We typically charge a "future satisfaction fee" on our mortgage loans and have been considering it a finance charge. However, I found in another resource document where it is not a finance charge.

Is it or is it not?

You will get conflicting opinions on this issue.

We do not treat the $12 as a finance charge.

In the past, we have considered both satisfaction and recording fees as finance charges. After reading the Reg more closely, we have decided NOT to count them as PPFCs:

Reg Z 226.4(e)(1)

(e) Certain security interest charges. If itemized and disclosed, the following charges may be excluded from the finance charge:

(1) Taxes and fees prescribed by law that actually are or will be paid to public officials for determining the existence of or for perfecting, releasing, or satisfying a security interest.

In effect, it sounds as if the satisfaction fee is for payment of recording - a recording charge. We would not consider this a finance charge to affect APR; it is a fee.