landscape surrounding real estate evaluations, particularly with the introduction of new rules  on Automated Valuation Models (AVMs) and the Consumer Financial Protection Bureau's (CFPB) perspective on these evaluations.

Automated Valuation Models (AVMs) are computer algorithms that provide property valuations based on data inputs such as recent  sales, property characteristics, and market trends. The new rules, adopted by the joint agencies including the CFPB, aim to implement quality control standards for AVMs. These standards are designed to ensure a high level of confidence in the estimates produced by AVMs, protect against data manipulation, avoid conflicts of interest, and ensure compliance with nondiscrimination laws. Institutions using AVMs in certain credit decisions or securitization determinations must adopt policies, practices, procedures, and control systems  to adhere to these quality control standards. 

This session will brief you on all the latest information you need to make sure that your real estate valuation, appraisal and AVM programs are in compliance.

Specific Areas Covered:

• We will discuss the QC standards for the AVMs as well as the renewed expectations for prevention of discriminatory practices related to appraisals.
• We will review what additional specific expectations the banking regulators now have, and not just the CFPB.
• We will also address the background on why this topic continues to be so “hot”.
• We will review steps to update your policies and procedures-what changes will you need to make to ensure that you have the most up to date info for your appraisal program.

The top 3 things you need to do to bring your residential real estate appraisal/AVM program up to date:

1. How to incorporate the new expectations from the Final rule on AVMS into your lending functions
2. Address which groups in the bank will need the awareness and training on these topics;
3. What areas in your bank need to be reviewed to ensure that your policies and procedures will be compliant with the new expectations.