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How mortgage lenders can save valuable time with automation for complex income calculations

29 Feb 2024
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Mortgage lenders today face new challenges in analyzing borrowers’ financial health due to a growing number of applicants with diverse and non-traditional sources of income.

It’s common for borrowers to have multiple jobs, seasonal work, self-employment income, or other types requiring varied documentation. As the variety and volume of necessary documentation grow, mortgage lending decisions can no longer depend on manual processes and traditional income calculation methods.

AI-powered document automation technology enables lenders to simplify even the most complex income calculations quickly and precisely. By automating income verification, mortgage lenders can save valuable time, allowing them to more efficiently serve non-traditional borrowers while making faster, smarter financial decisions. 

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The challenge with traditional income calculations

Manually verifying and calculating income has always been a time-consuming process for lenders. In the past, when most applicants had straightforward W-2 incomes from traditional jobs, loan officers could rely on predictable processes to confirm annual salaries and hourly wages.

Today’s borrowers require more complex income calculations. Even when automated, traditional income verification methods can fail to account for all of an applicant’s earnings accurately. While legacy calculations may only include traditional income documented on a W-2 or 1099, this can exclude substantial sources of legitimate earnings for non-traditional borrowers.

When verifying income from multiple sources, inconsistencies become more likely. Following up on myriad documents, standardizing different formats and accurately performing complex income calculations can all become extremely difficult and time-consuming for loan officers struggling with limited resources.

With mortgage lenders looking for ways to efficiently and accurately process 6, 12, or even 24 months’ worth of bank statements, manually calculating a borrower’s income can further introduce delays and errors, slowing the mortgage process.

Simplifying complex income calculations with AI-powered document automation

Using AI to automate income calculation and verification allows mortgage lenders to extract crucial data while performing numerous calculations simultaneously instantly. Streamlining the process of verifying income documents will enable lenders to efficiently handle a broad spectrum of income data, directly impacting their operations’ speed and accuracy.

With AI-powered document automation technology, lenders can instantly consider various mortgage income calculations from the most conservative to the least. This consistency enables lenders to take an objective and standardized approach to calculating borrowers for traditional and non-traditional applicants.

By modernizing their income verification practices, lenders can adopt broader lending strategies and bolster their defenses against financial risks, ensuring a more equitable and secure mortgage lending environment.

Case study: Deephaven Mortgage

Working closely with a network of independent mortgage brokers, Deephaven Mortgage is a pro-borrower mortgage lender that often assists borrowers locked out of the traditional GSE market due to specific standardized requirements such as non-W-2 income or short credit histories.

To cater to these traditionally underserved borrowers, Deephaven employs bank statement analysis for a more precise income assessment, focusing on the borrower’s actual cash flow.

By integrating Ocrolus into its loan origination workflow, Deephaven can seamlessly capture, verify and analyze data from borrower bank statements, enabling the calculation of real income within minutes instead of days. According to Deephaven’s internal studies on underwriter productivity, Ocrolus helped increase efficiencies and helped save more than 2 hours per mortgage application for their underwriters.

Leveraging document automation for complex income calculations provides a competitive edge in today’s non-traditional mortgage market.

With the influx of complex borrower profiles only continuing, AI-powered document automation gives forward-looking mortgage lenders an essential tool to make more informed lending decisions while serving a wider variety of traditional and non-traditional applicants.

Book a demo to learn how Ocrolus can help mortgage lenders save valuable time by automating complex income calculations with intelligent document automation.

Key takeaways
  • Adopting AI-powered document automation technology streamlines income verification and calculation for mortgage lenders, saving time and enabling quicker, more informed decisions.
  • Leveraging AI allows lenders to accurately assess non-traditional income and reduce errors and delays by standardizing and performing complex income calculations across a broad spectrum of data.
  • Implementing intelligent document automation in mortgage lending improves operational efficiency and expands access to credit for borrowers with diverse income streams, promoting more inclusive and equitable lending decisions.