Congress kills mortgage-valuation safeguards, banks dodge compliance
H.J.Res. 49 — Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Federal Deposit Insurance Corporation relating to "Quality Control Standards for Automated Valuation Models". · Filed by Andrew Clyde (R-GA) · Introduced Feb 12, 2025 · Referred to committee
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What it does
This resolution disapproves a Federal Deposit Insurance Corporation (FDIC) rule requiring quality-control standards for automated valuation models (AVMs)—software that estimates property values for mortgage lending. The rule is nullified and will not take effect. Banks and lenders benefit by avoiding compliance costs and regulatory oversight of their valuation software; homebuyers and borrowers lose a safeguard against inflated or manipulated property appraisals.
Why we flagged it
The resolution uses the Congressional Review Act (CRA) to block a consumer-protection rule governing mortgage-lending technology. It is a straightforward deregulatory measure that removes oversight of automated valuation models used in residential lending.
What the text implies
- Automated valuation models are increasingly used in mortgage underwriting and refinancing decisions; removing quality-control standards may increase the risk of systematic errors or bias in property valuations, potentially affecting loan approval rates and terms across demographic groups.
- The FDIC rule was issued in August 2024 after industry consultation; disapproving it signals regulatory retreat on fintech oversight in banking, potentially emboldening similar CRA challenges to other recent financial-services rules.
The full analysis lists 3 implications of this text.
Who stands to gain
commercial banks; mortgage lenders; automated valuation model vendors