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Comment

As a 20+ year appraiser and the owner of a small appraisal management company, I'm not sure I understand exactly how you expect to effectively regulate this. Most AVM's are "black box" products; proprietary systems with trade secrets, so there is no way for a government regulator (short of a judicial order) to be able to look at the algorithms and computer code that make up the AVM.
Additionally, I have doubts that any government regulator tasked with reviewing AVM's would be up to the task, since they tend to very complex, AND the providers of AVM's are continuously tweaking them. Todays version -- or more darkly, the version given to a regulator -- may not be the same provided to a customer a day later. Generic testing by 3rd parties of the output is going to be subjective at best a they also have no idea what is contained in the code; they can compare data from other sources, but they won't know if they truly meet the proposed standards.
Lastly, creating onerous regulations will come at the expense of small businesses including appraisers, small appraisal management companies, mortgage companies, and most importantly, community banks and credit unions. None of these has the resources to develop their own internal AVM's for which they can then attest to their ability to meet these standards, nor be able to somehow be able to assure regulators that any outside AVM's used meet those standards. While the concept of better AVM's is an admirable goal, I just don't see how implementing these proposed rules will provide any improvement in the products available, and in fact will likely harm many players in the industry. It seems to be great for very large lenders and AVM providers (as well as the GSE's), but will run smaller companies out of business as it is currently proposed.