Freddie Mac on the strategic shift of UAD 3.6

HousingWire

On today’s sponsored episode, Editor in Chief Sarah Wheeler talks with Daniel Miller, Senior Director, Provider Strategy and Distribution at Freddie Mac, about the new UAD 3.6 update and the strategic shift for lenders, appraisers, AMCs and more.   Related to this episode:   UAD 3.6 Information & Updates  https://sf.freddiemac.com/tools-learning/uniform-mortgage-data-program/uad?utm_source=housingwire&utm_medium=paid-content&utm_campaign=housingwire_sing-fam_sig-prog_risk-resil_sf__traffic_spon-mess_url-link_podcast_hw-spon-pod-uad-lp  Freddie Mac UAD 3.6 Learning Resources  https://learn.sf.freddiemac.com/ces/totara/catalog/explore.php?catalog_fts=UAD  HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠  https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q  HousingWire Mortgage Banking Summit – October 1  https://events.housingwire.com/mortgage-banking-summit-2026?utm_source=housingwire&utm_medium=website&utm_campaign=hwd_podcast_0727  More info about HousingWire  https://lnk.bio/housingwire   Want more from Sarah? Don’t forget to subscribe!  https://www.housingwire.com/subscribe/   The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate.

Transcript

00:08Welcome, everyone. My guest today is Daniel Miller, Senior Director, Provider Strategy

00:13and Distribution at Freddie Mac. To talk about the new UAD 3.6 update and how Freddie Mac is

00:19helping lenders, appraisers, AMCs, and everyone else involved in the appraisal process understand

00:25this strategic shift. Daniel, welcome to the podcast. Thanks for having me. I appreciate it.

00:31Thank you for being on. Such an important topic. So let's kind of start broad. And, you know,

00:37for listeners who may not be living and breathing appraisal modernization every day, what is UAD 3.6

00:43and why is it one of the most significant changes the mortgage industry has seen in years?

00:48Great question. So eight years ago, we went really all over the country on a roadshow to lenders.

00:55To talk to lenders about what pain points do they see in the appraisal process. And we learned a lot

01:01of things. We learned that the review process took too long, that they can't find particular things in

01:07the appraisal report that they need to review. And also the back and forth between the underwriter

01:14or other collateral reviewer and the appraiser was happening too often. And so we really went down

01:21this journey with UAD 3.6 is the answer to some of those pain points in the process.

01:27And I think as a result of proceeding with UAD 3.6, some of what we ended up with is

01:36really more

01:37consistency. So if you think about the number of appraisal forms that exist today, there's a lot

01:43of different numbers involved. And Freddie Mac has our numbers. Other investors have numbers

01:48that may differ. It's a little confusing. And so the new approach with UAD 3.6 is there's one report,

01:55the Uniform Residential Appraisal Report. That report covers all property types. It's dynamic.

02:01It can be adjusted over time, but also adjust to the property. So different property characteristics

02:07may cause different sections to pop in out into the report for the appraiser to fill out and also for

02:15the reviewer to take a look at. So that helps in really the understanding of the report and

02:20really makes the sections, regardless of property type, be much more similar than in the past.

02:26So it covers co-ops, manufactured home, two to four units that had previously not been included in the

02:33prior UAD version. And so that really focuses on all the data standardization capabilities that came

02:42about with the prior UAD 2.6 are now available with UAD 3.6 across all property types. And so

02:50really

02:51some great, powerful benefits. Amazing that you started the listening and the formulating of this

02:58years ago, right? This is a huge industry. There's a lot of players here. Just underlines to me what an

03:04incredible undertaking it is anytime you make a change in a form or in a process. So maybe talk

03:12about what's the deadline for this? What's the mandate? Yeah, the deadline is November 2nd.

03:19And that deadline is really nuanced. So we really want to kind of step through what November 2nd really

03:26means. On November 2nd, any new appraisal report submitted to UCDP can only be in UAD 3.6. So if

03:37let's say you had an appraisal that was submitted the week before under the legacy report, so UAD 2.6,

03:46you can resubmit that after November 2nd, no problem. You can submit that through May of next year.

03:52So no concerns there. But if you have never submitted an appraisal report and you come to UCDP

03:58on November 2nd, you can only upload or submit a UAD 3.6 appraisal report. So that's really key.

04:06And what it really means is that a lender needs to work with their appraisal providers and everyone

04:13else that may be part of their process. So maybe their direct appraiser panel, maybe their appraisal

04:17management company, they may use multiple, they may have some type of order management system

04:23involved, their loan origination system. All of these various players, as you mentioned, it's a

04:29large ecosystem. There's a lot of impacts across multiple layers of parties. And they have to make

04:35sure that the communication is clear and that they have a clear pipeline going into November 2nd.

04:40It's really, really important that they understand and they begin ordering early because you don't

04:47want to place a report with the appraiser a week or two prior to that November 2nd date. Place it

04:52as

04:532.6. Maybe the appraiser goes on vacation. Maybe the borrower goes on vacation. A lot of things can

04:59happen. And so you want to make sure that you have a clean pipeline of those 2.6 appraisals that

05:05all of

05:05them have been submitted to UCDP prior to November 2nd. Many people could think of UAD 3.6 as simply

05:13a

05:13new appraisal report, you know, but what's the broader problem or the opportunity, right, that Freddie Mac

05:19is trying to solve for through this modernization effort? Great question. Each form really had

05:26different info on different pages in the past. With the new uniform residential appraisal report,

05:32everything's all in a really standardized way. And so even though there's some dynamic components,

05:38the standardization and also the addition of more discrete data elements, it allows a number of

05:46powerful things in terms of risk management, the ability to have more automated rules. I know a lot

05:53of lenders want to get away from manual checklists and stare and compare. A lot of the ways that QC

05:58may

05:58have happened in the past. And some of the additional data that is available within the form

06:04as a, or the report as a discrete data element helps to power that. So in the past, if you

06:10think of

06:11looking at a 30 or 40 page appraisal report and digging and mostly narrative commentary to find

06:18particular pieces of information that the lender needs to understand really the risk picture within

06:25the appraisal, they, they spend a lot of time with that. And sometimes they don't find the necessary

06:30information. And so they go back to the appraiser and they may be asking the appraiser where it is.

06:35And the appraiser is spending time really saying this is on page 12, or this is on page 18 at

06:40the top

06:40of the page. And so what this powers is really the ability to have a lot more of that in

06:48clear sections

06:49and clear comments that are directly tied to the data that it pertains to, and also allows

06:56really dynamic capability where in the past, you may have a comment that starts out with three or

07:03four words, and then just says, see addenda. And then the reviewer needs to look in the addenda

07:09of maybe dozens of pages and figure out, okay, where in the addenda is this particular comment section

07:15continued. And that is really complex to do on a daily basis with a number of appraisals looking

07:22at all different appraisers work that do it differently. And so what this new URAR allows is

07:28really for those, those comment sections to grow and to always be in the place where they're very

07:34familiar with the, with the subject matter. So the appraiser, the reviewer and others involved in the

07:40process really have a much more clear way to, to read and understand the report. And as I mentioned,

07:46our roadshow eight years ago, part of what we did as part of all of that work is take this

07:52new URAR,

07:53review it with underwriters, review it with borrowers, review it with appraisers, get their feedback. And

07:59what we heard resoundingly was it is a much more clear report and offers a lot of benefits to everyone

08:07in the process. That's sort of, you know, listening to the customers and what they need

08:12is so important, especially when, when you're making this major change, because like, if you're not solving

08:16a problem for them, you know, you know, what's the point of all of the, you know, time and effort

08:21invested

08:22in this, of course, they're, you know, they're going to need to use it. It's not like they can decide

08:25yes or no,

08:26but like to understand exactly what you're trying to solve is the very first thing, you know, with, with a

08:31new tech

08:32product, but you know, you didn't have to do that. Right. So, um, kudos to you guys for, for really

08:37understanding what it was that the customer was struggling with. Absolutely. And, you know, with

08:45being such a transformational change, I think one thing it's allowed us to do even beyond just the

08:51initial subset of audience that we went to is really work with the appraisal management companies,

08:56all of the array of technology providers from the folks that are working directly to power the

09:02software for appraisers, to those that are helping lenders, not only facilitate the ordering of the

09:08appraisals, but the routing of them to appraisal management companies, the review of the process,

09:15having rules engines embedded. It is really allowed us to speak with all of these various parties that

09:23are all supporting the lenders and make sure that they understand U83.6. They understand the benefits

09:30and really they're supporting some of the underlying components that power and make these benefits

09:36possible, uh, and make it available as, as soon as possible for the industry and all the various

09:43parties involved. What do you, what's your sense of the industry readiness for this change?

09:49Great question. Uh, this is something that I think because of the, really the power of all the

09:56benefits and also what it requires to get there, it's taken the industry a little bit longer to

10:02implement than, uh, what many may have expected. And so it took the appraiser software providers

10:09a little bit longer to get the appraiser software out there and available. Uh, we had a fairly rigorous

10:16process, uh, within Freddie Mac and other investor to ensure that we were verifying the data, uh, to

10:23make sure that there were not data integrity issues and other things that would complicate the process

10:29and make sure that really we're delivering the benefits that are necessary. And as part of that,

10:35uh, it kind of delayed the ability for maybe some lenders to roll this out earlier.

10:39Um, and so now what we're seeing is there's widespread adoption in terms of appraiser

10:47availability. If you look back over the last 10 years of appraisal reports submitted to UCDP,

10:53we've had between 30 and 40,000 appraisers that have done all of those appraisal reports. And if you

11:00think about that today, we already have between 35 and 45,000 appraisers that have access to this

11:07software. So based on the software that's available in the market today, we can support all of the

11:12appraisals that we've gotten through UCDP over the last decade. So that's, that's really important

11:17for lenders to know. Another thing that's really important for lenders to know is there's a learning

11:23curve involved. This software, even though the appraisal analysis has not changed the appraisal software

11:30and what buttons need to be pushed and when to push them and what sections that report certain data

11:36elements may be in, some of that is shifted. The appraiser needs to get their bearings on how to

11:43use their software and really get familiar with it. And so they can do this a number of different ways.

11:50One of the ways is they can take training with their continuing education provider that they have

11:56available today. Uh, we have, uh, ensured that there is GSE approved UAD 3.6 training available

12:03with dozens of the continuing ed providers out there in the market today that appraisers are

12:08already dealing with. There's also free training. Uh, they may be able to get it from their appraiser

12:13software company. Uh, and that may, uh, go more in depth of how exactly UAD 3.6 works within their

12:20software. That's a huge component that every appraiser should, should be doing today. If they haven't

12:26already, another, uh, free training out there available for anybody in the industry is a four

12:32hour training that's available on Freddie max UAD website. And that training has 17 different modules.

12:38It's it's extensive and it covers a lot of different pieces and you can take it at your own pace

12:44and 17

12:46modules. You can go into the modules that, uh, are more impactful to your specific role in this process.

12:52Appraisers can take it. AMC employees that may be doing a review or have other impacts in the

12:58process. They can go through this training for free as well as any lender mortgage insurer.

13:03Anybody that's in the industry that has a need for this information, uh, is welcome to take that

13:08training for free on the free Mac, uh, UAD website. And then there's so many other parties. There's tons of

13:15webinars that we are offering the industry. And, uh, really we're offering a lot of this because

13:22we want to make sure that the industry has the tools that are available out there to help you

13:28understand it, help you plan for it, and also help execute on what we really don't want to see come

13:34November 2nd is for any lender to have a liquidity challenge. And so we want to make sure that on

13:40November 2nd that Freddie Mac is available for you to deliver your loans to. And so making sure that

13:47you're able to comply with a UAD 3.6 mandate early and work with your providers to do that is

13:53really,

13:54really important. Agreed. I, as you're talking through this, I'm like, it just speaks to the

13:58importance of, of jumping in now if they haven't already and, you know, getting the training and

14:04realizing what they don't know so that they can get that extra training. So there's, you know,

14:08so it's seamless for everybody on November 2nd and going forward. So, you know, you've said that

14:13there's a lot of people who are already doing this, right? Appraisers, lenders, technology,

14:17already up and running, delivering loans with the new UAD 3.6 form. What are you hearing from the

14:22early adopters? Yeah, we're hearing so much. And it, just to think about the numbers a little bit,

14:30there's nine appraiser software companies that are already verified by the GSEs to do this. There's 10

14:37order management systems out there that are actively processing UAD 3.6 appraisal reports

14:43today. There's a dozen or so loan origination systems that are actively supporting lenders

14:49in production with these UAD 3.6 appraisal reports. There's 45, almost 50 appraisal management companies

14:57that are out there actively processing UAD 3.6. There's over 110 lenders out there that are doing

15:04this today. We'd love for that number to be higher, but there's 11 aggregators that are also

15:10supporting this in production. So actively out there, in addition to just selling business directly

15:16to Freddie Mac, but you can sell it to an aggregator and there's widespread support for that already

15:21today. So it's really important to kind of make sure folks are aware of that. So what we're hearing

15:28from early adopters is there is a learning curve. There's a learning curve between three and five

15:34assignments for appraisers involved, for the collateral reviewers involved. There are some

15:40nuances that we've seen. We have seen a trend where folks have gotten used to over the last 15, 16

15:47years

15:48that the XML file is the final appraisal report in the current UAD 2.6 format. That's what gets uploaded

15:56to

15:56UCDP. That's a change for UAD 3.6. With UAD 3.6, it is the zip file. There is a

16:03zip file that includes a PDF.

16:05There is an XML file of the data. And then there is an image folder that includes all the various

16:11images

16:11in their raw format that are included in that appraisal report. And so it's important that lenders know that

16:18the file that must be submitted to UCDP is that complete unaltered zip file that is created by the

16:26appraiser's software. And so some things to know about that are the zip file can be up to 60 megs.

16:35That's a fairly large file for lenders that may have relied in the past on emailing files around

16:42between their AMC or appraisers for their reviewers or others. You really want to look at leveraging

16:48technology. You don't want manual processes to create liquidity challenges for you come November

16:552nd. So it's important to embrace technology in this process and make sure that you really have a way to

17:03technologically send the files around between parties that not only protect your data, but it makes

17:08sure that you're not going to have a challenge come November 2nd, getting the files through UCDP

17:13and getting the responses to your team to look at. And also, just as we as we think a little

17:19bit more

17:19about the learning curve, it's important that since there is a five assignment or so learning curve,

17:26you want to start early because you want to digest this learning curve and this experience that you're

17:32going to have in the beginning, you're going to want to digest that in small doses. So it's important that

17:37your reviewers and anyone else in your process, they don't have to learn and deal with the learning

17:43curve on 100% of their assignments at a time. They want to do it just like appraisers. They want

17:49to do

17:50it in small doses. You want to do that at five or 10% of your business, get familiar with

17:55it, get through

17:56the learning curve and get through it with each of your underwriters. So that way, when you get to

18:02November 2nd and you're doing it at 100%, everyone has that learning curve out of the way. And that's

18:08really a great thing to keep in mind as you look towards your implementation and execution plan.

18:14Those are really very practical things, right? Very important. If you could leave listeners with just

18:21one message about UAD 3.6 and Freddie Mac's role in helping modernize appraisal processes, what would you

18:27want them to remember about it? It's all about the lender. UAD 3.6 is to improve your process.

18:33So it mitigates your pain points that you've had over the last 15 or 16 years. And a lot of

18:39folks may

18:39think that the appraisal space is really ideal the way it is today. What we heard eight years ago and

18:46what we continue to hear today is that there are really some impactful challenges that lenders are

18:51facing. And so UAD 3.6 is here to help. And also it's important that you plan, you prepare, you

19:00train,

19:01test, implement all of the resources that we've kind of talked about here. And then there's plenty of

19:07other resources available on our UAD website at FreddieMac.com. And I also want to just touch briefly on

19:14some of the other things that we've done recently. So we rolled out uniform property data report.

19:22June 30th was the mandate for that. That was something that was really an answer to some

19:26similar challenges that lenders have faced with the appraisal process. They were also facing with

19:32the property data report process. And so we enhanced that process as well. Daniel, you have given us so

19:38much valuable information in this one short podcast where, you know, just the first of all,

19:44the vision that you guys had, how you guys have executed that, and then really what the industry

19:49from lenders to appraisers to their tech vendors, partnerships, you know, what everybody needs to be

19:55focused on and doing as they run up to this. So thank you so much for walking us through all

19:59of that.

20:00Great. Thanks for having me. I appreciate it.

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