Mary Kay Scully: Prepare for Upcoming Uniform Residential Appraisal Report Changes
Mary Kay Scully is director of customer education at Enact, where she trains more than 35,000 mortgage professionals annually on topics including tax return review, fraud detection, process improvements and compliance. With more than 30 years of industry experience, she has held multiple leadership roles at Enact (formerly GE/Genworth) and began her career as a loan officer. She is former chair of the MBA of New Jersey Women’s Committee. The statements in this article are solely the opinions of Mary Kay Scully and do not necessarily reflect the views of Enact or its management.
Lenders have a big change coming their way. On Nov. 2, one of the most significant updates to residential appraisal reporting in years will be mandatory. Fannie Mae and Freddie Mac are modernizing appraisal standards through the new Uniform Residential Appraisal Report.
Market volatility, affordability pressures, and increasing regulatory focus on fairness and transparency have elevated the role of the appraisal in recent years, sparking a broader industry shift away from static, form-based appraisal processes and toward a more dynamic, data-driven, and standardized framework. With this new reporting, lenders must prepare for changes that will impact compliance, technology, workflows, and how appraisal data is interpreted across the organization.
Instead of waiting until November, lenders need to get up to speed on the changes now to prepare for what’s ahead.
What’s Changing
One of the most significant updates is the transition from multiple static appraisal forms, such as the traditional 1004 and 1073, to a single, dynamic URAR that adapts based on the property and assignment type. At the same time, the implementation of UAD 3.6 introduces standardized, field-level data definitions intended to improve consistency and usability.
The new framework is designed to support more structured data collection, enabling increased automation, analytics, and more efficient appraisal review processes. Reports will become assignment-driven, with sections that appear or expand depending on the property’s characteristics, whether that includes a condominium, multi-unit property, or accessory dwelling unit.
The updated reports will also combine narrative commentary with structured data elements. Instead of lengthy addenda separated from the main report, analysis and commentary will be embedded directly into the relevant sections, improving transparency and usability for both lenders and reviewers.
Operationally, these changes will require lenders to reassess their technology infrastructure and workflows. Loan origination systems, appraisal platforms, and review tools must be updated to properly ingest and interpret structured appraisal data outputs.
Underwriting and appraisal review teams will need training to navigate a more dynamic report format that may vary from one assignment to another.
Lenders also will need stronger alignment across appraisal management companies, technology partners, and internal teams to ensure consistent implementation and reduce operational disruption during the transition period.
For lenders, the implications are substantial. Appraisal reports will no longer follow a uniform layout, which could make manual review more complex without updated processes and tools. At the same time, structured data creates opportunities for automation, validation, and scalable quality control that were not so easy to achieve with traditional static reports.
While the transition will require upfront investment in systems, training, and operational readiness, it also positions lenders for long-term efficiency improvements and stronger risk management capabilities.
How Appraisals Function in Today’s Market
Even as reporting evolves, the fundamental role of the appraisal is still the same.
An appraisal is still an independent opinion of home value developed through analysis of market data, comparable sales, and property characteristics. Core components lenders rely on continue to include the property inspection process, market analysis, and the application of valuation methodologies appropriate to the assignment.
Appraisals also remain a critical part of underwriting and risk management. They validate collateral, support loan-to-value decisions, and provide an important layer of protection for both lenders and investors. And while borrowers typically pay for the appraisal, the lender is still the client of the report.
What is changing is not the methodology behind appraisals, but the way appraisal data is structured, presented, and reviewed. That distinction is important because many lenders may initially view the new URAR as simply a formatting update. In reality, the shift represents a broader move toward a more data-driven appraisal infrastructure aligned with evolving GSE expectations.
Lenders will need to bridge the gap between familiar valuation principles and a new reporting environment that increasingly relies on structured data, standardized definitions, and more automated review processes.
Communicating Appraisals in a More Transparent Environment
Although the new URAR is primarily an internal and operational shift, it will inevitably influence how appraisal results are presented to and experienced by borrowers. Appraisals are one of the most emotional and sensitive stages of the mortgage process because they are so closely tied to borrower expectations, financial outcomes, and closing timelines.
As appraisal reporting evolves, lenders should focus on setting clear expectations early on. Borrowers should understand that an appraisal is an independent, market-based opinion of value grounded in comparable sales and objective analysis, not a reflection of their personal investment, listing price, or unsupported upgrades. Remember in the case of a refinance the borrower’s home value is priced on love, memories, and a new roof.
Lenders also should prepare borrowers for reports that may look and feel different from past experiences. The updated reports may be more data-driven and less narrative-heavy, and the presentation may vary depending on the property and assignment.
Importantly, borrower conversations should stay focused on explaining outcomes rather than the report structure. Discussions should center on the factors driving the valuation, including comparable sales, market conditions, and property characteristics, rather than overemphasizing formatting changes.
Internal teams also must be equipped to handle questions confidently and consistently. Loan officers, processors, and support staff should be trained to interpret appraisal findings in plain language and address borrower concerns when reports feel unfamiliar or more detailed than expected.
This level of preparation can help ease any uncertainty. Appraisals can introduce some tension, particularly when value expectations are not met. Clear and proactive communication can help reduce confusion, prevent delays, and support a smoother closing experience. Lenders that prioritize clarity, consistency, and staff preparedness will be better positioned to maintain trust throughout the appraisal process.
The transition to UAD 3.6 and the new URAR represents a foundational shift from static, document-based appraisal reporting to a more dynamic, data-driven infrastructure. Lenders’ ability to align technology, workflows, and staff expertise with this new framework will make all the difference in their success. The sooner they start preparing, the smoother November will feel.
(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes submissions from member firms. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)
