Correction, October 1, 2026. The headline now identifies covered valuations, the scope discussion has been checked against the final rule, and a related HUD link describes the proposed stage. The original publication date is unchanged.
AI Regulation Tracker / Regulation in force
Federal AVM Rule: Five Standards for Covered Home Valuations
The federal AVM rule took effect October 1, 2025. It requires five quality-control standards for covered mortgage valuations, including compliance with applicable nondiscrimination laws.
On October 1, 2025, a joint final rule from six federal agencies (OCC, Federal Reserve, FDIC, NCUA, CFPB, and FHFA) took effect, setting quality-control standards for the automated valuation models (AVMs) that mortgage originators and secondary-market issuers use to value a consumer's principal dwelling. Issued under section 1473(q) of the Dodd-Frank Act and published at 89 FR 64538, the rule requires covered institutions to govern their AVMs against five standards, including a new fifth factor on compliance with applicable nondiscrimination laws. Primary source: Federal Register, "Quality Control Standards for Automated Valuation Models" (Document 2024-16197).
The federal AVM rule and its effective date
The joint final rule, effective October 1, 2025, implements the quality-control requirements for covered automated valuation models under section 1125 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as amended by Dodd-Frank.
The rule defines an AVM as a computerized model used by a mortgage originator or secondary-market issuer to determine the value of a consumer's principal dwelling that collateralizes a mortgage. Covered uses require policies and controls addressing the rule's five standards.
Who issued it, and where it comes from
The rule was adopted jointly by the Office of the Comptroller of the Currency, the Federal Reserve Board, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Consumer Financial Protection Bureau, and the Federal Housing Finance Agency.
The authority traces to section 1473(q) of the Dodd-Frank Act, which amended title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 to require quality-control standards for AVMs used in valuing the real estate collateral behind mortgage loans. The final rule, published at 89 FR 64538 on August 7, 2024, implements that mandate. Congress called for these standards in 2010.
The five standards every covered AVM has to meet
Under the rule, an institution that uses AVMs in covered transactions must adopt policies, practices, procedures, and control systems that meet five quality-control standards. The model has to:
- produce estimates with a high level of confidence
- protect against the manipulation of data
- seek to avoid conflicts of interest
- require random sample testing and reviews
- comply with applicable nondiscrimination laws
The first four standards come from the underlying statute. The agencies added the fifth, compliance with applicable nondiscrimination laws, under their authority to identify another appropriate quality-control factor. Covered institutions must include applicable nondiscrimination laws in their AVM controls. The requirement applies alongside the other four standards.
Covered institutions and transactions
The final rule defines the institutions and transactions within its scope. Check both definitions and exclusions before deciding whether a particular use is covered.
It reaches "mortgage originators" and "secondary-market issuers." A mortgage originator is, roughly, anyone who for compensation takes a mortgage application, helps a consumer obtain or apply for a mortgage, or offers or negotiates mortgage terms, plus anyone who advertises that they do. A secondary-market issuer is any party that creates, structures, or organizes a mortgage-backed securities transaction.
The trigger is using an AVM to make either a "credit decision" (whether and on what terms to originate, modify, or change a mortgage) or a "covered securitization determination" (such as waiving an appraisal requirement, or structuring and marketing an initial mortgage-backed securities offering). The definitions also reach business-purpose mortgages secured by a consumer's principal dwelling. Using an AVM only to monitor or verify the performance of existing loans is outside the rule.
Implementing the quality controls
The agencies leave institutions flexibility to set their controls in light of their size, risk and complexity. The requirement to adopt and maintain those controls applies to covered uses.
What to do first
Determine whether your firm fits the applicable mortgage-originator or secondary-market-issuer definition and uses AVMs, directly or through a third party or affiliate, in a credit decision or covered securitization determination. For covered uses, inventory the AVMs, including vendor models, and map the controls to the five standards.
Document how the controls address applicable nondiscrimination laws. The agencies identify existing model risk management guidance as a resource for developing AVM policies, practices, procedures and controls.
Frequently Asked Questions
What is the AVM Quality Control Rule?
It is a joint federal final rule from six agencies (OCC, Federal Reserve, FDIC, NCUA, CFPB, and FHFA) that sets quality-control standards for automated valuation models used by mortgage originators and secondary-market issuers to value a consumer's principal dwelling. Issued under section 1473(q) of the Dodd-Frank Act and published at 89 FR 64538, it took effect October 1, 2025, and requires covered institutions to adopt policies and controls so their AVMs meet five standards.
When did the AVM rule take effect?
October 1, 2025. The final rule was published in the Federal Register on August 7, 2024, with an effective date set for the first day of the calendar quarter following 12 months after publication, which fell on October 1, 2025.
What is the fifth factor in the AVM rule?
Beyond the four standards drawn from the underlying statute (high confidence in estimates, protecting against data manipulation, avoiding conflicts of interest, and random sample testing), the agencies added a fifth: compliance with applicable nondiscrimination laws. It creates an independent requirement to build controls that specifically address discrimination risk in the AVM, which is the rule's core response to bias in algorithmic valuation.
Does the AVM rule apply to real-estate agents or appraisers?
The rule's direct obligations fall on mortgage originators and secondary-market issuers that use AVMs in credit decisions or covered securitization determinations. Check the rule's definitions and exclusions for the firm's role and AVM use; a job title alone does not establish coverage.
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Informational analysis for working professionals, not legal advice. Confirm how any rule applies to your situation with qualified counsel.