FAQs About Income Analysis

To obtain additional information visit the Income Analysis product page.

Income Analysis is your intelligent solution for automatically calculating and evaluating borrower income. It scans submitted income documents and provides a streamlined workflow that helps you qualify borrowers efficiently while maintaining compliance with GSE, investor, and Ability to Repay (ATR) guidelines.

Income Analysis uses Optical Character Recognition (OCR) to extract data directly from borrower submitted income documents, eliminating manual calculations and entry. You maintain control over workflows, exceptions, and key processes, while the system automatically checks documents against investor guidelines to reduce gaps and ensure compliance. If a borrower’s income falls short, Income Analysis will even identify potential income opportunities that you can take advantage of, with proper documentation, to help qualify your borrower.

Income Analysis turns unique loan details from income documents into a dynamic Task List just for you. It brings together everything that needs attention—like file deficiencies and opportunities to boost qualifying income—into one streamlined view. You can take action directly from the Task List without switching tabs or screens, saving you time and keeping your workflow efficient.

Income Analysis can be tailored to meet specific investor or portfolio needs. You’ll receive an investor compliant PDF that details all qualifying income sources you’ve selected, along with calculations and comments. The tool integrates investor feedback and, where applicable, provides rep and warrant relief helping reduce the risk of loan buybacks.

Cotality® continuously monitors regulatory changes to ensure alignment with current industry standards. When you submit raw income data, it’s transmitted directly to GSE calculation engines, and validation feedback is provided to support compliance and mitigate risk.

Machine learning powers the data extraction process, helping you generate accurate, consistent, and reliable income report, no matter who initiates the analysis order.

Income Analysis uses a consistent, rules-based engine aligned with investor guidelines to reduce regulatory and financial risk. You benefit from transparent calculations, a full audit trail of user actions, and minimized human error through automated data extraction. Where applicable, investor feedback and representation and warranty relief further strengthen compliance and reduce loan repurchase demands.

Income Analysis can handle complex income calculations for self-employed borrowers and complex earners, simplifying the process and ensuring accurate results. This includes calculations for Schedule C (Form 1040), Partnership (Form 1065), S Corporation (Form 1120S) and Corporation (Form 1120) business types.

The transparent and iterative processing feature allows income documents to be submitted as they become available, and the solution automatically updates the income calculation. It also enables the reviewer to find income opportunities to increase borrower qualifying potential transparently.

The collaboration feature allows multiple users to work on the same loan simultaneously, facilitating teamwork and providing a real-time audit trail of all actions taken.

Yes, Loan Officers and Underwriters have custom views in Income Analysis. The LO View tab simplifies income calculations for Loan Officers by omitting complex details. The Income Calculation tab provides Underwriters with full calculation details, built-in calculators and manual override options.

The Income Analysis maintains a comprehensive Change Log that records all user-initiated updates and system-generated modifications. This audit trail supports operational transparency and facilitates compliance reviews by providing detailed records of all changes.

Income Analysis can be conveniently accessed through Encompass^® Desktop, Encompass Web or directly within the AutomatIQ^® Borrower Portal.

You benefit from seamless integration with both Freddie Mac and Fannie Mae in Income Analysis, enabling automated data exchange and ensuring compliance with agency guidelines. This integration supports Rep & Warrant Relief on eligible transactions, based on the type and accuracy of your income calculations.

With the Document Inventory tool in Income Analysis, you’re automatically alerted to missing documentation based on GSE and investor guidelines. The system knows which documents are required for qualification and flags any gaps, helping you stay compliant and avoid delays.

Income Analysis uniquely provides a single underwriting solution for all income types. It is not a digital report that needs to be keyed into another spreadsheet or calculator. Wages, Commission, Bonus, Rental, Retirement, Investment, Asset, and Self Employment (as well as myriad other types) can all be underwritten in one tool that generates a single compliant output PDF with all qualifying calculations.

Income Analysis is an intelligent solution that uses advanced algorithms to analyze income data and provide accurate results. It is not a static report but a dynamic solution that drives lender workflow and efficiencies while adapting to different income scenarios across all income types.

Multiple users can simultaneously work on the same loan at the same time in Income Analysis. The solution provides collaboration features that allow users to share reports and work together in real time.

Income Analysis integrates directly with Encompass, allowing you to access and run income calculations without leaving your LOS. You can analyze borrower income, update values in Encompass, and push results back to the loan file—all within the streamlined workflow. With one click, you can send the income report to the eFolder, eliminating manual uploads.

By using standardized, rules-based income analysis aligned with GSE and investor guidelines, you can calculate and document income accurately from the start—often as early as pre-qualification. This eliminates guesswork, reduces exceptions, and minimizes the need for conditions. With GSE Rep & Warrant verification built in, you streamline the process, cut down on errors, and close loans faster, all while lowering your repurchase risk.

Income Analysis is certified by both Fannie Mae and Freddie Mac Rep & Warrant Programs. It provides all the raw income data in the formats necessary for the GSEs to perform their calculations and provide the Rep & Warrant relief.

Yes. Income Analysis provides you with the flexibility to include or exclude any portion of the income that you wish during your review.

No, you don’t need to start a new loan. If you no longer the need co-borrower’s income or documentation for qualification simply select the borrower(s) to be included or excluded. To exclude a borrower, select their name. Your selection will be highlighted in blue. Next, use the Include slider to indicate whether the selected borrower income should be included.  

• Underwriters will perform this action from Income Calculation tab.

• Loan Officers will perform this action using the LO View tab.  

It is not a requirement to run the automated underwriting system (AUS) before ordering Income Analysis. However, until the AUS identification number is added to Income Analysis, the findings will remain in “Preview Mode”.

Income Analysis will calculate income based on the income documents provided. If there is an outdated paystub for example, Income Analysis will process it and flag it for your attention. Updated documents can be added at any time and they will override outdated versions and update the calculated figures based on the new documentation submitted.

We recommend asking your Encompass Admin about creating a Loan Folder Business rule within Settings. This action would create an Encompass Alert based on Encompass Log events occuring in the milestone log.

Special characters in document names can interfere with the OCR process. To ensure faster and more accurate results, we recommend removing special characters from the naming convention of income documents prior to uploading.

The OCR QC team adds document-specific notes in Data Capture for legibility issues and Tax Return Notes for unsigned tax documents. This feedback is located in the Summary box located on both the Income Calculation and LO View tabs.

You can configure custom reports in Encompass using milestone log data to track when an Income Analysis request was made versus when the report is ready for review. Your Encompass Admin can assist with setup. Currently, no queue time reports are available in the AutomatIQ Portal.

Calculations provided by Income Analysis are based on the most conservative values pulled directly from borrower documents. You can view and validate all calculations in the interface. If needed, you can make documented income adjustments as the underwriter.

Fannie Mae evaluates both quick and current ratios and applies the one that best fits the business type. You can still affirm the business has sufficient liquidity and maintain R&W coverage.

These messages are not duplications. They are separate from DU messages but may be similar to the messages returned by DU messages regarding income. The messages appearing for the Underwriter are FNMA Income Calculator messages provided to inform Underwriters what the calculator output is based on.

Income Analysis is uses default tolerance limitations based on industry best practices. Tolerances can be updated, but be sure to confirm your credit policy before considering changes. Advise your Sales Consultant if further changes are needed.

You can't change the Baseline figure directly. This figure is generated from Income Analysis data extraction. While the LO can input figures, which impact the LO Adjusted totals and the Underwriter can finalize income, Baseline figures only update with new income documents loaded to Income Analysis. If you believe there’s an error, contact Cotality Customer Service for support.

In this scenario, you should access the investor popup by clicking the FNMA Surround. If the order file contains a DU Casefile ID, click Unaccept; otherwise, click Exit Preview. Either action exits the Fannie Mae® Rep & Warrant (R&W) approved calculations and opens the cash flow analysis, where income is recalculated using the appropriate ownership percentage.

It's important to note that the loan file will not receive R&W relief once you exit the investor approved calculations. However, exiting the calculations allows the income to be evaluated and used for qualification when needed.

Fannie Mae and Cotality™ have an existing integration to provide Rep & Warrant relief for self-employment and rental income calculations. This integration is now expanded to include wage income for both base and variable pay.

Once documents are uploaded to AutomatIQ® Borrower Income Analysis, the solution extracts relevant data, submits it to Fannie Mae’s Income Calculator, and returns the results, messages, and findings for lender review.

No. A separate manual review or pre-analysis is not required. Submit the available supporting documents and review the findings returned by Fannie Mae.

For the best chance of receiving a complete evaluation, submit the borrower’s wage income documents for each employer.

• Current year-to-date paystub(s)

• W-2(s)

• Year-end paystub(s), when available

• Documents for each employer whose income is being evaluated

Variable earnings may not appear consistently on the current pay stub. A year-end paystub may provide a history of bonuses, commissions, overtime, tips, or other variable earnings that are not fully reflected in the current year-to-date amount.

Yes. Submit available documents for each employer. Confirm that each document is associated with the correct borrower and employer before running the evaluation.

Start by reviewing the Fannie Mae Income Calculator Findings Summary (Report) in the investor popup, which you can access by clicking the FNMA Surround. They may explain the pay frequency used, income history evaluated, document requirements, and conditions affecting the result.

First, read the messages tied to the affected employer and income source. Then confirm that all available documents were submitted, including W-2s and year-end paystubs when applicable. Fannie will allow for the lender to provide additional information such as average hours worked or last date bonus received when there is insufficient data on the document. Add this information by expanding the Supplemental Information section on the popup.

If additional supporting documents are available, upload them, rerun the evaluation, and review the updated findings.

Fannie Mae’s Income Calculator applies Fannie Mae’s methodology to the information contained in the submitted documents. A different pay frequency, limited income history, or the treatment of variable income may produce a result that differs from a lender’s manual calculation.

Review the calculation details and messages before deciding whether corrective action is available. Supporting details can be provided by expanding the Supplemental Information section on the popup.

The paystub may not clearly establish whether the borrower is paid weekly, biweekly, semimonthly, or monthly. The pay frequency used can affect the calculation of monthly income.

Review the pay period dates, pay dates, gross earnings, and year-to-date earnings. If the documents indicate a different pay cycle, correct the pay cycle or add the requested year-to-date paystub data, then resubmit.

Fannie Mae may not have enough documented history to support the income. This can affect bonus, commission, overtime, tips, and variable base income.

Review the message for the affected income source. Confirm that current paystubs, W-2s, and year-end paystubs were submitted when available. Additional documented history may support a more complete evaluation.

Provide the strongest available documentation package rather than estimating or pre-calculating the income. Current and historical documents give Fannie Mae more information to evaluate the earnings pattern and determine whether the income is eligible.

Review the actual Fannie Mae message first, then confirm that the documents clearly support the current employment and compensation.

• Employment start date shown in the submitted information

• Current paystub(s) from the new employer

• Offer letter or employment documentation, when applicable and accepted for the loan scenario

• Available prior earnings documentation when needed to support income history

Confirm that documents from prior and current employers are not combined in the same employment record. Confirm that the current employer’s start date and current compensation are supported. If relevant documentation was not submitted, add it and rerun the evaluation.

If the finding indicates that income history or eligibility cannot be established, follow the actual Fannie Mae message and applicable underwriting requirements. Do not assume that adding a document will guarantee a different result.

Confirm that the most current paystub and supporting employment documentation reflect the effective date and new compensation. Review whether the finding used year-to-date history, current pay, or another documented amount.

If the compensation change is not supported in the submitted documents, add the available supporting documentation and rerun the evaluation.

A new income source may not have the documented history required for qualification. Review the specific finding, the date the income began, and the available current and historical documents. The lender remains responsible for determining whether the income is eligible under applicable Fannie Mae requirements.

No. Relief is not automatically granted for every submission. Review the Fannie Mae Income Calculator Findings Summary (Report) and the results returned in the investor popup, accessible by clicking the FNMA Surround, to determine the outcome of the loan evaluation.

Review the Fannie Mae findings and messages returned with the calculation in the investor popup. Confirm that the income used for qualification does not exceed the amount covered by the applicable finding. If Fannie Mae automatically grants relief for the wage income, the FNMA Surround will turn green, providing a quick visual indicator of eligibility.

The lender remains responsible for reviewing the findings, confirming the accuracy of submitted information and documents, resolving known discrepancies, meeting applicable Fannie Mae requirements, retaining required documentation, and making the final underwriting decision.

Use the table below to identify the type of finding you received and where to start your review.

The table below provides examples of Fannie Mae findings, what they may mean, and recommended actions you can take.

Important disclaimer

The messages below are representative examples drawn from pilot findings and are provided only to help lenders understand common scenarios. Actual wording, findings, calculations, documentation requirements, and eligibility results may differ based on the borrower’s employment profile, pay structure, income history, submitted documents, and Fannie Mae’s evaluation of the specific loan. This is not a complete list of possible findings and does not guarantee a particular result.

Always review the actual Findings Report, supporting documents, applicable Fannie Mae requirements, and your organization’s underwriting policies. Final qualification decisions remain in the lender’s responsibility. Any of the recommended updates can be taken by expanding the Supplemental Information section on the GSE popup, making edits and saving changes.