Accurately analyzing self-employed borrowers’ incomes, a critical aspect of responsible lending, has become considerably more complex in the current landscape. Irregular work schedules, multiple income sources and sometimes incomplete record-keeping make it challenging to document and determine reliable income levels. Technology solutions such as CoreLogic’s AutomatIQ Borrower Income Analysis are built to mitigate such challenges.
The Increasing Complexity of Analyzing Self-Employed Borrower Incomes
Traditional loan processes, which rely extensively on human judgment and manual work, now face issues stemming from shifting borrower profiles. The Consumer Financial Protection Bureau notes that about 43% of American consumers have a credit score below 700, a trend that indicates an increasing difficulty in assessing creditworthiness.
Meanwhile, the changing job landscape has resulted in a steady rise in self-employed workers. According to the U.S. Bureau of Labor Statistics, self-employed workers, including those in incorporated and unincorporated businesses, accounted for 5.4% of total employment in August 2021. Due to irregular income patterns and often-missing standard documentation, lenders can face challenges when accurately assessing these borrowers’ financial health.
Technology Is the Champion When Tackling Mortgage Loan Challenges
These complexities point to a need for an automated and streamlined technology solution.
The rise of artificial intelligence, machine learning and automation offers the mortgage lending sector unprecedented benefits. According to a 2020 Fannie Mae survey, 64.2% of respondents said that reducing manual processes was a primary advantage of digital transformation. Aite Group’s report goes a step further by suggesting that technology in mortgage lending can potentially decrease the often expensive loan-origination costs by as much as 20% to 30%.
CoreLogic’s AutomatIQ Borrower Income Analysis Tool Changes the Game
Designed to tackle the challenges of assessing self-employed borrowers’ incomes, CoreLogic’s AutomatIQ Borrower Income Analysis offers automation and advanced algorithms, resulting in faster, more accurate and more efficient solutions for lenders.
AutomatIQ Borrower Income Analysis helps lenders:
- Increase Efficiency: AutomatIQ integrates manual and automated processes, facilitating a smooth path to evaluating income levels. Tools like Fannie Mae’s Income Calculator and Freddie Mac’s AIM are included in its advanced analytics to ensure accuracy and minimize human error.
- Adapt to Self-Employment Scenarios: With its focus on accommodating the ever-changing world of self-employment, AutomatIQ offers a dynamic approach to analyzing irregular incomes, which allows for thorough risk assessments.
- Reduce Time and Costs: AutomatIQ’s features reduce both the time and cost involved in loan processing, leading to an easier experience for both lenders and borrowers.
Embracing technologies like CoreLogic’s AutomatIQ Borrower Income Analysis creates a seismic shift in how financial institutions engage with self-employed borrowers. Through streamlining the often-complicated process of income analysis, lenders can make faster and more informed decisions to enable healthier and more synchronized lending practices.