As any underwriter knows, the processes used to approve a borrower for a loan can be inefficient and time-consuming. While some technological improvements have been made, many steps in the process still require manual data entry with spreadsheets and pencil-and-paper exercises. The negative impact of the current process is shared among both underwriter and borrowers and is particularly painful when calculating a borrower’s income.
With so many potential income variables to calculate – from passive and portfolio income streams, like rental and investment revenue, to traditional income sources like borrower salary, raises and bonuses – this process requires multiple touch points and review cycles. Then, of course, there is also the human factor. Different underwriters calculating the same borrower’s income may come up with different amounts due to an inconsistent interpretation of underwriting guidelines and income calculation practices.
However, the digital age offers a path forward for many industries relying on legacy solutions. From do-it-yourself tax preparation software solutions to user-friendly investment apps, other industries are rewriting their status quo with digital tools that simplify complex processes and guide their users to make more informed decisions. These technology-based examples provide a potential blueprint for the mortgage industry to follow.
It’s time that the income calculation process sees this kind of change. By automating the collection of a borrower’s income data and standardizing a workflow for income analysis and calculation, underwriters would benefit from accelerated processing and more accurate and consistent results. New sources of potential income could be automatically suggested based on a borrower’s unique situation, and missing documents could be easily identified – all in the interest of making smarter underwriting decisions in a fraction of the time.
The pain points of the current process are too significant to ignore, but luckily as an industry and as a company, we are working on solutions. Soon the clunky and inefficient processes underwriters use to calculate a borrower’s income will be distant memories – like landlines or balancing a checkbook.
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