Esmond Bank approves a 10-year loan to Matt Schweitzer. In doing so, Esmond Bank incurs $2,000 of loan origination costs (attorney fees, title insurance, wages of employees’ direct work on loan origination). The loan origination fees shall be

 Esmond Bank approves a 10-year loan to Matt Schweitzer. In doing so, Esmond Bank incurs $2,000 of loan origination costs (attorney fees, title insurance, wages of employees’ direct work on loan origination). The loan origination fees shall be
Deferred and recognized upon final payment of the loan.
Reported as service fee income.
Deferred and recognized over the life of the loan as an adjustment of yield (interest income). Correct
Recognized as revenue when the loan is granted.
 You Answered Correctly!
This answer is correct. The lender shall defer and recognize loan origination costs over the life of the loan when the costs relate directly to the loan and would not have been incurred but for the loan.