Striking the right balance in ticklers

I’ve seen my fair share of ticklers throughout my career. And when I say fair share, I mean tens of thousands. I worked for a company that had a tickler solution as part of a larger loan management system and helped community banks make the switch from their old system to the new system.

I learned that there are two schools of thought around ticklers: Ticklers as a checklist, verifying that the correct documents exist in the loan file, and ticklers for tracking, a follow-up to a missing or recurring item in the loan file. 

Ticklers can be unwieldy, especially for banks with a lot of loan volume. So what are the best ways to make your tickler system manageable and make the data meaningful?

Stop using ticklers like a checklist

Many banks use a tickler system like a post-closing checklist, verifying that the proper loan documents are in the file. The problem? It relies on the loan operations team to understand the nuances of compliance requirements depending on the type of loan. And just because a document exists in the file doesn’t mean that it is correct.

Separate the compliance review from a post-closing checklist. If anything, a checklist of required documents should be deployed pre-closing — and as a separate activity from your ticklers. Someone with specialized expertise can do a compliance review. 

You can reduce the burden of your loan operations team by limiting ticklers to items that need to be tracked over the life of the loan.

Focus on follow-up ticklers

The best use cases for ticklers fall into one of two buckets: Recurring items and items missing from the loan file at closing.

Insurance, financial statements, tax returns, UCC continuations: Any tickler system should be capable of handling these items perfectly. Based on the last date of the document, the system should calculate the next date you need the item again, based on its recurrence (quarterly, annually, every five years, etc.). This allows your loan operations team to review documents that may have been in the loan file at one point (like last year’s tax return) but is now a document exception (this year’s tax return has not been received yet). The more automated your system is in identifying missing items, the better.

Ticklers can also be internal reminders for recurring tasks, like an annual review of the borrower’s loan file. Receiving the financial statements is one thing; having an analyst review the financials is another. Or maybe you set a reminder to reach out to a borrower in advance of an agricultural line of credit renewal, to begin collecting updated information.

In addition to your recurring items, use ticklers to track items that are missing from the file at closing: The recorded mortgage, final title policy, or verifying the lien on a vehicle, for example. You know that those items will not be received until weeks (or months) later, but you can’t lose sight of them. Ticklers should be your reminder to follow up if the items are still documentation exceptions after a period of time. 

Address exam-related issues

A final use case for ticklers is to address documentation issues that are raised during an exam. While these may typically fall into the checklist category, they require additional attention so that you can provide evidence to your examiners that you have addressed the shortcoming.

Make sure these ticklers are very specific: Instructing a loan operations person what to review in the loan file. Track the progress over time through tickler reports. How many loan files still had this issue? Does that number decrease over time?

This might be a temporary process until your examiners are satisfied that the documentation exceptions are no longer an issue. Your tickler system should be flexible enough that you can add, remove, or change tickler requirements without creating a lot of retroactive cleanup in your existing loan files.

If you haven’t reviewed your tickler configuration in a few years, now is the time to make updates. You can free up your loan operations team’s time by ensuring that your ticklers truly represent risks to your loan files, instead of extra busy work.