We are going to begin collecting release fees for grants that are borrowers obtain, at the time of closing since they are generally to be released by the bank before the loan pays off.

Question: prepaid finance charge or no? I cannot seem to wrap my mind around this one.

If the release fees were going to be actually paid to a government entity for the release, then they would be exempt. But that would involve maintaining these fees in a segregated escrow type of account for future use, which would also require periodic reconciliation. If you are just dumping the fee into income to later expense the release fee, I would be of the opinion that it is just a bank fee and a prepaid finance charge.

And that is where I needed the help thinking through the process there, thank you!