Art. 124 para 6 second paragraph defines that in case an institution has more than one exposure secured by the same property, these exposures should be summed and considered as one gross exposure for the purpose of the ETV. 

The paragraph does however not detail how to handle a further junior lien in such a case, especially considering how the V of the ETV formula shall be determined in such a case. We assume the property value can only be used once in the ETV calculation, so our question is if we are allowed to distribute the value of the property among mortgages.

Simplified example with a property value of 400

mortgage/loan rank 1 - 50

mortgage/loan rank 2 - 100 held by third party

mortgage/loan rank 3 - 50

as per the rules given we are not allowed to sum up loan rank 1 and rank 3 as the sequence is broken. assigning the full property value of 500 to the first lien would give an ETV of 0.1 and a great riskweight but nothing would be left for rank 3, resulting in the highest riskweight.

is it allowed to distribute the value of the property to achieve the best results like following:

50 / 100 property value for rank 1 --> ETV 0.5

150 (50+100 third party loan) for rank 3 loan / 300 property value --> ETV 0.5