SME supporting factor for exposures collateralised by residential property

How should the SME supporting factor be calculated for exposures to SME where the total amount owed to the institution is collateralised by residential property?

According to the formula for calculating the SME supporting factor in CRR2, exposures collateralised by residential property should be excluded in E*. However, if the total amount owed to the institution is collateralised by residential property, E* is zero and the formula is not mathematically correct and is not possible to use (see Example 1 below). Example 1: A loan to an SME is 100 000 EUR and RWEA is 10 000 EUR. The loan is collateralised by residential property and the institution has no other exposure to the SME. According to the newly introduced formula in Article 501 of Regulation (EU) No 575/2013 as amended by Regulation (EU) 2019/876 (CRR2), RWEA* should be calculated according the following: RWEA*=10000x(0x0,7619+0x0,85)/0. Since it is not possible to calculate this formula (partly because a number cannot be divided by 0), RWEA* cannot be calculated. Note that the formula error only occurs when the total amount owed to the institution is collateralised by residential property. Example 2 below shows that the formula works if the SME in Example 1 also has another exposures. Example 2: Besides the 100 000 EUR loan collateralised by residential property, the SME has a 100 EUR unsecured credit card loan, where RWEA is 75 EUR. It is now possible to calculate the RWEA*: 10 075x(100x0,7619+0x0,85)/100=7 676 EUR.