Overview

Analyze uses Ocrolus APIs to calculate income using data extracted from borrower-provided documents. Within the Ocrolus dashboard, end users can review calculations, identify the source of the data, and make any necessary adjustments, all without ever leaving their main system of operation. Ocrolus has worked directly with industry subject matter experts and its customers to refine the calculations and ensure they meet investor guidelines.

Supported Income Documents

Currently, Analyze uses data from the following document sources:

Wage Earner

• Pay stubs
• W-2s
• Written Verifications of Employment

Self Employed

This table contains the list of supported self-employed income document types. To learn more about the type of documents Ocrolus supports, see the All Supported Document Types section.

Rental

• IRS Form 1040 Schedule E (2023) - Supplemental Income and Loss

Other income

The table presents details regarding other income types and the respective documents they are supported by.

Accessing Ocrolus Dashboard through Encompass Smartclient

After receiving notification from Ocrolus that your documents have completed processing, it is time to examine the results in the Ocrolus dashboard.

Additional services

From the Encompass loan application, navigate to the Services tab and then click on Order Additional Services.

Now, from the list of My Providers, select Ocrolus and click Submit.

Navigating the Dashboard

Reviewing the Income Results

To review the Analyze results for a given book within the Dashboard, navigate to the Income tab on the navigation panel.

The Income page has three tabs: Wage Earner, Self-Employed Income, and Rental Income. Select the tab that corresponds to the relevant income source for the given Book. If the income is primarily from wages, select the Wage Earner tab. If the income is derived from self-employment, choose the Self-Employed Income tab. If the income is generated from rental properties, select the Rental Income tab.

Multiple Borrowers and Employers

In cases where multiple borrowers are identified through the documents uploaded in Ocrolus, income is calculated separately for each borrower-employer pair. These pairs will be visible in the relevant Wage Earner or Self-Employed tab and can be accessed using the dropdown menu.

Merge Borrowers, Employers, and Properties

In rare instances, Ocrolus might fail to recognize that two different variations of an employer's or a person's name refer to the same entity. In such cases, Ocrolus provides an option to manually merge these name variants. After merging, the calculations can be rerun using all related documents.

To merge two employers or two persons, perform the following steps:

1. elect the Merge option from the relevant dropdown.

   

2. Once the pop-up window appears, select the names you would like to merge and then select the entity name you would like to keep as the correct source.

   

3. Once merging is complete, calculations will automatically be re-ran using the relevant documents related to the merged entity. You can always reset this merge function by clicking on the dropdown and selecting Reset all merges.

   

Alerts and Messages

At times, Ocrolus may encounter challenges in accurately or entirely computing information. When this happens, Ocrolus provides details through alerts and messages.

Several of these messages might only be relevant when a specific program is chosen. Currently, Ocrolus offers support for identical calculations regardless of the agency, investor, or program. These alerts and messages serve to address the prerequisites of the major guidelines as a supplement to the Underwriter's review.

For example, if only one year of tax returns is submitted, income is computed but triggers a message to that effect. This ensures compliance if the loan is intended for Fannie, where two years of tax returns are necessary.

A full library of our alerts and messages can be found here. Note that the precise language of each alert may change slightly as the product is refined.

Checking the Source Material

Review Document Sources

On the right side of the income calculation, a panel displays the document sources utilized for each borrower and employer/business pair during the income evaluation. You can opt to include or exclude income sources anytime using the checkboxes.

For example, if the book is being reviewed in April and the most recent year's tax forms become accessible, you can deselect the outdated year and choose the latest version(s), then click on Apply to regenerate the income calculation using the selected sources.

You can also inspect the documents more closely via a hover feature, or via a full-page view by clicking on the hovered image.

View Data Origin

When hovering over any prefilled input value within the worksheet, you will see a hovered image of the data source and an option to Click to view origin. When you click on the value, an image will appear of the document from which it was extracted, with the value highlighted on the image for quick recognition. This allows end users to check the source of each input value, ensuring data accuracy and integrity.

Editing Values

There are multiple ways of editing values and income computation within the dashboard. Such as:

• By modifying the input source: By adjusting the input source, you can select the documents to be utilized for the calculation. Refer to the Checking the source material section for detailed information on how to modify input sources to regenerate income.
• By editing values directly: Any data field within the income worksheet can be modified. When hovering over a field within the worksheet, you will see a pencil icon on the right side of the cell. Simply click within the cell to modify the calculation.
  
  When making modifications to input values, all applicable calculations will automatically be modified. To save your changes, click the Save button in the upper right-hand corner. Otherwise, you may Reset All Values while clicking the dropdown arrow.
  

Import Income into Encompass

With Ocrolus for mortgage lenders, the users using the Analyze solution for income calculations, and the integration with Encompass LOS can import income values directly into Encompass Verification of Employment (VOE) fields. The import of income calculated by Ocrolus will update existing VOE entries for any existing employment and provide you the ability to create new VOE entries in Encompass using the Ocrolus dashboard.

Import Income Values for Existing Employees

To write back income values to the Encompass Verification of Employment fields, perform the following steps:

1. Click the IMPORT TO ENCOMPASS button.

   

2. The Import to Encompass popup appears. Evaluate existing Encompass data against Ocrolus income data within the popup.

   

3. From the Ocrolus dropdown menu in the popup, select the appropriate borrower and employer mappings for which you intend to import income.

4. Verify the presence of existing income values in Encompass for the selected Verification of Employment (VOE) entry. This will allow you to designate which values will be overridden upon import.

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   Note:

   The import menu lists all the Encompass & Ocrolus borrowers and Employers. Select the borrower name and employer name from the Ocrolus dropdown menu to import the values back into Encompass for the respective VOE entry.

5. Click the Import button to initiate the import process.

6. Once the import operation is complete, verify that the values have been successfully updated in the Encompass VOE data fields.

   

Create a New Employer

In case the Ocrolus has identified more employers than the ones present in Encompass, you have the ability to add a new VOE entry from the Ocrolus Dashboard UI itself. To create a new employer, perform the following steps:

1. Click on the Add Employer option within the Import modal and add the new employer name.

   

2. Once the new employer is entered, you will be able to map any of the Ocrolus-identified employers to this name and import the values back into Encompass.

3. Once the new employment is added, you will follow the same steps above to verify information successfully imported to Encompass VOE fields.

Export the Worksheet

To print a PDF copy of the worksheet, click the Export dropdown menu and select the PDF link for Income Data. This will print a PDF copy of the complete worksheet, including copies of the supported sources used for the income calculation.

Liquidity Ratio

For mortgage lenders, the liquidity ratio is computed for self-employed borrowers using 1065, 1120S, or 1120 business tax returns. There are three different ratios that can be used to calculate a business's liquidity. Ocrolus uses the Quick Ratio for the last two years of business returns and presents this on the Income screen to the lender.

The Quick Ratio (also known as the Acid Test Ratio) excludes inventory from current assets in calculating the proportion of current assets available to meet current liabilities.

Quick Ratio = (current assets — inventory) ÷ current liabilities

Process insights

For Forms 1065, 1120S, and 1120 related to businesses, Ocrolus reads the corresponding Schedule L, M1, and M2 and calculates the liquidity ratio from the tax forms for the last two years. The ratio from the most recent tax return is then displayed on the self-employment income calculation screen for the corresponding business.

Underwriters have the option to inspect the details of the ratio, with a pop-up displaying the specifics of the two-year calculation performed by Ocrolus. Lenders can also choose to manually edit the fields if necessary.