Look before you leap

In addition to debt counselling services, NCI is able to provide on the spot investigation where lenders are unable to visit prospective borrowers and/or securities. Below are two illustrations which show how useful this service is.

Case Study #1

NCI was instructed to meet with the representatives of a well-known celebrity. The celebrity owned a multimillion pound property in the South of England. He had secured a temporary position overseas and was looking to release funds to pay for a home near his new workplace.

The lender concerned was not authorised to make regulated loans. The celebrity declared that he would not be living in the property and thus this was not an issue.

NCI’s agent queried this point asking where the celebrity intended to live upon return to the UK. It quickly became apparent that the intention was to move back into the property; albeit after the loan had been repaid. This would have been a regulated loan as there was a clear intention for the property to be an owner-occupied residence in the future.

The loan did not proceed and NCI’s client was spared the embarrassment of making a loan of over £3m that may have been difficult to enforce; not mentioning issues with the regulatory authorities.

Case Study #2

The applicant was a qualified nurse and the proposed security was an 18 bed residential care home. She was under pressure to repay a loan to the Charity Commission that, she claimed, had sold her the business. She was selling her home to fund part of the loan repayment. It was not apparent where the applicant would live, if not in one of the 12 empty rooms in the care home.

The applicant would not allow the agent to undergo an internal inspection of the property. NCI highlighted in its report that the reduction in the number of residents had significantly reduced income and meant the previous loan with the terms of the previous loan from the charity commission had not been met.

Despite all the ‘red flags’ in NCI’s initial report the lender decided the risk was acceptable and the loan was made.

Sometime later NCI was instructed to do a progress report to see if the borrower was on track to repay the loan. On arrival the security was found to be empty and seemingly abandoned. Enquiries established that only two weeks after NCI’s initial report the Care Quality Commission had closed the care home down and moved the residents to alternative accommodation.