Document ID: chunk:federal_register_of_legislation:F2022L01576:body:0:p23
Version: federal_register_of_legislation:F2022L01576
Segment Type: other
Provision Reference: 
Character Range: 62431–65277

balance, less the amount of mortgage insurance, to the valuation of the security is no more than 80 per cent (where the exposure is 90 days or more worth of payments past-due, and the valuation is not older than 12 months); and
       (c)          an exposure that is secured by a registered second mortgage against a residential property where:
           (i)            the ratio of the outstanding balances of the exposure secured by both first and second mortgages to the valuation of the residential property does not exceed 80 per cent, and the first mortgage cannot be extended without it being subordinated to the second mortgage; or

           (ii)         where the ratio of the outstanding balances of the exposure secured by both first and second mortgages to the valuation of 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 (as defined in APS 112).

Category Two exposures
10.         A Category Two exposure 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 lenders' 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 90 days or more worth of payments past–due, and the valuation is not older than 12 months).
11.         For Category Two exposures, the prescribed provision is a percentage of the balance outstanding, where the percentage depends upon the term of payments past-due. An ADI must apply the minimum provisions for Category Two exposures in Table 1.
Table 1: Category Two exposures
    Term of payments past–due            Amount of Provision (%)
    Up to 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

12.         Where the provision calculated under Category Two exposures is greater than the provision that would have been calculated under Category Three exposures, the latter must be taken as the prescribed provision.

Category Three exposures
13.         Category Three exposures apply to all exposures that do not fall into Categories' One, Two, or Four. Personal and commercial loans (both secured and unsecured), and residential mortgage loans where the ratio of the outstanding balance, less the amount of lenders mortgage insurance, to the valuation of the security is greater than 100 per cent, are included.
14.         The minimum provision for these items is a percentage of the balance outstanding, where the percentage depends upon the term of payments