Understanding the Shift: From UAD 2.6 to UAD 3.6 in Residential Appraisal

Hi folks, Daniel Yoder here. As a fellow residential appraiser navigating the currents of industry change, I wanted to take a closer look at something fundamental: the evolution of the Uniform Appraisal Dataset, specifically the transition from the familiar UAD 2.6 to the upcoming UAD 3.6. Understanding this shift isn't just about new rules; it's about grasping the 'why' behind the move towards a more data-driven and dynamic approach to appraisal reporting.

Looking Back: The Foundation of UAD 2.6

For years, UAD 2.6 has been the standard dataset underpinning many of our appraisal reports submitted to Fannie Mae and Freddie Mac (the GSEs). As outlined in the GSEs' documentation (like the October 2017 UAD Overview), its primary function was to improve data quality and consistency for loans delivered to the GSEs. Key characteristics included:

• Standardized Fields: It defined required fields and standardized definitions/responses for a key subset of data points, primarily on the four main appraisal forms (1004, 1073, 465, 2055).
• Specific Formats: It mandated specific formats for dates, values, abbreviations, and standardized ratings for property Condition and Quality.
• MISMO 2.6 Basis: It relied on the MISMO® Property Valuation Response Version 2.6 Schema Errata 1, a standard that is no longer actively supported by MISMO.
• UCDP Submission: Data conforming to UAD 2.6 was required for electronic submission through the Uniform Collateral Data Portal® (UCDP®).

While UAD 2.6 brought a level of standardization, industry feedback gathered by the GSEs (summarized in the Industry Stakeholder Input Phase 1 Executive Summary) highlighted limitations: ongoing issues with data standardization, shortcomings in the data collected, inflexible and static forms, and challenges capturing the nuances of diverse properties.

The Drivers for Change: Enter UAD 3.6

The development of UAD 3.6 and the redesigned Uniform Residential Appraisal Report (URAR) wasn't arbitrary. It's a direct response to the limitations of the old system and the evolving needs of the mortgage industry. As GSE experts noted in a September 2021 Q&A, the dataset hadn't been significantly updated since 2010, and the reliance on numerous, typewriter-era forms was cumbersome.

The core drivers for UAD 3.6 include:

1. Modernization: Aligning appraisal data with current technology and the increasing digitization of the mortgage process.
2. MISMO Alignment: Upgrading to a supported version of the MISMO Reference Model (v3.x), enabling better data interoperability.
3. Form Retirement: Replacing the multitude of static legacy appraisal forms with a single, dynamic URAR. You can read more about how appraisals will be ordered and identified in this new environment here.
4. Flexibility & Detail: Creating a structure that can better accommodate all residential property types and characteristics, including atypical properties that didn't fit neatly into legacy forms.

UAD 2.6 vs. UAD 3.6: Key Distinctions and Benefits

The shift from UAD 2.6 to 3.6 represents a fundamental change in how appraisal data is structured and reported. Here are the key differences:

• Scope: UAD 2.6 focused on standardizing subset fields on specific forms. UAD 3.6 aims to be a comprehensive dataset supporting a single, dynamic URAR that covers all residential property types eligible for GSE purchase. The report's structure is now driven by 6 key property characteristics rather than a form number.
• Format: UAD 2.6 relied on static forms with defined fields. UAD 3.6 utilizes a dynamic structure where only relevant data fields are presented based on the specific property and assignment type.
• Data Structure: UAD 3.6 emphasizes discrete, machine-readable data points over free-form text and extensive addenda. This facilitates more structured data collection and is intended to improve consistency and reduce subjectivity. This move towards structured data impacts how we approach key sections, as discussed here.
• Automation & Efficiency: The discrete data structure of UAD 3.6 lends itself better to automation, potentially improving review processes, minimizing manual data entry, and increasing overall productivity. The introduction of tools like the UAD Compliance API, mentioned in the June 2024 Lender Readiness Kit, aims to help appraisers check compliance before submission, potentially reducing revisions.

The Bigger Picture: UAD 3.6 and the Proposed UPD

It's important to understand how UAD 3.6 fits with the proposed Uniform Property Dataset (UPD). While UAD 3.6 defines the reporting standard (how data is structured in the final URAR), the UPD is envisioned as the standard for data collection itself, particularly for desktop and hybrid appraisals. You can learn more about the specifics of the UPD in this post. Together, they represent a concerted effort towards end-to-end standardization in property valuation. This synergy is explored further here.

This transition towards structured data and dynamic reporting aligns with technological advancements in our field. Tools that leverage LiDAR scanning and AI for automated measurements and feature identification, like Valuemate, are becoming increasingly relevant as they can directly support the capture of the discrete data points required by these new standards, streamlining parts of the workflow.

Looking Ahead

The move from UAD 2.6 to UAD 3.6 is more than just a version update; it's a significant evolution in appraisal reporting methodology. It shifts the focus from form-filling to structured data capture and analysis, aiming for greater consistency, flexibility, and efficiency across all property types. As we approach the implementation phases, including the Limited Production Period starting September 8, 2025, staying informed about these changes is crucial. Keep an eye on the official GSE resources and the implementation timeline to prepare for this next chapter in appraisal practice.