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Assessment of security for loans.
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25.—(1) A building society shall make such arrangements for assessing the adequacy of the security for loans to be secured by the mortgage of freehold or leasehold estate or interest (referred to in this section as “security”) as may be reasonably expected to ensure that—
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(a) an assessment will be made on the occasion of each loan whether or not any previous assessment was made with a view to further loans,
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(b) each assessment will be made by a person holding office in or employed by the society who is competent to make the assessment and is not disqualified under this section from making it,
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(c) each person making the assessment will have furnished to him a written report on the value of the security and any factors likely to affect its value made by a person who is competent to value, and is not disqualified under this section from making a report on, the security in question,
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but the arrangements need not require each report to be made with a view to a particular assessment so long as it is adequate for the purpose of making the assessment.
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(2) The following persons are disqualified from making a report on the value of a security under this section, that is to say—
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(a) an officer or employee of the society who makes assessments of the adequacy of securities for loans or authorises the making of loans;
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(b) where the society has made, or undertaken to make, to any person a payment for introducing to it an applicant for the loan, that person;
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(c) where the loan is to be made following a disposition of the security, any person having a financial interest in the disposition and any director, other officer or employee of his or of an associated employer; and
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(d) where the loan is to be made following a disposition of the security, any person receiving a commission for introducing the parties to the transaction involving the disposition and any director, other officer or employee of his.
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(3) In relation to any security which is to secure a loan following its disposition, the following persons are disqualified from making an assessment of the security or authorising the making of the loan, that is to say—
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(a) any person, other than the society making the loan, having a financial interest in the disposition and any director, other officer or employee of his or of an associated employer; and
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(b) any person receiving a commission for introducing the parties to the transaction involving the disposition and any director, other officer or employee of his.
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(4) An officer, solicitor, surveyor or valuer of a society or other person engaged by a society in making reports on the value of securities or in connection with the assessment of the adequacy of securities or the authorisation of the making of loans shall not accept any commission for or in connection with any loan made or proposed to be made by the society.
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(5) Any person who, being disqualified from doing so—
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(a) makes a report on a security for a loan,
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(b) makes an assessment of the adequacy of a security for a loan, or
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(c) authorises the making of a loan,
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and, in the case of a person making a report, does so knowing or having reason to believe that the report will be used or is likely to be used for the purposes of a loan, shall be guilty of an offence.
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(6) For the purpose of this section any 2 employers are associated if one is a body corporate of which the other (directly or indirectly) has control or if both are bodies corporate of which a third person directly or indirectly has control; and the expression “associated employer” shall be construed accordingly.
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(7) In this section a person shall be taken to have a financial interest in the disposition of any security if, but only if, he would, on a disposition of that security, be entitled (whether directly or indirectly, and whether in possession or not) to the whole or part of the proceeds of the disposition.
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