DEFINITION of 'Building And Loan Associaiton'

It is a depository financial institution that is federally or state chartered, that specializes in collecting savings deposits from customers and investing it in residential mortgage loan. Building and Loan Associations are usually mutually held, meaning that depositors and borrowers have the ability to direct the financial goals of the organization.

Also referred to as "savings and loan association."

BREAKING DOWN 'Building And Loan Associaiton'

The difference between a savings bank and a building and loan association is that savings banks generally concentrate on commercial lending to help businesses and finance ventures or lending that is secured by other items like credit cards. Building and loan associations, on the other hand, tend to focus on residential mortgage lending and promoting home ownership.

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