According to Annex II Part II Credit Risk IRB – B.6.1, to the exposure class “Retail – Secured by residential real estate” shall be assigned retail exposures as referred to in Article 147 (2), point (d) (ii), of Regulation (EU) No 575/2013.

Article 147 (2), point (d) (ii) refers to “retail exposures secured by residential property”.

Furthermore, Article 147 (5) requires that to be eligible for the retail exposure class laid down in point (d) of paragraph 2 of the same Article, exposures shall be one of the following: 

“(i) exposures to one or more natural persons;

(ii) exposures to an SME, provided that the total amount owed to the institution and parent undertakings and its subsidiaries, including any exposure in default, by the obligor client or group of connected clients, but excluding exposures secured by residential property, up to the property value does not, to the knowledge of the institution, which shall take reasonable steps to verify the amount of that exposure, exceed EUR 1 million; 

(iii) exposures secured by residential property, including first and subsequent liens, term loans, revolving home equity lines of credit, and exposures as referred to in Article 108(4) and (5), regardless of the exposure size, provided that the exposure is either of the following: 

(1) an exposure to a natural person; 

(2) an exposure to associations or cooperatives of individuals that are regulated under national law and exist with the sole purpose of granting their members the use of a primary residence in the property securing the loan”.