TD Bank’s Mortgage Loan Sale: A Strategic Move to Comply with U.S. Regulations
Toronto-Dominion Bank, Canada’s second-largest bank and the 10th largest in the U.S., is taking a significant step to modify its balance sheet. The bank plans to sell approximately $9 billion of residential mortgage loans to comply with a new cap imposed by U.S. regulators. This move is part of the plea agreement TD Bank reached with government authorities last year.
A Plea Deal with Far-Reaching Consequences
In October 2024, TD Bank made history by becoming the largest bank in the U.S. to plead guilty to violating a federal law aimed at preventing money laundering. The bank agreed to pay over $3 billion in penalties to resolve the charges. The plea deal came with a rare imposition of an asset cap and other business limitations.
The Sale Portfolio: Jumbo Mortgages with High Credit Scores
The sale portfolio, for which bids are due next week, consists of jumbo mortgages obtained by U.S. homeowners with high credit scores. This strategic move will help TD Bank rebalance its assets and comply with the new regulatory requirements.
A New Chapter for TD Bank
As TD Bank navigates this significant change, it’s clear that the bank is committed to regaining the trust of its stakeholders. By selling off a portion of its mortgage loan portfolio, TD Bank is taking a crucial step towards a more sustainable future. The outcome of this sale will be closely watched by industry experts and investors alike.
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