An adverse action notice is a document sent to a loan applicant stating a bank’s rationale for denying a loan. It may also contain a counteroffer, such as a lesser amount or a request for an approved co-borrower.
An authorized signer form is a document that allows an account holder to grant a range of clearance levels to individuals to perform certain functions within a bank account.

An exception report lists the documents that are missing from an organization’s files. It can also include documents that are expired or require some other type of action.

For a bank or credit union, exception reports are most frequently used to track loans (commercial loans in particular). Since all documents in a loan file are included for a specific reason, each is important and should be collected and indexed in a timely manner. Financial institutions must resolve exceptions efficiently to manage risk, remain compliant with banking regulations, and maintain customer and member satisfaction.

Although frequently used in commercial lending, exception reports could also be used for non-commercial accounts, such as deposits or trusts.

Why Exception Tracking is Critical

Well-structured exception reports in banks and credit unions empower users to quickly sort and filter exception data. Credit or loan admins use such filters to generate reports that consider a variety of variables, including officer, branch, and account-related data. Consistent and in-depth analysis of exception data helps banks and credit unions identify situations that require immediate action, thereby protecting their interests related to:

  • Defaults: If a recorded deed of trust isn’t filed and a loan defaults, the financial institution may be unable to foreclose on a property.
  • Collateral: Without auto insurance tracking, a wrecked car becomes lost collateral.
  • Collection: A missing promissory note inhibits the bank or credit union’s ability to collect on the debt.
  • UCCs: UCC collateral must be filed every five years.
  • Compliance: Missing documents can lead to poor compliance exams by regulators.

Common Ways to Track Exceptions

There are several methods that banks and credit unions use to track exceptions and generate exception reports.

  1. Spreadsheets: One inexpensive means is via an electronic spreadsheet. Although cost is minimal in this scenario, it is time-intensive, as information must be entered manually. Reports are generated from the spreadsheet and then routed to the appropriate bank staff member via email. Printed reports may need to be mailed or couriered to a separate location. Introducing the human element, therefore, also can result in human error.
  2. In-house Databases: An in-house, homegrown database is another option for tracking exceptions; the same pros and cons of a spreadsheet apply to a database as well. Databases also introduce additional technical challenges, requiring involvement by IT.
  3. Exception Report Software: Automated software, such as AccuAccount, generally provides a more streamlined approach to tracking exceptions, generating reports, and delivering flagged items to employees for resolution. A financial institution can customize the software to flag “critical” exceptions that must be dealt with immediately, such as a recorded deed of trust within 30 days or a title policy within 60 days. Automated exception reports can be run daily if the financial institution desires, and they are automatically routed via email to the appropriate compliance officer, insurance clerk, or other bank or credit union employees as necessary.

Exception Report Resources

For more exception report information, be sure to check out our extensive resource library with free document tracking spreadsheets, whitepapers, and eBooks.

Looking for more banking definitions? Check out our banking definitions page.

Explore more resources

Exception Tracking Cost Calculator

Exception tracking has many moving parts—from notice generation to recordkeeping and reporting. How much does it cost your financial institution each year? Find out with Alogent’s free calculator.
Read More »

Related articles

Tuesday 19 September 2023

From Data to Results: The Role of Personalization in Your Digital Banking Platform

One powerful strategy to enhance the user experience and drive engagement on digital platforms is through built-in contextual marketing. In the world of digital banking…

Learn More »

Wednesday 6 September 2023

[Playbook] Efficiently Managing To-Dos with Task Exceptions

Your financial institution is growing—more branches, more team members, more loan and account holders, and more follow-up. To keep pace with this complexity, you need…

Learn More »

Monday 28 August 2023

Exception Tracking: Is Now the Right Time to Upgrade Your Workflow?

Documentation and follow-up tasks for financial institutions to manage is commonplace—especially for banks and credit unions involved in commercial lending. Proactively tracking missing and expired…

Learn More »

Thursday 17 August 2023

[Playbook] Tracking and Resolving Recurring Document Exceptions

Proactively dealing with missing and expiring documents is a key component of an effective exception management strategy. However, that’s easier said than done when your…

Learn More »

Wednesday 9 August 2023

Six Steps to Maximize Your Financial Institution’s Digital Transformation Journey within the Digital Banking Channel

In today's rapidly evolving digital banking market, digital transformation and the adoption of cutting-edge, scalable solutions has become a necessity for banks and credit unions…

Learn More »

Tuesday 1 August 2023

Check Volumes are Declining, But Check Fraud is Rising: What’s it Costing your Financial Institution?

No financial institution – large or small – is protected from transaction or check fraud. And, the difficult reality for institutions is that fraud can…

Learn More »

Wednesday 26 July 2023

Boost Productivity at your Financial Institution with Enhanced Cold Storage

Cold storage systems can support numerous use cases at banks and credit unions. The phrase “cold storage” can be used to describe technology that manages…

Learn More »

Tuesday 18 July 2023

[Playbook] Interfacing Your Imaging System with eSign, LOS, & Other Systems

Your financial institution relies on a variety of technology to ensure efficient commercial lending operations—everything from loan origination systems (LOS) to eSign products. Wouldn’t it…

Learn More »