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How to setup an automated income workflow

As an operations professional, you know that automated income analysis can make your organization run more smoothly and efficiently.  However, did you know that some of the more forward thinking lenders are using automation to help out their colleagues in sales?  Let’s back up.  Sales needs to be able to correctly qualify a potential borrower.  They need to do this quickly and accurately.  However, the sales person superpower is relationships, not income analysis.  So the leading edge lenders are empowering their sales teams with automated income analysis workflows to help them quickly and accurately determine income.  

 

Challenges To Look Out For

If this sounds interesting to you, here are the top three challenges you should look out for when setting up one of these pipelines. 

 

First, these systems must be available at all times. Sales teams need answers quickly, often on a weekend.  They do not have time to wait untill Monday morning.  Sales teams are not underwriters, so they need to leverage software to guide them on an income analysis, not just an income calculation.  They need to know what documents might be missing, or additional information required to give a complete picture of the borrower’s income to present to the underwriter.

 

Secondly, the sales team needs a compliant and accurate income to help qualify a lead.  If the loan officer can quickly determine the borrower does not have the qualifying income for the loan, both parties can quickly move on rather than wasting time and degrading the relationship. The tool cannot be so limited it creates overly conservative incomes, but also you can’t go overly conservative or you might risk losing deals. A balance must be struck here to give the highest possible compliant income to the loan officer to qualify the borrower.

 

Lastly, the automation must give controls to the underwriter to deviate and modify the income where appropriate.  When the underwriter reviews the file and the advisories that were triggered by the loan officer’s income calculation, a risk analysis by the underwriter can remediate  some of these advisories and adjust the income.  The ability to do this must reside with the underwriter, not the loan officer.  It is key to have separation of controls and permissions between the sales and operations staff.

 

Case Studies

When these challenges are met, as in the case of a few of our clients, efficiencies are unlocked and new emergent behaviors are available.  First off, the unsung heroes of the mortgage world, the loan processors, will have a lessened workload and less risk ownership.  Sales teams can move more quickly and engage with more borrowers as they aren’t losing time qualifying borrowers income with uncertain calculations that would have to be repeated by the underwriter later in the loan lifecycle.  Lastly, the underwriter will have the data entry burden removed from them as they shift to a risk analysis expert.  Isn’t that the original goal of underwriting in the first place?

 

Case Study – National Lender

At Blueprint, we have two clients who have embodied this workflow and have transformed their pipeline as a result.  The first client is a national lender who leverages the IncomeXpert API to automate the income analysis process.  Using data they have already captured in their LOS, they send this data to the IncomeXpert API.  IncomeXpert API automatically creates a loan file, adds the borrowers, and their income sources automatically.  A structured loan file in IncomeXpert is created, ready for data entry.  This saves time in sales and underwriting by leveraging the data they lender already had.  This is the first step in their automation journey, and they have further plans to use the API to load in the specific income data to fully calculate the income.

 

Case Study – GSE

A second client of Blueprint is a GSE using IncomeXpert API and IncomeXpert PLUS to automate the post closing audit process.  As the GSE audits their loans, they leverage Blueprint’s suite of products to automate the process and get more loans audited with less manual effort.  As loans come into the audit pipeline, they use the IncomeXpert API to automate the creation of a loan file and add the borrowers for analysis.  Next they use IncomeXpert PLUS to upload the tax and income documents, where the documents are scanned, classified, and data extracted.  This gives the underwriter a fully populated income analysis to review, with all of the data entry done for them. This entire process happens at the moment the loan enters the pipeline, thus the income analysis is complete and waiting for the underwriter to review it when they get to it a day or two later.  The key takeaway here is the GSE is leveraging the waiting time in their audit pipeline to run automation to make the underwriting team more efficient.

 

How to Set Up Automation Workflow

If your organization is looking to implement an automation workflow, here are the top three items you should consider when setting this up. 

First, leverage APIs or other interfaces to route borrower income documents to the automated income analysis system, such as IncomeXpert.  Ideally, an API connecting your LOS or POS system to IncomeXpert is the ideal solution. However, gains can be made even if this process is done via our web portal by your processing staff.  The key here is shortening the time from the documents being received to the income analysis starting. If a borrower uploads their information to your POS at midnight, you can have the income analysis waiting for you when you wake up the next morning.

 

Second, set up roles and permissions for your sales staff and your operations staff inside the income analysis tooling.  IncomeXpert understands loan lifecycle and workflows, so setting up the permissions to allow sales to operate in a safe space while giving broader controls to the operations staff is essential to managing risk appropriately.  This allows sales to get safe, compliant income and the underwriting team the guidance and latitude to deviate where appropriate, all the while enjoying the peace of mind of reps and warrants.

 

Lastly, retraining of staff should be considered.  With the introduction of automation, the needs of the organization may change to require less manual data entry and calculations, but require different skills in other areas, thus necessitating retraining.  The typical formula of “for every X loan officer, I need Y processors and Z underwriters” will shift.  The use of human directed automation solutions like IncomeXpert does not eliminate the need for roles, but it can enable the rebalancing of the quantity of individuals in a given role and the required skill set to effectively perform the role.

 

Summary

The automation trend is not new in the mortgage industry, but it is evolving.  With each step of this evolution, new possibilities are unlocked and forward-thinking lenders are taking advantage of technology to work smarter, manage risk, and create efficiencies.

 

If you are introducing automation to your organization, here are the top three things you should look out for.

  1. Speed.  Sales teams need a quick, safe, and compliant solution to determine income and qualify borrowers.
  2. Roles and Permissions.  Ensure your solution gives the right roles and permissions to the right people.  Sales and operations need differing features and permissions.
  3. Staffing Review.  Automation efficiencies enable reorganization and retraining of staff.

 

As Blueprint has handled over 3 million loans, we have had the pleasure of working with numerous lenders and observed the best and the worst.  We have compiled a report you may be interested in that is based on our 3 million loan history and looks at the most common errors and guideline misunderstandings that lenders make today.  If you are curious what these top 5 errors are, we can send you a copy of the report.  Click the link below to get a copy.

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