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

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.

Business TypesDocuments
Interest and Ordinary DividendsIRS Form 1040 Schedule B
Sole ProprietorshipsIRS Form 1040 Schedule C
Capital Gains and LossesIRS Form 1040 Schedule D
Supplemental Income or Loss (Royalties)IRS Form 1040 Schedule E
Profit or Loss for FarmingIRS Form 1040 Schedule F
Partnerships- IRS Form 1065

- IRS Form 1065 Schedule K-1 - IRS Form 1065 Schedules L, M1, and M2 - W2 (if applicable)
S Corporations- IRS Form 1120S

- IRS Form 1120S Schedule K-1 - IRS Form 1120S Schedules L, M1 and M2 - W2 (if applicable)
Corporations- IRS Form 1120

- IRS Form 1120 Schedules L, M1, and M2 - IRS Form 1040 Schedule B

Rental

Other income

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

Other Income TypeDocuments
Social SecuritySocial Security Award Letter and SSA-1099
Retirement, Pension or AnnuityPension Award Letter, Annuity Award Letter, and 1099-R
AlimonyDivorce Decree
Child SupportDivorce Decree
DisabilityDisability Award Letter
Interest and Ordinary DividendsIRS Form 1040 Schedule B
Capital Gains and LossesIRS Form 1040 Schedule D
Supplemental Income or Loss (Royalties)IRS Form 1040 Schedule E

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.

The list of services available in the Encompass instance. The **Order Additional Services** feature is highlighted with a red arrow, denoting its importance.

The list of services available in the Encompass instance. The Order Additional Services feature is highlighted with a red arrow, denoting its importance.

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

The list of **My Providers** available in the **Additional Services** feature. Ocrolus is listed and highlighted to indicate that it is selected as the provider.

The list of My Providers available in the Additional Services feature. Ocrolus is listed and highlighted to indicate that it is selected as the provider.

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 Ocrolus navigation panel displays tabs for each unique page of the Book overview. The Income tab is displayed at the very bottom of the panel, along with a graphic of a dollar ($) sign.

The Ocrolus navigation panel displays tabs for each unique page of the Book overview. The Income tab is displayed at the very bottom of the panel, along with a graphic of a dollar ($) sign.

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.

The borrower and employer dropdowns show all the borrower-employer pairs identified through the documents

The borrower and employer dropdowns show all the borrower-employer pairs identified through the documents

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.

    The employer dropdown shows two different employer names, even though they are the same employer. An option to **Merge employer** is presented.

    The employer dropdown shows two different employer names, even though they are the same employer. An option to Merge employer is presented.

  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.

    The list of Ocrolus-identified employers is presented to the end user. The end user has the option to multi-select the different employer names and merge them into the same employer.

    The list of Ocrolus-identified employers is presented to the end user. The end user has the option to multi-select the different employer names and merge them into the same employer.

  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.

    An option to reset all merges is presented in the dropdown.

    An option to reset all merges is presented in the dropdown.

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.

An Alerts banner is displayed at the top of the income tab. There are two alerts listed to notify the end user of missing documents and missing data, resulting in a potentially inaccurate calculation.

An Alerts banner is displayed at the top of the income tab. There are two alerts listed to notify the end user of missing documents and missing data, resulting in a potentially inaccurate calculation.

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.

The ‘Sources’ navigation panel displays the documents used for the given income evaluation. Some light descriptions are provided to best differentiate between each form. Checkboxes are displayed on the left-hand side of the form name, which allows the end user to exclude or include the given source in the income evaluation.

The ‘Sources’ navigation panel displays the documents used for the given income evaluation. Some light descriptions are provided to best differentiate between each form. Checkboxes are displayed on the left-hand side of the form name, which allows the end user to exclude or include the given source in the income evaluation.

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

The Sources panel shows an enlarged, hovered image of the document when a borrower scrolls over the thumbnail image.

The Sources panel shows an enlarged, hovered image of the document when a borrower scrolls over the thumbnail 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.

The Export dropdown menu displays different format and data export options for the book. The income calculation worksheet can be printed when selecting the PDF link next to the **Income Data** label.  The Income Data label is highlighted via a red outline for emphasis

The Export dropdown menu displays different format and data export options for the book. The income calculation worksheet can be printed when selecting the PDF link next to the Income Data label. The Income Data label is highlighted via a red outline for emphasis

Liquidity Ratio

For mortgage lenders, the Liquidity Ratio is computed for self-employed borrowers using 1065, 1120S, or 1120 business tax returns. Three different ratios can be used to calculate a business's liquidity. Ocrolus uses the Quick and Current ratios for the last two years of business returns and presents this on the Income screen to the lender. Ocrolus currently defaults to the Quick Ratio when determining liquidity.

Quick Ratio

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. Below is the formula to calculate the Quick Ratio:

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

Current Ratio

The Current Ratio (also known as the Working Capital Ratio) determines a company's ability to repay short-term obligations by comparing its current assets to its current liabilities. It may be more suitable for businesses that do not rely on existing inventory to generate income. Below is the formula to calculate the Current Ratio:

Current Ratio = current assets ÷ 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 Quick 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 calculations performed by Ocrolus. Lenders can also choose to manually edit the fields if necessary.