The Principal Act is amended by inserting the following after section 41 but in Chapter 1 of Part 4:

"41A. Modifications to this Chapter in its application to securitised mortgage credit assets.

(1) This Chapter shall be modified as follows in relation to securitised mortgage credit assets:

(a) securitised mortgage credit assets shall be disregarded for the purposes of sections 31(1), 32(11), (12) and (13) and 40(2);

(b) the location of securitised mortgage credit assets for the purposes of section 33(1) and (2) shall be determined by reference to the location of the property assets related to the mortgage credit assets which are securitised;

(c) securitised mortgage credit assets may only be included by a designated mortgage credit institution in the cover assets pool if those assets satisfy the following requirements:

(i) the securitisation entity which is the issuer of the securitised mortgage credit assets is established under and subject to the laws of an EEA country;

(ii) at least 90 per cent of the assets held, directly or indirectly, by the securitisation entity are assets that comprise one or more mortgage credits, but disregarding, for the purposes of this subsection -

(I) assets that comprise one or more mortgage credits which if they were held by a designated mortgage credit institution would only qualify as mortgage credit assets under section 4(4), and