Which statement describes a common feature of savings and loan associations and mutual savings banks?

• A. Home mortgages tend to account for a large proportion of their consumer loans
• B. They offer a broader range of services than other financial institutions
• C. They are required to obtain charters from the federal government
• D. Interest rates on loans are generally lower than the rates charged by traditional banks

Answer: (A)

Savings and loan associations and mutual savings banks are thrift institutions whose primary function is to promote home ownership through mortgage lending. A defining feature of their business is that home mortgages tend to make up a large share of the loans they issue, more so than other kinds of consumer loans. This focus on residential real estate sets them apart from broader commercial banks that offer a wider range of services and loan types. Charters can be either federal or state, so it isn’t correct to say they’re required to have federal charters. Mortgage rates can vary, but the key distinguishing trait is their emphasis on mortgage lending.