Congress Nixes New Rule on Automated Home Valuations, Keeping Current System

This bill blocks a recent rule by the Office of the Comptroller of the Currency (OCC) that aimed to set quality control standards for automated valuation models (AVMs) - those computer programs that spit out estimates of your home's worth. By using the Congressional Review Act, Congress is hitting the 'undo' button on this rule (89 Fed. Reg. 64538), meaning it won't go into effect. The rule is officially dead.

Sticking with the Status Quo

So, what was this scrapped rule about? Basically, the OCC wanted to put some guardrails on how AVMs are used in the housing market. Think of it like setting standards for those online home value estimators – ensuring they're accurate and fair. AVMs are used by mortgage originators and secondary market issuers to determine collateral worth for a mortgage or mortgage-backed security. Since the rule is disapproved, everything stays as it was before the OCC tried to change things. This means whatever standards (or lack thereof) were in place for AVMs before, they're still in effect.

Real-World Ripple Effects

Let's say you're a homeowner refinancing your mortgage, or a small business owner using your property as collateral for a loan. The valuation of your property directly affects your interest rates and loan terms. If the AVM used to value your property is off – either too high or too low – it could impact your finances. For example, an undervalued home might mean you can't borrow as much, while an overvalued one could lead to problems down the line if the market corrects. By rejecting these new standards, Congress is essentially saying the old way is good enough, or at least, not worth changing right now.

The Bigger Picture and Potential Pitfalls

This move keeps things consistent in the short term, which might be a relief for lenders and tech companies using AVMs. They don't have to scramble to meet new requirements. However, it also means any problems with the existing system are likely to continue. If there were concerns about accuracy, bias, or lack of transparency in AVMs, those concerns are still on the table. It could also mean different AVMs will continue to produce widely different valuations, potentially leading to confusion and inconsistency in the market. The bill does not say that quality control standards are unnecessary, it just says that this rule, at this time is not the way to do it.