The amortized fees feature can be used to handle the accumulation of income for fees for which that income must be amortized over the life of the loan. In addition, it can also be used to amortize discount income (the income inherent in purchasing a loan for less than the principal balance of that loan) or to amortize the expense of loans bought at a premium.
The first step in setting up a fee amortization is to configure two transaction codes: once for establishing the amortized fee, and the second for the periodic amortization.
Next, the amortized fee is configured on a loan by one of the following four amortization methods:
The fee will amortize during the nightly accrual process on those days when it is scheduled to do so. For example, if the fee amortization is set up as daily, it will amortize during each nightly accrual process, but if it is set up to weekly, it will only amortize during one of each seven nightly accrual processes.
At any time, you can view the setup and the fee amortization history for the amortized fees on a loan by selecting Amortized Fees from the view menu.