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Federal regulators want to tweak rules for automated home appraisals. Under a Biden administration proposal, agencies would require firms that use automated valuation models to adopt best practices and procedures to ensure accuracy, fairness and compliance with nondiscrimination laws. Proponents say the new rules could prevent bias in home appraisals, with algorithms serving as a check on human appraisers or replacing them.
Unlike a regular home appraisal, where a person looks at a property and assesses its value based on comparisons to other recent home sales, automated valuations rely on formulas to do the job. Regulators say rules for these models are needed because they can still reflect the biases of the people who initially developed them. The proposal is part of a wider push to address the problem.
Allegations from Black homeowners of lowball appraisals have inspired the administration to tackle the issue. Among the other initiatives that have been unveiled lately: An easier pathway for homeowners to challenge unfair appraisals. And a dashboard showing which states impose overly stringent requirements to become an appraiser. The latter move should allow more minorities to enter the appraisal industry.
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