What Is Automated Income Assessment Using Account Data
Fannie Mae's automated income assessment lets lenders verify certain types of income by analyzing your bank account deposits instead of requiring traditional documentation like tax returns or employer letters. This streamlined process applies only to specific income types that are considered stable and predictable.
The system works through Loan Product Advisor, Fannie Mae's automated underwriting system. Your lender uploads data from your bank accounts showing regular deposits from eligible income sources. The system analyzes the deposit patterns and determines whether your income qualifies for representation and warranty relief.
Say you receive $1,800 monthly in Social Security benefits and $900 monthly from a pension. Instead of providing award letters and pension statements, your lender can submit three months of bank statements showing these consistent deposits. Loan Product Advisor reviews the data and may approve the income without requiring additional documentation.
Eligible Income Types for Automated Assessment
Only six specific income types qualify for this automated process:
- Alimony, child support, or separate maintenance payments
- Retirement income from Social Security and pensions
- Social Security disability benefits
- Social Security Supplemental Security Income (SSI)
- Social Security survivors benefits
- VA disability compensation
Your employment income, commission, bonuses, rental income, and investment income do not qualify for this automated assessment. Those income sources still require traditional verification methods outlined in other Fannie Mae guidelines.
The income must come from the expected sources. For Social Security, the deposits must come from the Social Security Administration. For pensions, they must come from the actual pension fund. For alimony or child support, the payments must come from the responsible party identified in your legal documentation.
Bank Account and Documentation Requirements
Your bank accounts must meet specific criteria for the automated assessment to work. All accounts must be owned by at least one borrower on the loan application. The accounts must be held at U.S. or state-regulated financial institutions, and all deposits must be in U.S. dollars.
Your lender will need access to account data that shows the regular deposits from your eligible income sources. This typically means providing online banking credentials or bank statements that demonstrate consistent deposit patterns over the required time period.
For alimony, child support, or separate maintenance payments, you still need to provide the underlying legal documentation. This includes a copy of your divorce decree, court order, or legally binding separation agreement that shows the payment obligation, amount, and duration. For child support specifically, you must also provide evidence of the ages of the children receiving support.
The verification report your lender obtains must be current according to Fannie Mae's age requirements outlined in [[Section 5102.4]]. If your lender gets an updated verification report after the initial submission, they must resubmit the new data to Loan Product Advisor.
How the Assessment Results Work
Loan Product Advisor returns one of four possible results for your income assessment: Eligible, Partial, Not Eligible, or Unavailable. Each result determines what additional documentation your lender needs and what representation and warranty relief they receive.
An "Eligible" result means your income passed the automated assessment completely. Your lender only needs to keep the verification report in your loan file. They don't need traditional income documentation like tax returns or employment letters for the eligible income sources.
A "Partial" result means some of your income sources passed but others didn't. Your lender gets relief for the approved sources but must document the remaining income sources using traditional methods. They'll need to keep both the verification report and any required paystubs or other documentation.
"Not Eligible" or "Unavailable" results mean the automated assessment didn't work for your situation. Your lender must verify and document all income using the standard Fannie Mae requirements found elsewhere in the Selling Guide.
Why Fannie Mae Created This Process
Traditional income verification can be time-consuming and burdensome for borrowers receiving predictable government or court-ordered payments. A retiree receiving Social Security and a pension shouldn't need to jump through the same documentation hoops as someone with variable commission income.
The automated assessment recognizes that certain income sources are inherently stable and verifiable through banking data. Social Security payments don't fluctuate month to month. VA disability compensation continues as long as the disability exists. Court-ordered support payments have legal enforceability behind them.
By analyzing actual bank deposits, the system can verify both the amount and consistency of these payments without requiring borrowers to obtain letters from government agencies or pension administrators. This speeds up the loan process while maintaining Fannie Mae's risk management standards.
Tax Return Requirements May Still Apply
Even if your income qualifies for automated assessment, you may still need to provide tax returns depending on your specific situation. The IRS Form 4506-C requirement gets waived only under very specific circumstances.
You can skip the tax return requirement only if you receive an "Eligible" or "Partial" result with a feedback message indicating no further documentation is needed, and all of your income comes from the eligible sources listed above. If you have any employment income, self-employment income, or other non-eligible income sources, you'll still need to provide tax returns.
Most borrowers have at least some income that doesn't qualify for automated assessment. If your spouse works or you have any investment income, rental income, or other sources beyond the six eligible types, the standard tax return requirements in [[Section 5302.5]] still apply.
Common Complications and Gotchas
Mixed income sources create the most confusion with this process. Say you receive $2,000 monthly in Social Security but also work part-time earning $800 monthly. The Social Security income might qualify for automated assessment, but your employment income requires traditional verification. Your lender must document both sources appropriately.
Irregular deposit patterns can derail the automated assessment even for eligible income types. If your Social Security gets deposited on different dates each month or the amounts vary due to Medicare premium adjustments, the system might not recognize the pattern as stable income.
Joint accounts can complicate the process if the income recipient isn't the primary account holder. The account must be owned by at least one borrower on the loan application. If your Social Security gets deposited into an account owned solely by your non-borrowing spouse, that won't work for automated assessment.
Foreign accounts or foreign currency deposits disqualify you from this process entirely. All accounts must be at U.S. regulated institutions with deposits in U.S. dollars. This affects some military families or retirees living abroad who might receive U.S. government benefits in foreign accounts.
Timing issues can arise if your income situation changes during the loan process. If you start receiving a new pension or your Social Security amount changes due to a cost-of-living adjustment, your lender may need to resubmit updated data to Loan Product Advisor.
References
For the official guidelines, see 5305.2: Automated income assessment with Loan Product Advisor® using account data for other income in the Fannie Mae Selling Guide.
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Original Freddie Mac Guideline Text
This section contains:
Underwriting requirements
Data submission requirements, representation and warranty relief eligibility and documentation requirements
Internal Revenue Service (IRS) Form 4506-C requirements
(a)
Overview
Representation and warranty relief eligibility is contingent on the Seller’s compliance with all requirements as set forth in this section.
Asset and income modeler (AIM) automated income assessment using account data, provides Sellers with the option to use Loan Product Advisor
®
to determine whether the Seller is eligible for relief from enforcement of certain representations and warranties related to the Borrower’s income.
The Seller must obtain the Borrower’s account data and submit all required data and information to Loan Product Advisor. Based on the data submitted, Loan Product Advisor will assess for representation and warranty relief eligibility and return the results of the assessment on the Feedback Certificate.
(b)
Eligible income types
The following income types, as described in
Section 5305.1
, are eligible for an automated income assessment using account data:
Alimony, child support or separate maintenance payments
Retirement income from social security and pensions
Social Security disability benefits
Social Security Supplemental Security Income (SSI)
(c)
(i)
General underwriting requirements
The Seller must have no knowledge, information or documentation that contradicts an expectation that the income will continue for at least the next three years.
The Seller must confirm:
Each account on the verification report is owned by at least one Borrower
All assets shown on the verification report are in U.S. dollars located in a U.S. or State-regulated financial institution
That the payor(s) is one of the following by using the information in the Mortgage file:
The pension fund(s)
The Social Security Administration or VA, and/or
For alimony, child support or maintenance payments, that the payments are made either by, or on behalf of, the responsible party identified in the legally binding documentation (i.e., signed court order, final divorce degree, legally binding separation agreement, legally binding child support agreement or other legally binding documentation).
Note: For alimony, child support or separate maintenance payments documentation requirements, see
Section 5305.2(d)(iii)
below.
(ii)
Age of documentation
For the age of the documentation, the expiration date of the verification report reflected on the Last Feedback Certificate complies with the requirements in
Section 5102.4
.
(d)
Data submission requirements, representation and warranty relief eligibility and documentation requirements
(i)
Data submission requirements
For Mortgages with an automated income assessment using Loan Product Advisor, the Seller must:
Submit the income amount used to underwrite the Mortgage to Loan Product Advisor
Investigate and resolve any inconsistent or contradictory information between the verification report, information contained in
Form 65, Uniform Residential Loan Application
(including the Borrower’s income and employment representations), and the Mortgage file and, if applicable, resubmit the correct information to Loan Product Advisor
If after the initial submission, the Seller obtains an updated verification report, the Seller must resubmit the account data to Loan Product Advisor
(ii)
Representation and warranty relief results on Feedback Certificate
If multiple Loan Product Advisor submissions are made, Seller’s eligibility for representation and warranty relief will be based on the results on the Last Feedback Certificate.
When income representation and warranty eligibility results are provided on the Last Feedback Certificate, the representation and warranty relief available is described in the following table:
Income representation and warranty relief based on Feedback Certificate result
Eligible
The Seller is relieved from enforcement of the following representations and warranties:
Accuracy of the income calculation related to eligible income types on the verification report, and
Accuracy and integrity of the data on the verification report
Partial
When partial income representation and warranty relief is granted for a source(s) as confirmed by the feedback message, the Seller is relieved from enforcement of the following representations and warranties:
Accuracy of the income calculation related to eligible income types on the verification report, and
Accuracy and integrity of the data on the verification report
Not eligible
The Seller is not eligible for relief from enforcement of representations and warranties related to the Borrower’s income.
Unavailable
The Seller is not eligible for relief from enforcement of representations and warranties related to the Borrower’s income.
(iii)
Documentation requirements based on representation and warranty relief result on Feedback Certificate
When income representation and warranty eligibility results are provided on the Last Feedback Certificate, the documentation requirements are described in the following table:
Documentation requirements based on representation and warranty relief result on the Feedback Certificate
Eligible
The verification report must be maintained in the Mortgage file.
When alimony, child support or separate maintenance payment income is used, the Seller must maintain in the Mortgage file:
A copy of the legally binding documentation verifying the payor’s obligation for the previous six months, including the amount and the duration of the obligation, and
For child support income, evidence of the ages of the children for which child support is received
When there are multiple income sources and one or more is eligible for income representation and warranty relief, for the income source(s) not eligible for representation and warranty relief, the Seller must either:
Verify and document the income as required by the Guide, or
Remove the income and resubmit the Mortgage to Loan Product Advisor
Partial
The verification report and paystub(s), as applicable, must be maintained in the Mortgage file.
When alimony, child support or separate maintenance payment income is used, the Seller must maintain in the Mortgage file:
A copy of the legally binding documentation verifying the payor’s obligation for the previous six months, including the amount and the duration of the obligation, and
For child support income, evidence of the ages of the children for which child support is received
When there are multiple income source(s) and one or more income sources are needed to qualify the Borrower, document the income source(s) as required by the feedback messages.
Not eligible
The income must be verified and documented as required by the Guide.
Unavailable
The income must be verified and documented as required by the Guide.
(e)
IRS Form 4506-C requirements
For Mortgages that receive an income representation and warranty result of either “Eligible” or “Partial” with a feedback message indicating that no further documentation is required for the income reflected on the verification report, if all of the Borrower’s income is from an eligible income type described above in
Section 5305.2(b)
, the Seller does not need to obtain the following:
A signed IRS Form 4506-C (or alternate form acceptable to the IRS that authorizes the release of comparable tax information to a third party), or
A signed Commonwealth of Puerto Rico Form 2907 or Form 4506-C (or an alternate form that authorizes the release of comparable tax information to a third party), for income that is derived from sources in Puerto Rico, Guam or the U.S. Virgin Islands and is exempt from federal income taxation under the Internal Revenue Code
For all other Mortgages, the IRS form 4506-C documentation requirements of
Section 5302.5
apply.
