23.A 35% risk weighting shall apply to exposures fully secured by eligible immovable residential property that is occupied by the owner or that is rented, and where the purpose of the facility is to fund the purchase of the property. This risk weight value shall be applied only where there exists a substantial margin of additional security over the amount of the loan.

24.Residential property shall be considered eligible immovable property if the following criteria are met:

1. (i)A mortgage is enforceable in all jurisdictions which are relevant at the time of the conclusion of the credit agreement and shall be appropriately filed within a reasonable time;
2. (ii)All legal requirements for establishing the mortgage have been fulfilled;
3. (iii)The protection agreement and the legal process underpinning it enable the bank to realise the value of the property within a reasonable timeframe;
4. (iv)Location of the property must be in the UAE; and
5. (v)Banks shall have in place procedures to monitor that the property taken as credit protection is adequately insured against the risk of damage.

25.Banks shall be responsible to monitor on an ongoing basis that the criteria listed in paragraph 24 above are met. In case of failure to conduct such internal monitoring or if the results of such internal monitoring indicate that the criteria are not met, the residential property cannot be considered eligible immovable property for the application of the 35% risk weight.

26.Banks shall clearly document the types of residential immovable property they accept and their lending policies in this regard.

27.Exposures secured by eligible residential real estate, as specified by the eligibility criteria set out in paragraph 24 above, and for which the 35% risk weight applies must not exceed any of the two items below:

1. (i)85% of the market value of the property (i.e., the LTV ratio must be less than or equal to 85%); and
2. (ii)AED 10 million;

28.If the two criteria listed above in paragraph 27 cannot be definitively established or met, then the 35% risk weight cannot be applied. If the exposure meets the criteria for regulatory retail claims as set out at paragraph 21 then a 75% risk weight applies, otherwise a 100% risk weighting must be used.

29.The Central Bank may increase the 35% risk weight if this risk weight is deemed to be too low based on the default experience for these types of exposures in the UAE.