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What do Fannie Mae and the standards say about using AI tools on UAD 3.6 reports?

“New 3.6 tools offer to fill in the form with AI, and some ask me to upload the order, the contract, or my inspection video. Is there official guidance on what I can put into these tools?”

Last checked: Oct 20, 2026. Guidance can change, so check the official pages linked below before relying on this.

Line numbers after AO-41 quotes are the printed line numbers in the official AO-41 PDF.

Plain-English answer

  1. Fannie Mae has published a short list of resources “for informational purposes only.” It is not a rule. Fannie says GenAI tools raise “important considerations around data privacy and the handling of non-public information (NPI).” Fannie also says these resources “are not intended to provide legal, regulatory, compliance or other professional advice or to establish requirements or standards for the use of AI,” and that appraisers “remain responsible for determining whether and how to use these technologies” [1].
  2. What Fannie points you to [1]:
    • USPAP Advisory Opinion 41 (AO-41), “Use of Technology in an Appraisal or Appraisal Review Assignment.” The Appraisal Standards Board adopted it on April 23, 2026 [1][2]. (See item 3.)
    • Fannie Lender Letter LL-2026-04, “Governance framework on use of artificial intelligence and machine learning” (April 8, 2026). Fannie says it “is directed to lenders,” but “many of the principles it describes may also be useful to appraisers” [1]. (See item 4.)
    • Your MLS terms of use. These “may include restrictions or considerations related to sharing data with AI tools” [1].
    • The AI platform's subscription agreement and terms of service. These “may describe how user-entered data is stored, processed, or used.” Many platforms also have privacy settings you can change [1].
    • Your professional liability (E&O) insurer, continuing-education providers, and conversations with your lender clients, AMCs and legal counsel [1].
  3. What AO-41 actually says [2]. AO-41 is Advisory Opinion 41, adopted April 23, 2026. It is guidance, not a new rule: it “does not establish new standards or interpret existing standards” (lines 2–3).
    • You can use AI. The question is how. “The core issue is not whether technology can be used, but how its use aligns with the appraiser's responsibility” (lines 46–47). USPAP “does not prohibit the use of a tool simply because the appraiser has limited control over its internal process” (lines 411–413).
    • You, not the tool, are responsible. “A tool cannot comply with USPAP.” If you rely on a tool's output “without applying [your] own analysis,” the work “does not comply with USPAP” (lines 56–62). “The appraiser remains responsible for determining whether the output is accurate, relevant, and appropriate for the assignment” (lines 106–108).
    • A four-step check before relying on output (lines 159–167): 1. evaluate the tool; 2. evaluate the data it uses; 3. when necessary, perform the analysis independently; 4. evaluate whether the output is credible for the intended use. You don't have to “reverse engineer a tool's internal processes,” but you need “the knowledge and experience needed to use the tool competently” (lines 170–172). Using output you don't understand “may constitute a violation of the COMPETENCY RULE” (lines 83–86).
    • Confidential files and AI tools. This is the part that answers the question above.
      • “When using tools, the appraiser must take reasonable steps to prevent improper disclosure of confidential information or assignment results” (lines 304–305). That duty is “no different” from the rules that apply without tools (lines 305–306).
      • “Before entering confidential information into a tool, the appraiser must confirm that doing so does not violate the ETHICS RULE” (lines 311–312).
      • “If the appraiser cannot take reasonable steps to safeguard confidential information and assignment results from unauthorized access, such information must not be entered into the tool” (lines 316–318).
      • If a tool “stores or transmits data outside the appraiser's control,” you must check that using it fits client conditions and USPAP confidentiality rules (lines 326–328).
      • Knowingly using a system that “may inappropriately disclose or transmit confidential information” “may constitute gross negligence in violation of the ETHICS RULE” (lines 328–331).
      • Negligent or uninformed use that leaks information “could violate the ETHICS RULE and/or the COMPETENCY RULE” (lines 332–334).
    • What “reasonable steps” means (USPAP FAQ 79). AO-41 points to USPAP FAQ 79 (footnote 1). The ASB's published answer says USPAP “does not list steps the appraiser should take to comply.” “USPAP can only require the appraiser to exercise sound judgment. Therefore, relying on best professional practices, individual appraisers must seek 'reasonable' and practical solutions to maintaining client confidentiality” [6]. It names no AI-specific steps, so the AO-41 tests above are the most specific official guidance.

      Edition note: we read this wording in two places, FAQ 81 of the 2020–2021 USPAP edition and the ASB's original 2016–17 USPAP Q&A as reprinted by a state appraiser board. The wording is identical in both. The current version, FAQ 79 in the 2024 USPAP Guidance and Reference Manual, is a paid publication, and we have not seen its exact text. Current-edition wording not verified.

    • Client bans and requirements. A client may prohibit AI. Switching to manual methods doesn't by itself make the scope of work acceptable (lines 180–185). If a required or prohibited tool would keep you from producing credible results, “the appraiser must not agree to perform the assignment” (lines 216–219).
    • Disclosing AI in the report. USPAP has no rule to disclose a tool “simply because [it was] used.” You must disclose it only when leaving it out would mislead (lines 221–229, 233–235). Disclosure “may be needed” when output comes from processes you can't fully see, such as “a proprietary algorithm or generative AI system” (lines 236–239).
      • Proofreading example: using “a generative artificial intelligence type assistant to check for mathematical errors or inconsistencies in formulas or narrative sections of a draft report” doesn't need to be named. The reasoning “remains entirely the appraiser's” (lines 258–264). Tools for “formatting, grammar, spell checking” don't need to be named either (lines 283–287).
      • When a client requires you to disclose a tool, that is a “contractual obligation” and a business-practice issue outside USPAP, unless following it would make the report misleading (lines 265–273).
    • Workfile. If you relied on a tool's output, the workfile must show how. That “may include the tool's output, related data and information and prompts or instructions used in the tool” (lines 346–351). If a program only did formatting, spelling or grammar, “there is no requirement under the RECORD KEEPING RULE to document its use” (Answer 7, lines 486–490).
  4. What LL-2026-04 actually covers [3]:
    • It is addressed “To: All Fannie Mae Single-Family Sellers and Servicers.” It does not mention appraisers.
    • Lenders and servicers that use AI or machine learning must have policies and procedures for it; comply with Fannie's Information Security and Business Resiliency Supplement; and “manage risks and appropriate governance of subcontractor and vendor use of AI/ML.”
    • It took effect “120 days from publication.”
    • It sets no rules for appraisers. The only link is Fannie's own comment that its principles “may also be useful to appraisers” [1].
  5. Fannie's bottom line: “appraisers should take time to understand how those tools handle data and align with applicable professional obligations” [1].
  6. Certification 25 (official wording) and the debate around it. This is related to AI tools but separate from them.
    • What it says [4]: the listed recipients of the report “may choose to store, copy, reproduce, analyze, use and distribute the data in the appraisal report for internal or external purposes without having to obtain the appraiser's or supervisory appraiser's (if applicable) consent.” The recipients include the borrower, mortgage insurers, the GSEs, other secondary-market participants, data collection or reporting services, and others. It also says a recipient “does not become an intended user, unless the appraiser identifies such person as an intended user.” And it says the appraiser “shall have no liability for any use of this appraisal report not related to the mortgage finance transaction.”
    • What it does not cover: Certification 25 is about what lenders and other recipients may do with the finished report. It does not say anything about appraisers uploading assignment files to AI tools.
    • The debate (appraiser discussion, not official): some appraisers and an industry blog argue that signing it conflicts with the USPAP Ethics Rule on confidentiality [7][8]. Other appraisers reply that USPAP covers the appraiser's conduct, not what users do with the report [8].
    • Reported, not verified: a blogger posted what she says is a written reply from The Appraisal Foundation, later quoted by Working RE magazine [9][10]. In it, TAF says the confidentiality section “governs disclosures made by the appraiser” and that “A client's subsequent disclosure or use of the report is not an action by the appraiser and is not governed by USPAP.” TAF also reportedly said it cannot give legal advice and that questions about Certification 25's scope belong with Fannie Mae and Freddie Mac. This is a private reply as reported. It is not a published TAF guidance document. We found no Fannie or Freddie guidance that settles the question.
  7. What appraisers are debating about AI tools (appraiser discussion, not official). On Reddit, an appraiser with 20+ years' experience argues that sending the order form, contract, survey or property video to a new software company is a USPAP confidentiality problem. Others disagree about what counts as confidential [5]. For reference, AO-41 repeats USPAP's definition: confidential information is information the client identifies as confidential that “is not available from any other source,” or information classified as confidential by law. Assignment results are protected too (lines 297–303) [2].
  8. Practical steps, from Fannie's list [1] and AO-41 [2]:
    • Before uploading assignment documents to any tool, read its terms of service and data settings.
    • Check your MLS rules and your client or AMC agreements.
    • Ask your E&O carrier and, if needed, legal counsel.
    • Use AO-41's confidentiality test: if you can't take reasonable steps to keep confidential information safe in that tool, don't enter it [2].

Sources

Limits. This is not legal advice and not USPAP advice or interpretation. Only the Appraisal Standards Board issues USPAP guidance, and only your state board enforces it. Fannie's own list is “for informational purposes only” and sets no requirements. Lender and client instructions control. This covers process only. It gives no advice on value or fees. Ask your E&O carrier or counsel about your own situation.

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