Policy brief
UAD 3.6: What LOs, Realtors, and Appraisers Need to Know Before November 2
Fannie Mae's SEL-2026-08 clarified highest and best use reporting for UAD 3.6 and locked in the switchover date. The operationally significant change isn't HBU — it's how rental income gets reported.
Mortgage File IQ policy brief · September 28, 2026 · Educational only — not underwriting guidance.
The short version
Fannie Mae's SEL-2026-08 clarified how highest and best use (HBU) must be reported for UAD 3.6 and the new URAR — and locked in the switchover date. Starting November 2, 2026, every appraisal delivered to UCDP must use UAD 3.6. Until then, both UAD 2.6 and 3.6 are accepted. The operationally significant change isn't HBU — it's how rental income gets reported.
Primary source: Fannie Mae Announcement SEL-2026-08: Selling Guide Updates (Sept 2, 2026; updated Sept 23, 2026)
What changed
1. Highest and best use must be residential.
The property's HBU — as improved or as proposed — must be residential. The property must be primarily a 1-4 unit residential property, with any non-residential use subordinate. This replaces the prior "residential in nature" guidance.
Honest note: At least one detailed appraiser analysis argues the HBU portion is reporting housekeeping — documenting analysis appraisers were already obligated to perform — not a tightening of standards. The reporting expectation changed; the underlying analysis expectation arguably did not. Don't oversell this as a policy tightening.
2. Rental income reporting moved into the URAR.
The new UAD 3.6 URAR has a built-in rental information section. Use it. The legacy Form 1007 Rent Schedule cannot be delivered to UCDP as a standalone PDF, and it cannot be tucked into the UAD 3.6 zip package as a separate PDF either. Keep the 1007 in your loan file — just don't ship it to UCDP.
This is the change that will actually trip files up. Old habit: attach the 1007 PDF. New rule: rental data lives in the URAR rental section.
3. The deadline.
- Now through November 1, 2026: UAD 2.6 and 3.6 both accepted.
- November 2, 2026: UCDP requires UAD 3.6. No more 2.6.
If your appraisal desk hasn't switched, that's the conversation to have this week.
What this means for you
Loan officers: When you're reviewing a file with rental income, check that the rental data is in the URAR rental section — not just on a 1007 sitting in the file. A file can look complete and still fail UCDP delivery on this.
Realtors: If your buyer is relying on rental income to qualify, the appraisal has to carry the rental section under the new format. Flag it early with the LO so nobody discovers a gap at the closing table.
Appraisers: The HBU commentary needs to be present and consistent with the residential-use requirement, and rental income belongs in the URAR rental section — the 1007 stays in the workfile/loan file, not the UCDP package.
File-completeness checklist (UAD 3.6 era)
Use this before the file goes to underwriting or UCDP:
- Appraisal format: Is the report on UAD 3.6 (required for UCDP delivery on/after Nov 2, 2026)?
- Rental income claimed → rental section present: If rental income appears anywhere in the file, is the URAR's rental information section completed?
- No standalone 1007 in the package: Confirm the legacy Form 1007 PDF is not included as a standalone or embedded PDF in the UAD 3.6 zip package. (Retain it in the loan file.)
- HBU commentary present: Does the report state the highest and best use as improved (or as proposed)?
- HBU consistent with residential requirement: Does the commentary support residential HBU — primarily a 1-4 unit residential property, any non-residential use subordinate?
- Zip-package composition: No extra PDFs riding along in the UAD 3.6 package that UCDP won't accept.
Sources
- Fannie Mae SEL-2026-08: Selling Guide Updates — Sept 2, 2026 (updated Sept 23, 2026)
- FHA Single Family INFO messages (HUD.gov) — for related INFO memo tracking
- National Mortgage News breakdown of SEL-2026-08 HBU and rental-income changes (trade press, secondary)