Calculate borrower income automatically with AutomatIQTM Borrower Income Analysis
Post Updated April 17, 2023
When it comes to attaining a mortgage, each borrower will receive a different answer to the question, “How much can I borrow for a mortgage based on my income?” To provide a customized answer, lenders perform a borrower income analysis – a practice that has historically been anything but automatic.
Ensuring that a loan application is approved and closed can take an average of 50 days, according to the 2021 Origination Insight Report by ICE Mortgage Technology. For lenders originating loans at scale, that means that there are dozens, if not hundreds, of applications to process simultaneously, leaving the door open for oversight and customer dissatisfaction due to long turn times.
Due to current practices requiring processors and underwriters to transmit and verify documentation at multiple touchpoints, issues of accuracy and efficiency have long been of concern to lenders. After all, no one wants to be in a position where they buy back a loan.
As homeownership becomes more expensive and rising interest rates make qualifying for a loan more difficult, there are indications that repayment over the life of a loan may become more challenging. Therefore, lenders must have a crystal-clear picture of a borrower’s income to limit the risk of late payments or, worse, defaults.
Simplify the Complex With AutomatIQ™ Borrower Income Analysis
From the record-low mortgage rates that spurred high origination volumes in 2020 to the slower-paced markets burdened by the highest interest rates seen in decades, borrowers have quickly faced shifting loan qualification requirements. In such an environment, lenders need to equip themselves to mitigate underwriting risk associated with borrowers whose income circumstances do not generally adapt to the market.
As a result, calculating debt-to-income ratios for mortgages — this is especially crucial when identifying income sources for self-employed borrowers — verifying, underwriting and closing a loan can be a rigorous and time-consuming undertaking.
But there is another answer.
Lenders using AutomatIQ Borrower Income Analysis have seen 25-50% increases in productivity across the pipeline by using automation – rather than individuals – to perform baseline income calculations and process required documents. By entrusting AutomatIQ Borrower Income Analysis with the tedious calculations and identification of missing documentation, income discrepancies, credit issues, asset verification quagmires and the grey areas of debt analysis, lenders put themselves in a position to reduce the time, touch and cost involved in the income analysis process. It also frees underwriters, processors and loan officers to dedicate their energy to analyzing a complete file and determining more complex credit decisions.
One of the top 20, non-bank mortgage lenders in the U.S., experienced the value of consistency firsthand when organizational leaders implemented AutomatIQ Borrower Income Analysis into the company’s loan origination system (LOS).
“We needed a tool to do the OCR [optical character recognition] input for our underwriters and present an income that they can then analyze as part of the transaction,” said the Chief Risk Officer at this top U.S. lender. “Instead of making their work about getting to that calculation, they needed to be able to use calculations to analyze the overall quality of file and the credit decision.”
Lenders must follow strict guidelines when approving loans, and borrower income analysis is critical to this process. While regulatory compliance is always a consideration, AutomatIQ Borrower Income Analysis makes it simple to check the boxes by coming equipped with Fannie Mae and Freddie Mac validation.
Having the assurance of compliance, efficiency and accuracy has proven to be a boon for underwriters. In fact, one underwriter from a top-20 U.S. lender found that files typically requiring upwards of four hours to evaluate ended up taking only 20 minutes. This time reduction became consistent among underwriters at the lender, as AutomatIQ Borrower Income Analysis saved them significant time by reducing manual effort.
With customizable capabilities to accelerate processing times, standardize workflows and create transparency, all while improving the user experience for clients, AutomatIQ Borrower Income Analysis is a pre-approved fit into lenders’ workflows.