Appraiser’s Perspective on the FHFA Valuation Modernization Summit
The Federal Housing Finance Agency (FHFA) held its second Valuation Modernization Summit on Feb. 26 in Washington, D.C., bringing together industry stakeholders to discuss the future of real estate valuation. The Appraisal Institute was represented at the Summit by Immediate Past President Sandra Adomatis, SRA; Director of Government Affairs Scott DiBiasio; and Senior Manager of Federal Affairs Brian Rodgers.
From an appraiser’s standpoint, the discussions underscored significant shifts in valuation process and procedure, the growing reliance on alternative appraisal processes and the challenges these changes pose to the profession. One of the primary topics was the expanded use of inspection-informed appraisal waivers to reduce borrower costs. While this initiative enhances efficiency, it also raises concerns expressed by the Appraisal Institute about the diminishing role of appraisers in the valuation process. Similarly, the increased adoption of hybrid appraisals may accelerate turnaround times but brings into question the reliability of third-party data collectors who lack the expertise and accountability of licensed appraisers.
A key focus of the Summit centered around the rollout of the Uniform Appraisal Dataset (UAD) version 3.6 and the new Uniform Residential Appraisal Report (URAR). These updates aim to improve transparency and consistency in appraisal reporting but will require appraisers to adapt to new reporting standards. Limited production use of UAD 3.6 is set for September 2025, with full adoption by November 2026 and a complete phase-out of UAD 2.6 by May 2027. While training programs, including those to be released by the Appraisal Institute, will be available to support this transition, some participants expressed concerns that certain appraisers may be unwilling to adopt the new system. As a result, these appraisers may choose to stop working with GSE lenders altogether, potentially reducing the number of qualified professionals.
Another focus of the summit was FHFA’s collaboration with Fannie Mae, Freddie Mac, the Federal Housing Administration, and bank regulators to standardize reconsideration of value (ROV) policies. While standardization promotes consistency, appraisers must be vigilant to ensure that these policies do not compromise their independence or lead to undue pressure to adjust values without sufficient market support. FHFA also confirmed that no new appraisal-related rulemakings are currently under consideration, providing a temporary period of regulatory stability for the profession.
Concerns were also raised regarding appraisal quality and the perceived gaps in appraisers’ support for adjustments related to time and market conditions. The GSEs suggested that app-based data collection tools might provide more accurate property condition reports than traditional appraisals. This was countered by Appraisal Institute representatives and other participants as overlooking the critical role of an appraiser’s expertise, judgment, and ability to assess market nuances that automated tools cannot capture. Furthermore, reliance on third-party data collectors introduces risks, as these individuals often lack the comprehensive training, experience, and professional accountability that licensed appraisers bring to the valuation process.
The summit reinforced the GSEs’ long-term commitment to hybrid and desktop appraisals as solutions to reduce turnaround times, particularly during peak demand periods. While these models were valuable during the COVID-19 pandemic, their expanded use may limit opportunities for appraisers to conduct full interior inspections, which remain vital for identifying property conditions that automated systems or third-party data collectors might overlook. Additionally, concerns were raised about the regulatory oversight of property data collectors, with the National Association of REALTORS® suggesting state-based regulation consistent with the Appraisal Institute’s position to ensure proper training, insurance, and background checks.
As the appraisal profession navigates these ongoing changes, it is critical for appraisers to remain engaged in policy discussions, advocate for sound valuation practices, and ensure that modernization efforts do not compromise accuracy, integrity, or the essential role of appraisers in the mortgage lending process. The evolution of valuation should enhance, not diminish, the expertise and professionalism that appraisers bring to real estate valuation.