Jan 25, 2013
A savings and loan association (S&L) is a financial institution that specializes in savings deposits and mortgage loans. and has become one of the primary sources of mortgage loans for homebuyers today. It offers mortgage services to people from the savings and deposits received from private investors.
Depositors and borrowers are members with voting rights and have the ability to direct the financial and managerial goals of the organization .
Characteristics of Savings and Loan Associations
- Privately or locally managed financial institutions
- Uses individuals' deposits to make long-term amortized loans to home buyers .
- Disperses loans for home repairs. construction. and refinancing
savings and loan association was established in 1831, and the Federal Home Loan Bank System was set up in 1932 to administer it. The Federal Savings and Loan Insurance Corporation (FSLIC)
was responsible for insuring the deposits of the savings and loan association. These associations underwent real expansion only after the Second World War. In the past, there were only two ways of organizing savings and loan associations: as mutual or capital stock institutions .
The day-to-day affairs of the association are controlled by the officers and directors whose job responsibilities include organizing and operating the association in compliance with the state and federal laws. Thus, they are accountable for breaches of these common-law duties that may occur due to violation of state or federal laws or corporation bylaws. They are also responsible for selecting competent staff for managing affairs of the association, devise operating policies. monitor operations. and assess audit reports .
Savings and loans can no longer afford to remain mere mortgage providers with their margins narrowing down as higher interest rates continue to inflate borrowing costs.