Appraiser Update
Welcome to our Q1 2025 Fannie Mae Appraiser Update.
Since the announcement that we are updating the Uniform Appraisal Dataset (UAD), appraisers have been asking for a preview of what the new report will look like. In this edition we share how appraisers can get a first look along with some other important information about implementation of UAD 3.6.
We also provide guidance on how to determine condition, quality, location, and view ratings, as well as an overview of our new definitions of floor plan and sketch.
Another article unpacks a December update to the Fannie Mae Selling Guide regarding market change (time) adjustments.
As always, we invite you to share what’s on your mind, submit feedback, or ask questions about appraisal topics using the link at the bottom of this newsletter.
Collateral Policy Team
Fannie Mae
The Future of Residential Appraisals: A First Look at the New URAR
Soon the mortgage industry will migrate to the new Uniform Residential Appraisal Report (URAR) and the updated Uniform Appraisal Dataset (UAD 3.6). This is an pivotal time in our appraisal modernization journey.
The most significant change is the retirement of the legacy appraisal forms and form numbers. Yes, you heard correctly! No more forms or form numbers. Going forward, there will be one dynamic URAR for all residential property types, including single family, 2- to 4- unit, condo, manufactured, and co-op. The new process will accommodate traditional, exterior only, desktops, and hybrids appraisal assignments when applicable. Even those additional client requests, such as limited marketing or exposure time values, cost to repair, and government agency requirements are now part of this single reporting process.
The best part is the adaptive nature of the report. Conditionality drives what sections and information appear in the final output, eliminating the need for multiple forms. The final report will only display what is relevant to your appraisal assignment and show the actions you have taken to develop the appraisal. The result will be a uniquely designed report for each subject property that best communicates its characteristics, and the work performed.
URAR Sneak Peek
Since this reporting structure is brand new, we received questions from appraisers asking to see it or practice using it. While appraisal software vendors are not quite ready for their big reveals, we do have a way for appraisers to see how the finished appraisal report will look.
Recognizing no two reports will look the same, Fannie Mae has published sample appraisals to illustrate various possibilities. We encourage appraisers to go to Fannie Mae’s UAD webpage and view all twelve sample reports found in Appendix D-1 to get a general idea of what to expect.
View URAR Sample Scenarios
- Go to the UAD webpage.
- Scroll down to the UAD Documentation section.
- Select Appendix D-1: URAR Sample Scenarios and XML Files.
Note: This will start the download process. - Once downloaded, open the zip file folder and select a sample scenario from the list.
Note: Appraisers will want to view the PDF version.
Also available in the file folder is the D-1 URAR Sample Scenario Matrix. Use this spreadsheet to quickly identify key characteristic of each scenario. For example, Single Family 3 (SF3) has an ADU in an outbuilding, while Single Family 4 (SF4) has an ADU in the basement of the primary dwelling. Condo1 is a sample of a hybrid appraisal while Condo2 is a desktop appraisal, and so on.
Single Family Scenario 5 (SF5) is the best representation of how a typical straight-forward appraisal assignment will display in the new URAR. Keep in mind, each sample scenario was thoughtfully crafted to display as many different appraisal variations as possible to give appraisers and users of appraisal reports the full spectrum of reporting capabilities.
As you begin to prepare, we ask that you take the time to review each sample scenario. Given your experience as an appraiser, we think these visual aids will help provide greater context into the coming changes. The sample appraisal reports are intended to illustrate how the new reports display information and demonstrate the diversity of fields available for appraisers to use.
Countdown to the New URAR
Now you’re probably asking: how much time do I have? Review the upcoming milestones below and view the detailed timeline for more information:
- Sept. 8, 2025: Limited Production Period begins
- Jan. 26, 2026: Broad Product Period begins
- Nov. 2, 2026: Mandate – all lenders must use UAD 3.6 for all new submissions
- May 3, 2027: Retirement of UAD 2.6
The UAD webpage includes a detailed implementation timeline.
Definitions of Sketch and Floor Plan
In February, we added the definitions of footprint sketch and floor plan to the Selling Guide glossary:
Footprint sketch
A footprint sketch must be software-generated (not hand drawn) and include the following:
- all exterior wall dimensions,
- all levels of the dwelling, and
- the calculations that demonstrate how the square footage(s) was derived.
A separate footprint sketch including all exterior dimensions and room labels must be provided for each additional structure.
Floor plan
A floor plan must be software-generated (not hand drawn), show the exterior footprint and interior layout of the dwelling unit(s) and include the following:
- all exterior wall dimensions,
- all interior walls, doorways, staircases, exterior ingress/egress, and labels for each room,
- all levels of the dwelling, and
- the calculations that demonstrate how the square footage(s) was derived.
We require a floor plan for all property data collections, hybrid appraisals, and desktop appraisals. If the layout of the dwelling unit(s) is atypical or functionally obsolete, we also require a floor plan for traditional appraisals. Otherwise, a footprint sketch is acceptable for traditional appraisals. For more information about when to provide a floor plan versus a sketch, see Selling Guide B4-1.2-01, Appraisal Report Forms and Exhibits.
Absolute vs. Relative Ratings
Our Appraiser Quality Monitoring (AQM) team routinely finds cases of appraisers smoothing their quality or condition ratings. An example would be when the appraiser rates the quality of all subject properties Q3, indiscriminately. In fact, we sent educational letters to more than 200 appraisers in 2024 (and 59 already in 2025) for this issue. It undermines the credibility of the appraiser and, if uncorrected, could lead to more serious consequences. This behavior may be evidence that the appraiser has determined property ratings on a relative basis rather than absolute. Selling Guide section B4-1.3-06, Property Condition and Quality of Construction states:
“When selecting the condition and quality ratings, an appraiser must … describe the subject property … on an absolute basis, meaning the property must be rated on its own merits. The rating should not be selected on a relative basis, meaning it is not selected on how the property relates or compares to other properties in the neighborhood. Additionally, the condition and quality ratings for comparable properties must be made on an absolute basis … These requirements also apply to all other ratings or descriptions, including the View and Location.”
To understand what we mean by “an absolute basis,” it may help to consider these common definitions (from Oxford Languages) of absolute:
- (adjective) viewed or existing independently and not in relation to other things; not relative or comparative
- (noun) a value or principle which is regarded as universally valid or which may be viewed without relation to other things
When determining the ratings, the appraiser must not take into consideration comparisons to other properties nor the characteristics of the neighborhood or market area. The only consideration is how the property characteristics align with our rating definitions.
One important outcome of correctly applying these policies is that, once the appraiser has rated a particular property, it will naturally continue to have the same rating throughout all reports. Thus, the ratings determined by the appraiser when appraising a subject property for a purchase will remain the same if that property is subsequently used as a comparable.
These same principles apply to View and Location ratings. For example, if a subject property is adjacent toa busy street, its location rating must be adverse. Comparables with similar traffic influence would also be rated adverse. It would not be correct for the appraiser to rate them all Neutral because that would be a relative rating rather than absolute.
Determining ratings on an absolute basis may be challenging for some appraisers because the principal approach to value for residential properties is the sales comparison approach which requires appraisers to consider the relative merits of the subject and the comparables. The key is for the appraiser to first determine the ratings on an absolute basis, then to determine the adjustments on a relative basis.
Market Condition (Time) Adjustments
In a recent internal analysis of appraisals with aged comparables performed during times of rapid home price appreciation (suggesting the need for time adjustments), we found that most comparables were not adjusted for time. When we asked appraisers why not, a common response is that their lender clients discourage time adjustments.
With that in mind, in December 2024 we added two provisions to the Selling Guide in relation to time adjustments.
First, we specified that “Failure to make market-derived adjustments including time adjustments when they are clearly indicated” is an unacceptable appraisal practice (Selling Guide section B4-1.1-04 Unacceptable Appraisal Practices). Our aim is to convey to lenders that they should expect and encourage time adjustments. This also gives appraisers a succinct, tangible policy statement that may help them defend the decision to make a time adjustment.
Market condition is always the norm and that analysis may require an adjustment. The next question is how to determine the rate of adjustment. There are many acceptable professional appraisal methodologies. We added this statement to illustrate the wide range of techniques available to appraisers:
“Time adjustments, or the lack thereof, must be supported by evidence. Use of home price indices (HPIs) to support time adjustments is consistent with our policy. The adjustment rates can also be determined through statistical analysis, modeling, paired sales, or other commonly accepted methods. The appraisal report must, at a minimum, summarize the supporting evidence and include a description of the data sources, tool(s), and technique(s) used.” (Selling Guide B4-1.3-09, Adjustment to Comparable Sales.)
This policy obligates the appraiser to provide support for the lack of a time adjustment:
- Stating that an adjustment was or was not made is not enough.
- The expectation is that the appraiser will always analyze market conditions to determine if time adjustments are needed and will always disclose how the determination to adjust or not adjust was made, and at what rate.
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