The UAD 3.6 Deadline is Coming. Most lenders Aren't Prepared

It's Halloween. You're dressed to impress in your best Bill Pulte costume when you feel a sinking pit in your stomach. You just realized that UAD 3.6 hits GSE loans starting Nov. 2 & you are not ready. You had to be ready in early October, but rates dropped & you were so busy!

That was the real deadline for UAD 3.6, the biggest overhaul of the appraisal form in roughly 40 years. Any loan delivered to the GSEs on or after Nov. 2 must contain a UAD 3.6 appraisal. But uh, there's a problem: by nearly every account I've gathered — appraisal executives, lender execs, tech providers — huge swaths of the industry are treating this like a next-quarter problem. And it just isn't.

"It is very much an everyone's-waiting-until-the-last-minute sort of thing," said Brian Zitin, CEO of appraisal tech firm Reggora. Across the hundreds of lenders on Reggora's platform, fewer than 10% have ordered a UAD 3.6 appraisal so far, he told me.

The AMC side may be worse. One retail lender CEO told me his shop's surveys & conversations suggest only about 30% of AMCs are even working on the transition right now. And when his team presses the ones who claim they'll be ready, "it doesn't sound like they truly are doing what is necessary to be ready."

"I'm not saying this as an alarmist," he said. "I think it's something that people are overlooking."

For Mortgage Scoop Insiders, we’ve got the full breakdown on what you need to do to be ready for UAD 3.6. Also in today’s edition: VantageScore being used (or not) in the wild, Keller Williams cuts a deal to acquire one of Rocket’s top referral partners, several ex-CFPB enforcement officials start a new law firm, banks win big in mortgage in Q2 & more!

Plenty of LOs would love to use VantageScore to close more loans, but it’s not especially practical at the moment. 

As I’ve previously reported, there are strange cases where a borrower sees a 130-point difference, but those seem pretty rare (thank you everyone who has sent me comparisons!).

“A few of our LOs in our office have pulled some Vantage, & there's some that come back nearly the same, within a 10 point or 20 point threshold,” said UMortgage’s Tyler Hodgson. “But there are many that I've heard are 40, 50, or 60 points better. I would say the majority are materially better [than FICO]. A borrower in a lower credit range is going to see more impact — if you're a 740 then your Vantage comes at 750. You're not seeing a 740 go to an 820. But if you're a 660, maybe you see that come at a 710.”

The initial rollout was a bit tricky, he said. But once it was set up, the scores could be pulled directly through lenders he works w/, like UWM or NewRez. "You just pull one credit report & it shows you all the FICO scores and all the Vantage scores on one report. You decide which model to base your pricing & your lock on." 

“The real downside right now—the reason we're not using it a lot or seeing it a lot—is I know UWM only allows it on 80% LTV conventional,” Hodgson said. “A lot of times those borrowers might be your higher 700 FICO scores anyway. So the Vantage score doesn't provide them much advantage. UWM also takes a 20 point score adjustment there.”

Overall, he said, “It's a very small portion of the population that’s got a 600 or 620 FICO, and is doing 20% down.”

Don’t expect much Vantage impact this year or early next year…

Let’s start w/ what’s actually changing. In plain English: UAD 3.6 replaces the free-form, PDF-and-commentary 2.6 appraisal report w/ a standardized, data-rich format. There's hundreds of new fields covering granular property characteristics like porch heights & stuff like that. The GSEs' goal is to feed their risk engines cleaner data to power decisions like appraisal waivers vs. full appraisals vs. hybrids, all of which should let lenders underwrite collateral faster.

For appraisers, it means relearning a workflow they've run on muscle memory for decades. We're talking new inspection requirements, new form software, new delivery format (a ZIP file replaces the old XML). 

The form software isn't quite there yet, sources said. Cotality & First American control roughly 80–90% of that market, & while both have been verified by the GSEs, appraiser forums are full of complaints about bugs & glitches. One appraiser told me he’s attempted three separate 3.6 reports, hit so many software problems that he completed one of them as a 2.6 instead. Zitin said Reggora, newly GSE-verified for form software, plans to give its version away free "just to make it smoother for everyone involved."

Expect longer turn times & higher fees out of the gate. The co-owner of an AMC & staff appraisal firm in the Midwest told me the first 3.6 report one of his staff appraisers completed took 3x as long as a 2.6. With repetition, that appraiser is now down to about 25% longer.