Building And Loan Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Building And Loan, written in plain English, along with examples of how it is used.
What is Building And Loan?
(n) Building And Loan is the type of housing loan provided by the special type of association where one can take housing loan when he build a deposit with such association, which is sufficient for paying the down payment
History and Meaning of Building And Loan
Building and Loan associations, also known as savings and loan associations, have been around in the United States since the mid-19th century. They were created to help working-class people become homeowners by providing them with loans to purchase or build their own homes. These associations acted as a type of cooperative, where members would pool their money together to create a fund from which loans could be made.
The building and loan concept was based on the idea of mutuality, where people would work together for the common good. Members of the association would make contributions to a general fund, and in return, they could obtain shares that would entitle them to borrowing privileges. The interest paid on loans would go back into the shared fund to help fund future loans.
Examples of Building And Loan
Sarah joined a building and loan association to save up money for a down payment on her first home. She contributed a portion of her paycheck to the association each month and was able to secure a loan to purchase her new home once she had built up enough savings.
The building and loan association that George belonged to was struggling financially due to a large number of defaults on loans. They were able to recover, however, by turning to more conservative lending practices and taking steps to reduce their overall risk.
In the early 20th century, building and loan associations became popular in small towns and rural areas as a way of promoting rural development and homeownership.
Legal Terms Similar to Building And Loan
Savings and loan association - A financial institution that specializes in providing savings accounts and mortgage loans to individuals and families.
Mutual savings bank - A type of bank that is owned by its depositors and operates for the benefit of its customers rather than shareholders.
Credit Union - A non-profit financial institution that is owned and operated by its members, who typically have a common bond such as working for the same employer or living in the same community.