Document ID: chunk:federal_register_of_legislation:F2018L00379:body:0:p9
Version: federal_register_of_legislation:F2018L00379
Segment Type: other
Provision Reference: 
Character Range: 22117–24842

the residential property exceeds 80 per cent, and the first mortgage cannot be extended without it being subordinated to the second mortgage, and the outstanding balance is 100 per cent mortgage insured by an eligible lenders mortgage insurer.

Category two facilities

A category two facility is defined as an exposure that is secured by a registered first mortgage against a residential property, where the ratio of the outstanding balance, less the amount of mortgage insurance, to the valuation of the security is greater than 80 per cent but no more than 100 per cent (where the loan is 6 months or more worth of payments past due, the valuation must be no older than 12 months).

For category two facilities, the prescribed provision shall be a percentage of the balance outstanding, where the percentage depends upon the term of payments past due as outlined in the following table.  The balance outstanding should not be adjusted for any collateral value.
Term of payments past due        Amount of provision (%)
Less than 90 days                0
90 days and less than 182 days   5
182 days and less than 273 days  10
273 days and less than 365 days  15
365 days and over                20

Where the provision calculated under category two facilities is greater than the provision that would have been calculated under category three facilities, the latter should be taken as the prescribed provision.

Category three facilities

This category applies to all facilities that do not fall into categories one and two above, or category four below. Category three facilities include personal and commercial loans (both secured and unsecured), and mortgage loans where the ratio of the outstanding balance, less the amount of mortgage insurance, to the valuation of the security is greater than 100 per cent.

The minimum provision for these items shall be a percentage of the balance outstanding, where the percentage depends upon the dollar equivalent of a given term of contracted payments being past due as detailed below:
Term of payments past due        Amount of provision (%)
Less than 90 days                0
90 days and less than 182 days   40
182 days and less than 273 days  60
273 days and less than 365 days  80
365 days and over                100

Where an exposure falling within this category is secured by a mortgage over a residential property, the provision may be adjusted to reflect a part of the collateral value.  When this occurs, the minimum provision percentage in the table shall be applied to the difference between the outstanding balance (less any loan insurance) and 70 per cent of the security value (where the exposure is 6 months or more worth of payments past due, the valuation