Do you like your bank? If you are like most Americans, you probably feel like you've developed a relationship with them, that they know you. In fact, you probably think that they actually care about this relationship like you do. Well, think again.

Banks are large financial institutions with one purpose: Making money! Credit unions, which are often not-for-profit, are built with the intention of protecting the assets of their members. And the term "not-for-profit", simply means they do not have shareholders to pay dividends to. Either way, banks and credit unions are in business to make money, not be your buddy.

One of the most devious ways that many credit unions protect their assets is the practice of cross-collateralization, where one loan, say a credit card or home equity line of credit, is secured by the collateral of another loan-your car purchased using an auto loan, for instance.

Earlier this month Fox Business News did an expose on this very subject.

Many consumers may not realize that the car they're financing through their credit union could also be used as collateral not only for their auto loan, but for another debt, such as a credit card.

So if you borrow money from your credit union for that new car today, then run into financial trouble two years down the road and stop paying on your credit card, the credit union can have someone come and "tow your car away," says Terry Duncan, a bankruptcy attorney with Duncan Law in Charlotte, N.C.

"It's a practice called "cross-collateralization," and while banks also may have such clauses in their loan documents, the practice is much more typical with credit unions", Duncan says.

"It's a fairly common clause in credit union loan documents" as the credit unions try to "make loans less risky for them", says Mike McClain, assistant general counsel and senior compliance counsel with the Credit Union National Association (CUNA).

Don't think it will happen to you? Don't be so sure. While working with clients to secure a short sale of their property, I watched as their credit union repossessed their truck. The home sellers were behind on their home equity line of credit (HELOC), which was through their credit union, but were current on the payments for their auto loan, also through their credit union. Through the cross-collateralization clause of their HELOC, the credit union towed their truck away to make good on their home equity line. The threat of repossession is very real.

You may want to think hard about borrowing money from the same place you have deposit accounts or credit cards. While there's nothing wrong with it if you have your financial house in order, and you may receive better interest rates on loans, it could become problematic if you run into financial difficulties, Dorothy Barrick, group manager and financial counselor at the nonprofit GreenPath Debt Solutions says.

"Sometimes it's not a good idea to bank where you're borrowing money," Barrick says.

Personally, I would change the last statement to read... "It is NEVER a good idea to bank where you're borrowing money," particularly when it comes to dealing with home mortgages, although I must say I've not seen any financial benefit to financing through one's bank as Barrick suggests. Use a lender that specializes in home mortgages, not your bank. Think of it as diversifying your credit lines. It's best to not have all your eggs in one basket, especially if the bank or credit union can take your entire basket if one of the eggs cracks.

I have always advocated using a local Mortgage Banker/Broker, rather than one of the big banks for a reason. Unlike a bank employee, who is most likely just an order taker, a Mortgage Broker/Banker is Trained, Tested and Licensed in all aspects of Mortgage Origination. A Mortgage Banker is required to take at least 20 hours of classroom training and pass not one, but two comprehensive tests to ensure that they know and understand the mortgage loan products, programs, State and Federal Disclosure laws and most importantly how to ethically counsel Mortgage Borrowers BEFORE they are issued a license allowing them to work with you. Did you know that a bank loan officer is only required to be "Registered". Not Licensed, just registered! Sad, but true...
No training, No testing, No licensing requirements, just registered. Think about that before you decide who is looking out for your best interest in what is probably the largest financial decision of your life.

I also recommend that you check out your selected Mortgage Originator at the National Mortgage Licensing System at www.NMLSConsumerAccess.org. This is the National repository for information on all Mortgage Loans Originators.

~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ www.LoansA2z.com