Resources

Glossary

Industry terms around income verifications for consumer lending and tenant verifications

AI - training computer systems to be able to perform tasks that normally require human intelligence

AI Copilot - An AI copilot is an "agent" that uses large language models (LLMs) to support users in various tasks and decision-making processes, freeing them from repetitive, low level tasks.

Aftermarket or Ancillary Products - An add-on purchase when buying a product. Guaranteed Asset Protection (GAP) and extended warranties are the most popular ancillary products for car buyers.

Annotations - Annotations with regard to OCR, accelerate the labeling process of documents that include text or images. It uses natural language processing and image annotation.

Auto lending - Auto Lending is the process of applying for a loan to finance the purchase or lease of a car.

Automated document processing - a machine learning model to extract data from documents.

Bank Statement Analysis/API - The ability to automatically or programmatically read, understand and analyze the contents of a bank statement for the purpose of verifying and validating it as evidence of an applicant's ability to pay and that it is not a fraudulent document.

Bookout Sheet - A detailed invoice process, which provides a lender with a comprehensive summary of a vehicle's value.

Business process management (BPM) - the discipline of using various methods to discover, model, analyze, measure, improve, optimize, and automate business processes.

Community Reinvestment Act - The CRA was enacted in 1977. It requires the Federal Reserve and other regulators to encourage lenders to meet the credit needs of their communities. This includes low- and moderate-income (LMI) neighborhoods.

Compliance - conforming to a rule, such as a specification, policy, standard or law.

Concept Drift (In AI) - discrepancies between annotated training data and real-world data. Reasons why these occur- a lender military have proprietary forms not encountered before or state/publishers update their forms, for example. Tracking Concept Drift ensures models stay in line with evolving realities, maintaining high performance.

Consumer Financial Protection Bureau (CFPB) - The CFPB is a U.S. government agency that makes sure you're treated fairly by banks, lenders and financial institutions.

Consumer Lending - A category of financing centered on individual and household consumers. It includes home and auto loans, as well as personal loans.

Contract in Transit - a receivable from the auto lender that contracted the sale of the car; however the cash has not yet been received by the dealer.

Deal Jacket - The package of documents used by auto dealerships to store all pertinent paperwork related to the sale or service of a vehicle.

Data Consortium - A data consortium is a large database of information benefiting everyone involved, but where no personal data or PII is passed.

Digital Transformation - the adoption of digital technology as part of change management in an organization. Common reasons to undertake an initiative are to improve efficiency, value or innovation.

Disparate Impact - an adverse effect of practice or standard that is neutral and non-discriminatory in its intention. But, it disproportionately affects individuals having a disability or in particular groups based on age, ethnicity, race or gender.

Document Intelligence - Document Intelligence is an artificial intelligence (AI) solution, sometimes coupled with OCR, that enables lenders to automate and accelerate extracting data from documents. That data - structured or unstructured - can be integrated into automation workflows to save time and resources.

Dodd Frank Act Section 1033 - Section 1033 of the Dodd-Frank Wall Street Reform and Consumer Protection Act states the following, subject to the CFPB. A lender must make available to consumers, information concerning the product or service the consumer obtained from the provider.

E-Contracting - loan contracts generated digitally, which typically speeds the financing process.

Employment verification - the process of verifying a consumer's employment status using documents including W2s, paystubs, Military LES and SSI award letters.

Equipment financing - Loans that finance equipment which can be vehicles, factory machines, farming vehicles or any other equipment.

Extraction Rate (In AI) - the frequency the software extracts a non-null value. If the software extracts non-null values from 90 out of 100 documents, the extraction rate is 90/100, or 90%.

F & I Manager - Finance & Insurance (F&I) Managers located at auto dealerships are responsible for obtaining and reviewing credit applications, structuring loans or leases based on underwriting guidelines from lenders, and explaining details of loans to the customer.

Financial statement fraud - deliberate misrepresentation of finances to deceive a lender, to access more credit and/or better terms than they actually qualify for.

Fraud (in lending) - any deceitful action taken to gain financial advantage during the loan process. This includes paystub fraud, identity fraud, over-stated income fraud and more.

Funding Process - Also known as the Loan Origination process usually (but not always) consists of six steps. The steps are: Pre-Qualification, Loan Application, Application Processing, Underwriting,Credit Decisioning, Loan Funding.

Generative AI or Gen AI - Gen AI is artificial intelligence capable of generating text, images, or other media, using generative models. Generative AI models learn the patterns and structure of their input training data and then generate new data that has similar characteristics.

Guaranteed Asset Protection Contract (GAP Contract or Waiver) - A gap contract is a debt cancellation agreement which absolves you from paying the difference between what you owe on the vehicle and what it's worth if the vehicle is declared a total loss. A GAP Waiver is an "add on" or ancillary product you can purchase with your auto loan or lease.

HELOC - A Home Equity Line of Credit is also known as a HELOC. It's a line of credit secured by your home, giving you a revolving credit line. HELOCs are used for large expenses or consolidation of higher-interest rate debt on other loans such as credit cards. A HELOC often has a lower interest rate than some other common types of loans, and the interest may be tax deductible.

Human error - natural mistakes made by people undertaking repetitive tasks

Human-in-the-Loop - Using humans to double check and validate results of OCR and/or machine learning models.This adds cost and time to the data collection process.

Identity fraud - when an individual presents themselves as someone else using stolen, fraudulent or forged documents.

Income Verification - Proving your income to demonstrate eligibility for a loan. Generally this is accomplished through documentary validations and requires applicants to provide a paystub, W2, bank statement, military LES, SSI award, VA award letter, and/or child support court orders.

Knowledge Graph - Originally named by Google, a knowledge graph is a collection of interlinked descriptions of concepts, entities, relationships and events. Knowledge graphs put data in context via linking and semantic metadata. In AI, knowledge graphs complement machine learning techniques to: reduce the need of large datasets, facilitate learning and explainability, encode domain, task and application knowledge that would be costly to learn from data alone.

Layout LM or LLM - Layout LM is a Neural Network that models interactions between text and layout information across scanned document images.

Loan origination system (LOS) - software that automates and manages the entire loan process. Beginning with the application, to underwriting, approval, pricing and funding.

Loan stacking - the process if of getting approved for multiple loans or lines of credit at the same time in order to reach some financial goal.

Machine learning - a type of artificial intelligence allowing software to become more accurate at predicting outcomes without being explicitly programmed to. Machine learning algorithms use historical data as input to predict new output values.

Military LES (Leave & Earnings Statement) - A pay stub for members of the military which shows their leave and earnings (entitlements, deductions, allotments).

Odometer Statement - A legal document requiring the owner of a used vehicle to state accurate mileage upon transfer of ownership.

Optical character recognition (OCR) - a technology enabling computers to “read” text off of documents and turn it into into machine-readable data.It is usually priced per page and can be riddled with mistakes.

Origination - the process of a borrower applying for a loan and a lender processing the application. Origination totals can be either a dollar value or the number of loan contracts.

Precision (in AI) - the accuracy of the software's predictions. The ratio of the number of times the software correctly predicts a value to the total number of times it predicts a value. If the software extracts non-null values 90 times, and 80 are correct, the precision is 80/90, or 88.9%.

Recall (in AI) - refers to the frequency AI-software accurately extracts values when they are present in the document. For instance, if there are 100 documents containing the term and the software correctly identifies the term in 80 of these, the recall is 80/100, or 80.

Regulatory Compliance - Regulatory compliance is an organization's adherence to laws, regulations, guidelines and specifications relevant to its business processes.

Retail Installment Sales Contract (RISC) - The contract documenting a transaction between the customer and dealer to purchase a vehicle where customer agrees to pay the dealer over time, paying both the value of the vehicle plus interest, in which the dealer may sell this contract to a lender or other party.

Robotic process automation (RPA) - the process of designing software to do human tasks. This helps lenders accelerate the lending process and significantly increase revenue.

Stipulation -Conditions a bank or dealer requires to fund a loan.
-- Consumer (proof of identity, proof of residence, proof of income, proof of insurance)
-- Dealer (proof of VSC, proof of title application, proof of GAP waiver, proof of odometer statement)

Underwriting - the process by which an institution assesses the riskiness of a potential applicant before extending credit.

Underwriting process - in the lending process the lender verifies the individuals income, assets, debt, credit and property to determine their eligibility.

Unwind - An unwind refers to a deal that has fallen through or a cancelled sale. The simplest unwind in auto lending is when the buyer does not take possession of the vehicle and the vehicle does not leave the dealership, and the transaction is voided. But unwinds can happen after the car leaves the lot for a number of reasons.

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