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Extending automated calculation and validation to new income profiles

25 Apr 2024
featured extending automated calculation and validation to new income profiles

As the economy and workforce continue to change, the diversity of borrower income sources in the mortgage lending market has naturally expanded beyond traditional employment, now including various revenue streams like gig work, investments and even personal payments like alimony and child support.

Diversity and complexity in applicants’ income sources can pose significant challenges for lenders in understanding borrowers’ financial health. As a result, there is a growing need for more sophisticated and adaptable income calculation methods to accurately assess borrowers’ financial stability and creditworthiness with non-traditional income profiles.

Understanding income calculations for borrowers with non-standard earnings

Calculating income for borrowers with non-standard earnings is a highly complex, time-intensive task that requires rigorous human auditing. Non-traditional borrowers present unique challenges due to irregular income patterns, varying sources and diverse documentation types. Therefore, reviewing borrower and property documents is a typically manual and repetitive task, leading to costly errors caused by “stare-and-compare” fatigue.

This process involves meticulously comparing figures and details across various documents, such as tax returns, bank statements and pay stubs, to ensure consistency and accuracy. Any discrepancies or inconsistencies must be investigated and resolved, adding to the overall complexity and time required for the income calculation process.

Traditional financial assessment models designed for conventional income sources like salary or hourly employment can only accurately determine borrowers’ financial stability and creditworthiness with complex income profiles. These models must adequately account for the nuances and variability associated with non-traditional earnings, preventing lenders from accurately gauging a borrower’s financial health, increasing risk, and potentially leading to inaccurate lending decisions.

4 considerations for calculating non traditional income

How Ocrolus is addressing the complexities of assessing non-traditional income in lending

Accurate and efficient income calculation for borrowers with non-traditional earnings is essential for lenders to make informed and confident financial decisions.

Automated income verification technology like Ocrolus enhances the accuracy of income calculations by detecting inconsistencies and errors across multiple documents, reducing fatigue from manual “stare-and-compare” tasks.

With Ocrolus, mortgage lenders can introduce automated calculation and validation for additional income profiles, including:

  • Rental income
  • Social security benefits
  • Retirement funds
  • Alimony payments
  • Child support
  • Disability benefits

With these improvements, lenders are empowered to address the diverse financial scenarios of modern borrowers, ensuring income verification processes are robust, inclusive, and adaptable to the complexities of today’s lending environment. This approach makes the lending process more equitable and thorough, allowing lenders to cater to a broader range of financial profiles.

Automation in income verification enables lenders to adapt to evolving work and income trends, ensuring they have the tools to make informed and confident financial decisions in a competitive market.

Lenders can use Ocrolus to review and validate non-traditional earners, improving operational efficiency and accuracy while reducing risk and accelerating decision-making processes. With these expanded capabilities, lenders can take a more inclusive approach to income verification, ensuring that a broader spectrum of borrowers can access the financial services they need to purchase the homes they love.

Book your demo to discover how Ocrolus enables lenders to better understand borrowers with automated income verification for consumers with diverse income profiles.

Key takeaways

  • The increasing diversity and complexity of borrower income sources, such as gig work, investments, and personal payments, pose challenges for lenders in accurately assessing financial health and creditworthiness.
  • Calculating income for borrowers with non-standard earnings is a complex and time-intensive task that requires rigorous manual auditing, which leads to errors and inconsistencies.
  • Ocrolus now supports additional income profiles, including rental income, social security benefits, retirement funds, alimony payments, child support, and disability benefits. This enables lenders to adapt to the evolving work and income landscapes and make more informed and confident financial decisions.