UAD 3.6 & URAR: How Lender Preparations Are Reshaping Appraiser Workflows

Hi, I'm Daniel Yoder, and as a fellow residential appraiser, I've been closely following the developments around the Uniform Appraisal Dataset (UAD) 3.6 and the redesigned Uniform Residential Appraisal Report (URAR). While much of the conversation has centered on new data fields and the retirement of familiar forms, it's crucial to recognize that these changes signal a deeper transformation in our daily operations and business practices. Today, we'll delve into how lender preparations for UAD 3.6, as outlined in recent GSE guidance, are set to directly reshape our workflows, client interactions, and the very way we manage our appraisal assignments.

The GSEs have been clear: the move to UAD 3.6 is intended to modernize the appraisal process, enhancing data quality and consistency. The Lender Readiness Kit (June 2024) provides a roadmap for lenders, and understanding their upcoming changes offers us a valuable window into the new expectations we'll soon encounter.

1. Evolving Engagement Letters and Scope Definition

The way appraisal orders are initiated and defined is set for a refresh. Lenders are being instructed to "Update Engagement Letter after review of the new UAD, which now includes common lender overlays" (Lender Readiness Kit, p.16).

• For Appraisers: This means we should anticipate more detailed and standardized engagement letters. These documents will likely be more explicit about expectations for the new dynamic URAR, especially concerning lender-specific requirements or "overlays." It will be vital to scrutinize these new terms carefully.

Furthermore, lenders will "Determine appraisal scope of work and pricing structure (billing fee tables)" (Lender Readiness Kit, p.15). In a world without traditional form numbers, the "scope of work" will be driven by property characteristics and assignment complexity.

• For Appraisers: This shift could lead to more granular fee structures. Our pricing may need to adapt to reflect the specific demands of each unique assignment rather than being tied to a legacy form type. Understanding how lenders will define and communicate this new "scope" will be key to accurate bidding and service delivery.

Lender guidance also points to a focus on "Assign AMC and/or appraiser (including product competency)" (Lender Readiness Kit, p.16).

• For Appraisers: Demonstrating proficiency with UAD 3.6, the dynamic URAR, and the principles of structured data (like those underlying the proposed Uniform Property Dataset, or UPD) will be paramount. This might necessitate new training or a refresh of existing skills to ensure we meet the "product competency" requirements for these modernized assignments.

2. The New UCDP Experience and Feedback Loop

Our interaction with the Uniform Collateral Data Portal (UCDP) is also evolving. The Lender Readiness Kit (June 2024) highlights modernized UCDP functionality, including a "Redesigned SSR [Submission Summary Report] provides more pertinent information; available in PDF and JSON" and "Updated message severity and removed manual overrides" (p.11).

• For Appraisers: The SSR will become an even more critical feedback document. With lenders potentially losing the ability to manually override certain UCDP messages, the accuracy and completeness of our initial submission are more important than ever. The availability of the SSR in JSON format also signals a move towards more data-centric, automated reviews by lenders, a topic we touched upon when discussing why the lender kit is important for appraisers.

A significant development is the new "UAD Compliance API" (Lender Readiness Kit, p.10). This API will allow appraisal software vendors to "check UAD compliance early (prior to submitting to client)."

• For Appraisers: This is a welcome change. As your appraisal software integrates this API, it should increasingly help identify and flag UAD compliance issues before you submit the report. This has the potential to significantly reduce revision requests tied to dataset compliance. Tools that facilitate structured data capture from the outset, like Valuemate, could be particularly helpful in preparing data that aligns smoothly with these API-driven pre-submission checks.

3. Rethinking the Review Process: From Narrative to Discrete Data

UAD 3.6 aims to "Improve review process through data standardization," leading to "More discrete data – less freeform text – no more addenda," "Reduced subjectivity to enhance impartiality," and "Easier searchability and more automation opportunities" (Lender Readiness Kit, p.8). Lenders, in turn, will "Perform risk-based reviews including workflow routing and appraisal quality" (Lender Readiness Kit, p.16).

• For Appraisers: The shift away from lengthy, free-form narratives in addenda towards more discrete, standardized data fields means that precision and clarity within these fields are essential. While the goal is increased objectivity, our expertise will still be crucial to ensure that the discrete data accurately portrays the property and robustly supports our valuation conclusions. The increasing automation in lender review processes means our data must be clean, logical, and defensible. You can read more about this shift in our post on adapting to the data-driven URAR.

4. Handling Atypical Properties and Government Agency Appraisals with Greater Clarity

The new framework is designed to be more adaptable. UAD 3.6 "Simplifies documentation of atypical properties (e.g., 2- to 4-unit condos, site condos)" and "Includes required data for FHA, VA, and USDA and a new field to clearly identify government agency appraisals" (Lender Readiness Kit, p.7).

• For Appraisers: This is a notable operational improvement. The dynamic URAR, driven by data points rather than rigid forms, should make appraising diverse and atypical property types more streamlined. For appraisers who handle FHA, VA, or USDA assignments, meticulous attention to capturing and correctly reporting these newly specified data points will be a core requirement.

5. Software and Training: Foundations for the Future

The GSEs are emphasizing the need for technological and educational preparedness. Lenders are advised to "Obtain updated appraisal software for staff appraisers" and "Use the industry training to make sure your staff are educated about UAD 3.6 and are ready to use it" (Lender Readiness Kit, p.1, p.18).

• For Appraisers: The takeaway is clear: staying current with your appraisal software is non-negotiable. Software providers are actively working to support UAD 3.6, the new URAR, and integrations like the UAD Compliance API. Equally important is proactively seeking out and completing GSE-provided training and other industry educational offerings. This ongoing learning is fundamental to navigating the changes successfully.

The transition to UAD 3.6 is a comprehensive evolution, impacting not just the data we report, but fundamentally how we conduct our business, interact with clients, and manage our appraisal practice. By understanding these operational shifts now—many of which are driven by changes on the lender side—we can better prepare our own businesses for the evolving demands of the appraisal landscape. This proactive approach will ensure smoother transitions and help us maintain our relevance and value in a modernized industry. Keep an eye on GSE announcements, engage with your software providers, and continue the dialogue with your peers to stay at the forefront of these exciting changes.