Building And Loan Associations are federally or state chartered financial institutions that specialize in accepting deposits and making mortgage and other loans. The primary purpose of these institutions is to make mortgage loans on residential property. Structurally similar to mutual insurance companies, depositors and borrowers are members with voting rights. In addition, members are capable of directing the financial and managerial goals of these institutions.
Building And Loan Associations often operate under other business models as well. It is not uncommon for these financial institutions to take the form of joint stock companies that are publicly traded. This allows the institutions to take advantage of even larger pools of resources. Leveraging the resources of capital markets increases the capacity of these organizations. Building And Loan Associations that are publicly traded are no longer considered associations. Dropping the word “association” from the title is more than a mere name change. It reflects the transfer of financial and managerial control from members to the shareholders.
