Mutual Savings Financing
Sources...
Mutual savings banks may play an important role in obtaining a real estate mortgage and they are contributors to real estate credit in several states. Started
in Philadelphia in
1816 and in Boston
in 1817 these banks
historically
provided a place
where a person of
limited financial
means could save
money for any
purpose. Today,
mutual savings banks
are found primarily
in the northeastern
United States, where
they compete
aggressively for the
savings dollar. The
states of
Massachusetts, New
York, and
Connecticut account
for 75% of the
nation's total.
As the word
"mutual"
implies, the
depositors are the
owners, and the
"interest"
they receive is the
result of the bank's
success or failure
in lending. Mutual
savings banks offer
accounts similar to
those offered by
Saving and Loans. To protect
depositors, laws
require mutual
savings banks to
place deposits in
high-quality
investments. This
includes sound real
estate mortgage
loans. Loan-to value
ratios can be 70% to
80% (higher for FHA
and VA loans),
maturities are of 20
to 30 years, and as
a rule, loans are
made within a
100-mile radius of
the bank. Presently,
real estate loans
account for two out
of every three loan
dollars at mutual
savings banks.
Mutual savings banks
are chartered and
controlled by state
regulatory agencies.
Membership in the
FDIC is available
and optional.
Mutual
Savings Banks To
Life Insurance
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