How to Work with Income Analysis for Loan Officers

Overview

Calculating borrower income has traditionally been manual, slow and inconsistent. With Income Analysis, you can transform that process through automation and simplified workflows, delivering consistent and objective results early in the loan cycle. That means you can qualify more borrowers, faster.

As a Loan Officer, here’s what you can expect from Income Analysis:

Compatible with FHA, VA, Fannie Mae® and Freddie Mac® loan programs.
Extracts income data directly from borrower documents, then applies the appropriate investor guidelines to calculate qualifying income.
Automatically identifies income opportunities that, with proper documentation, could help you qualify your borrower.
Flags missing or inconsistent documentation to strengthen your loan files.
Identifies potential opportunities for additional income qualification.

Tip: “EPC” stands for Encompass® Partner Connect. If you do not use Encompass®, then you may disregard any step that indicates “EPC”.

Start your review

Begin your borrower’s income analysis review by asking yourself the questions below, then review and take the actions included in each accordion. These actions will help you accurately assess your borrower’s income profile and determine the appropriate next steps to move the loan forward.

How much income did my borrower get?

Start by reviewing the Income values displayed at the top of the LO View tab. When reviewing the income totals, ask yourself Where is my borrower currently and what income level do they need to reach to qualify? This comparison helps you quickly assess whether additional documentation or income opportunities could make a difference in loan eligibility and provide a reasonable range of qualifying income prior to underwriting.

Baseline: Most conservative income figures calculated by using the exact documented values that align with guideline requirements and no conditioning.
Potential: Calculated income value that includes income opportunities that, with proper documentation, could be acted on to increase the borrower’s qualifying income.
LO Adjusted: This is the income amount that reflects any changes or updates you've made. For example, if you identify additional income and choose to accept it, the LO Adjusted value will increase by that amount. The original Baseline income amount stays the same and does not change with your adjustments.
UW Adjusted: Calculated value of income that reflects modifications or adjustments made by Underwriters during their review.

Tip: To understand your borrower’s current income position, compare the Potential value to the Baseline. This value comparison is especially helpful when your borrower is close to qualifying and you need to identify additional income sources to help them meet the requirements.

What if the values are not enough for my borrower to qualify?

If the values presented are not enough to qualify your borrower, you have a couple actions to take that may change the outcome.

Action 1: Compare Income Analysis Values to 1003 LOS.

Note: If you are not an Encompass® user, then skip this action and proceed to Action 2.

Use the Confirm EPC Income Source Matching task to identify how much income you have in your Encompass 1003 compared to how much income was found in Income Analysis. This view helps you quickly see your borrower’s income standing.

Navigate to the Task list and locate the Confirm EPC Income Source Matching task.
Click the > symbol to expand the details.
Review the income for each income source. Here you can view your current calculated income data in Income Analysis side-by-side with the income stated in your Encompass 1003 LOS.
Tip: Income sources identified by Income Analysis will be reflected on the left side, while sources from your LOS will be on the right side of the table.
Next, locate any income entries that do not have a corresponding match, which will be flagged as No Match.
If available, select a match from the dropdown menu then click Save.
Tip: The Confirm EPC Income Source Matching task is a great way to compare income and immediately identify gaps to inform your actions. For example, the illustration above shows a potential opportunity to include Taxable Social Security Benefit / Non-Taxable Social Security income of $732.60. This income is not currently reflected in your Loan Origination System (LOS). If the income can be verified, consider adding it and request supporting documents from your borrower—such as a Non-Taxable Social Security Award Letter or Statement of Benefit.

Action 2: Review Income Opportunities

Navigate to the Task list and locate the View Opportunity List task.
Click the > symbol to expand the details. Once expanded you can view all possible income opportunities which, with proper documentation, could be used to increase the borrower’s qualifying income.
Review the list of opportunities, then click View to see specific details about the opportunity selected.
Review the income details and take action. You can Edit or Accept the income presented.
Note: If you “Accept” the income presented, make sure to request the correct supporting documentation from your borrower. You will notice the LO Adjusted column total increases by the amount you accepted.
If changes are made to the income, click Update LOS to send the updates to your LOS.

Are there any missing documents in my loan file?

The Document Storage tab displays the list of borrower income documents submitted to Income Analysis. Here you can view upload statuses, view or download submitted documents, change the status and add comments for your records.

Additionally, this tab will list income documents that Income Analysis identifies as “Missing” or “Recommended”.

For Missing documents, add the document to an existing order or reclassify the document status to Requested, Received or Not Required.
Documents labeled Recommended are optional.
The document status will update to Uploaded once processed by Income Analysis.

In the example earlier, where the borrower had an income opportunity of Taxable Social Security Benefit / Non-Taxable Social Security income of $732.60. If you accepted the value, you should:

Navigate the to the Document Storage tab.
Locate the the document line item.
Click the ellipsis icon to open the Document Status popup.
Update the status to Requested.
Add your Comment.
Click Save Changes.

Did my borrower receive GSE Rep and Warrant (R&W) Relief?

Cotality^™ is partnered with Fannie Mae and Freddie Mac to offer the following R&W relief programs and will continue to collaborate on future GSE initiatives as they are developed.

R&W results are indicated by the presence of an Investor Surround located in the applicable income section of the Income Calculation and LO View tabs. The FNMA and FHLMC surrounds are clickable and provide details about the income calculated by Fannie Mae or Freddie Mac. Investor Surrounds are color-coded to indicate the relief status, which vary by income type and investor.

Fannie Mae income Calculator for Wage
Fannie Mae Income Calculator for Self-Employment
Fannie Mae Income Calculator for Schedule E Rental
Freddie Mac AIM Check API integration for Digitized Paystubs and W-2's.
Freddie Mac Asset and Income Modeler (AIM) for Self-Employment Program.
Warning: Freddie Mac AIM R&W verification for Self Employed borrowers works a little differently than the other R&W programs. Results are provided directly through Loan Product Advisor^® (LPA). To use it, first run Income Analysis on the borrower's financials. Once the analysis is complete, take the Freddie Report ID and enter it into LPA when rerunning the loan submission to view eligibility results.

Explore the LO View tab

The LO View tab is your default workspace, displayed each time you log in. It provides you a personalized view for reviewing your borrower’s income and serves as the primary screen for interacting with income throughout the loan process. The LO View focuses on monthly qualifying income and highlights potential opportunities, helping you identify gaps, engage in informed discussions with your borrower and request supporting documentation when needed.

LO View features

Summary: Each Income Analysis order includes a Summary at the top of the LO View tab. The Summary provides a snapshot of key order details, including quick links to Available Opportunities, Missing Documents, and Tax Return Notes and Data Capture Comments.
Borrower Tab: For loans with co-borrowers, each borrower’s income is accessible by clicking the tab labeled with their name. These are located just beneath the Summary box.
Expand > Symbol: Click the > symbol next to each income type—Wage, Self-Employed, Rental, or Other—to view additional details.
Investor Dropdown: This dropdown determines which investor guidelines Income Analysis uses to evaluate submitted income. You can choose from FHA, FHLMC (Freddie), FNMA (Fannie), VA, or custom investors such as Portfolio loans, depending on your organization’s configuration and product offerings. Switch guidelines at any time to see how different rulesets affect loan qualification.
Edit, Accept: Use the Edit and Accept buttons to take action on the income presented. “Accept” confirms that you intend to use the income for qualification, while clicking “Edit” allows you to modify the income value. When you “Accept” or “Edit” a value, the amount will be added to the LO Adjusted column totals.
Output Options: You can generate a PDF Income Analysis report at any time using the Output Options dropdown menu. Click View PDF to view a copy or, if you’re an Encompass®-integrated user, you can select Send PDF to eFolder to send the report to your directly to the loan file eFolder.
Update LOS: The Update LOS button is available to Encompass®-integrated users. Use this feature to extract all income figures calculated by Income Analysis and update them in your LOS.
Task List: This dynamic actionable list consolidates all possible items requiring attention, including file deficiencies and opportunities to increase qualifying income, into one simplified workstream.

Review the income and take action

From the LO View tab, review the calculated income in the Baseline and Potential columns to understand your borrower’s current income position.
Click the Task List.
Locate the Confirm EPC Income Source Matching task, then click the > symbol to expand the task details.
Review the income for each income source. Here you can view your current calculated income data in Income Analysis side-by-side with the income stated in your Encompass® 1003 LOS.
Tip: Income sources identified by Income Analysis will be reflected on the left side, while sources from your LOS will be on the right side of the table.
Confirm that all income has a source match with the LOS. Income items without a match will reflect No Match. Use the dropdown(s) in each section to select a match for the income sources.
Tip: If you prefer, you can navigate to the Income Match tab to complete income source matching steps. This method will initiate an Income Match Wizard that walks you through the income match process.
Click Save.
Locate the View Opportunity List task, then click the > symbol to expand the details.
Identify any income opportunities or adjustments that you want to act on. Click View to see specific details.
Use Edit or Accept buttons to take appropriate action. If you accept or edit a value, the LO Adjusted column updates to include the amount(s) you accepted or entered.
Once you complete your updates, click Update LOS to send the updates to your Loan Origination System (LOS).

Outcome

You explored the features on the LO View tab of Income Analysis, can identify additional income that could help your borrower qualify and can act on the values presented in your analysis.