Two Harbors Investment Corp. reported a comprehensive loss attributable to common stockholders of $186.7 million for the year ended December 31, 2025, a significant decrease compared to the comprehensive income of $107.6 million for the year ended December 31, 2024. This decline was primarily driven by a $375 million litigation settlement expense, net mark-to-market losses on mortgage servicing rights (MSR), and dividends declared, partially offset by servicing income and net mark-to-market gains recognized on investment securities. The company's book value per common share decreased from $14.47 at December 31, 2024, to $11.13 at December 31, 2025.
The company's investment portfolio, consisting primarily of Agency residential mortgage-backed securities (RMBS) and MSR, totaled $9.0 billion as of December 31, 2025, compared to $10.4 billion as of December 31, 2024. Agency RMBS comprised $6.6 billion of the portfolio, while MSR accounted for $2.4 billion. The company's debt-to-equity ratio, which includes unsecured borrowings, was 4.8:1.0 as of December 31, 2025, compared to 4.3:1.0 as of December 31, 2024. The increase in the debt-to-equity ratio was primarily driven by a decrease in total stockholders’ equity as a result of the comprehensive loss incurred and dividends declared during the year ended December 31, 2025.
Key operational developments included an increase in the three-month average conditional prepayment rate (CPR) for MSR to 6.4% for the three months ended December 31, 2025, compared to 4.9% for the three months ended December 31, 2024. The company's total serviced mortgage assets, which include mortgage loans underlying MSR, subserviced loans, and mortgage loans held-for-sale, decreased from $211.8 billion as of December 31, 2024, to $203.2 billion as of December 31, 2025. The company also continued to operate its direct-to-consumer loan origination platform through its subsidiary, RoundPoint Mortgage Servicing LLC, which was established to benefit the MSR portfolio through retention and recapture of existing borrowers.
On December 17, 2025, Two Harbors entered into a definitive agreement to merge with UWM Holdings Corporation in an all-stock transaction, expected to close in the second quarter of 2026. Under the terms of the agreement, Two Harbors common stockholders will receive 2.3328 shares of newly issued UWM Class A common stock for each share of Two Harbors common stock. The company anticipates that the paired construction of its low mortgage rate MSR with RMBS will generate attractive risk-adjusted returns with lower expected volatility, relative to RMBS portfolios without MSR.
About TWO HARBORS INVESTMENT CORP.
Two Harbors Investment Corp. is a Maryland-based REIT specializing in investing in, financing, and managing mortgage servicing rights (MSR) and Agency residential mortgage-backed securities (RMBS). It operates as a mortgage owner, servicer, and originator, leveraging expertise in interest rate and prepayment risk to generate stable, long-term shareholder value through diversified assets, risk management, and strategic capital allocation within a highly regulated industry.
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