The Consumer Financial Protection Bureau (CFPB) has proposed new outlines to make sure that the computer models used to help find home valuations are accurate and fair.
According to a Wednesday (Feb. 23) press release, the outlines will be reviewed to determine the impact they would have on small businesses.
“It is tempting to think that machines crunching numbers can take bias out of the equation, but they can’t,” CFPB Director Rohit Chopra said in the release. “This initiative is one of many steps we are taking to ensure that in-person and algorithmic appraisals are fairer and more accurate.”
The CFPB wants to take several steps to strengthen oversight of the models. It also wants to ensure a “high level of confidence” in estimates and seek to avoid conflicts of data, and will protect against manipulation of data.
Additionally, the CFPB would require that random sample testing and reviews take place, and would account for any other factors that agencies feel need to be put in.
When underwriting a mortgage, an appraisal, or an estimate of the value of the home, is needed — and while traditional ones are done in-person, lenders also use algorithmic computer models. If a home is overvalued, it can put family wealth at risk and create challenges for reselling. That can also lead to higher costs of foreclosure.
Lower valuations can jeopardize selling the home and make it so the owners can’t refinance — thus impeding them from making wealth or repairs.
The CFPB also offered new rules recently to let it be easier for individual citizens to submit petitions, PYMNTS wrote. The agency said its new changes were in-line with the Constitution, which guarantees a right to petition the government.
Read more: CFPB Makes It Easier for Public to Petition for Rule Changes
That has been complicated in recent years because of the perception that the agency is inaccessible and needs lobbyists or moneyed agents to interact with.
Individuals will now have the ability to submit direct petitions for rulemaking, and ex-government employees and others will have to submit their petitions for public expression.
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