Navigating the UAD 3.6 Shift: Understanding Lender Preparations and Appraiser Impact

Hi, I'm Daniel Yoder. As we gear up for the significant industry evolution with UAD 3.6 and the redesigned Uniform Residential Appraisal Report (URAR), it’s crucial for us appraisers to look beyond our own processes. Understanding how our primary clients – the lenders – are navigating these changes is key to a smoother transition for everyone. With the Limited Production Period (LPP) for UAD 3.6 kicking off September 8, 2025, lenders are already in active preparation mode. Let's explore what these preparations entail and, more importantly, what ripple effects we, as appraisers, can anticipate in our daily work.

Why Lender Readiness Is Our Business Too

Lenders are at the forefront of implementing the new UAD 3.6 and redesigned URAR. Their readiness directly impacts how we receive appraisal orders, what data is expected from us, and how we communicate. The "Limited Production Readiness Overview for Lenders" makes it clear that the LPP is not "testing" but a real-world production environment experience. Lenders participating in this early phase, and eventually all lenders, are working towards leveraging benefits like a single URAR for all property types, a more streamlined review process with less free-form text, and potentially reduced revisions.

By understanding the steps lenders are taking, as outlined in resources like the June 2024 "Lender Readiness Kit," we can better prepare for the evolving demands and ensure we remain valuable, proactive partners. For a deeper dive into the LPP itself, you might find my colleague's post on understanding the UAD 3.6 Limited Production Period (LPP) insightful.

Key Areas of Lender Preparation

Lenders have a comprehensive checklist to work through, touching on operations, technology, and training.

1. Operational Overhauls:The "Lender Readiness Kit" (page 18) highlights that lenders are making broad operational changes. This includes:*   Adapting Loan Origination: Moving away from traditional form numbers to understand property characteristics using updated data requirements. This shift will fundamentally change how appraisals are ordered. They're also reviewing how appraisal fees appear on Loan Estimates and Closing Disclosures and reassessing mortgage insurance processes (Lender Kit, pg 15).*   Refining Order & Receive Appraisal Processes: Lenders will be updating engagement letters, potentially incorporating new common lender overlays. They'll also be focusing on assigning AMCs and appraisers with demonstrated product competency for the new URAR, measuring service-level agreements (SLAs) for turn times, and ensuring the type of appraisal received matches what was ordered. This means they'll need to learn how to read the new dynamic report and its billing implications. Reviewing feedback from the Uniform Collateral Data Portal (UCDP) and performing risk-based reviews will also be critical (Lender Kit, pg 16).*   Impacting Loan Delivery & Servicing: Correspondent lending will see new Submission Summary Report (SSR) requirements, and loan delivery will involve ULDD Phase 5 data points (Lender Kit, pg 17).

2. Technology and Vendor Coordination:A significant hurdle for lenders is ensuring their technology and vendor partners are ready.*   System Readiness: Lenders must verify that their Loan Origination System (LOS) providers have made the necessary system enhancements to accept and process UAD 3.6 data (Limited Production Readiness Overview, pg 1).*   Vendor Testing: They are expected to conduct thorough workflow and process testing with all their vendors, including appraisal firms and AMCs (Lender Kit, pg 19).*   Internal and External Training: Lenders are responsible for educating their staff about UAD 3.6 and the new URAR, utilizing industry training provided by the GSEs (Limited Production Readiness Overview, pg 1). The GSEs are even providing a "User’s Guide to the New Uniform Residential Appraisal Report (URAR)" starting Q4 2024 (Lender Kit, pg 21).

3. Preparing for the Limited Production Period (LPP):To participate in the LPP starting September 8, 2025, lenders must demonstrate comprehensive readiness. This involves:*   Reviewing the "Lender Readiness Kit" and the "Limited Production Readiness Overview for Lenders."*   Implementing necessary operational changes.*   Ensuring staff, vendors, and appraisers are trained and ready to use UAD 3.6 and the new URAR.*   Submitting a "Lender Readiness Questionnaire" to the GSEs for approval.

What This Means for Appraisers: Anticipating the Impact

Lender preparations will inevitably influence our work. Here’s what we can expect:

• New Ways of Ordering Appraisals: With the retirement of form numbers, lenders will order appraisals based on property characteristics. We discussed this in detail in our posts on ordering appraisals without form numbers and how UAD 3.6 data defines property types in the new URAR. Expect a learning curve for lenders too, so initial orders might require more clarification from us.
• Evolving Data Expectations: The push for "more discrete data – less freeform text – no more addenda" (Lender Kit, pg 8) means our reports will need to be highly structured and data-rich. Lenders might also update their engagement letters with specific overlays (Lender Kit, pg 16).
• Emphasis on Upfront Compliance: A key benefit for lenders is the appraiser's ability to "check UAD 3.6 compliance rules with the GSEs before sending you the report" (Limited Production Readiness Overview, pg 1). The "Lender Readiness Kit" (pg 10) mentions a "New UAD Compliance API" that appraisal software vendors will access. This means a greater emphasis on getting the data right the first time to reduce revisions.
• Changes in Submission and Communication: As lenders update their systems and work with their AMCs, we might see changes in how appraisal orders are managed and how reports are submitted.
• Shared Learning Curve: Lenders will expect their appraiser partners to be equally knowledgeable about the new URAR and UAD 3.6, especially if they are involved in LPP assignments. We should be leveraging the same GSE training resources.

Navigating the Shift Together

The transition to UAD 3.6 and the redesigned URAR is a collaborative effort. Lenders are undertaking significant operational and technological shifts. As appraisers, staying informed about these preparations allows us to adapt our practices, anticipate new requirements, and continue to provide high-quality, compliant appraisal services.

Tools designed for a data-driven environment can be invaluable during this transition. For instance, at Valuemate, our app is built to streamline the collection of property data, automatically generating 3D models, calculating square footage according to ANSI Z765 standards (a critical component you can read more about in our post on why ANSI Z765 compliance is crucial), and structuring key report sections. This can help ensure the discrete, accurate data lenders will increasingly rely on is captured efficiently.

By understanding the lender's journey to UAD 3.6 readiness, we can better align our services and solidify our role as essential partners in this modernized appraisal landscape. Keep an eye on GSE announcements and continue to engage with educational resources to stay ahead of the curve.