Two Harbors Investment Corp. has recently released its 10-Q report, providing detailed insights into its financial condition and operations. The company, incorporated in 2009 and headquartered in Saint Louis Park, Minnesota, is a real estate investment trust (REIT) that invests in, finances, and manages mortgage servicing rights (MSRs), agency residential mortgage-backed securities (RMBS), and other financial assets through its operational platform, RoundPoint Mortgage Servicing LLC.
In the 10-Q report, Two Harbors Investment Corp. highlighted its focus on leveraging core competencies in understanding and managing interest rate and prepayment risk to invest in its portfolio of MSR and Agency RMBS. The company aims to deliver stable performance across changing market environments and create sustainable stockholder value over the long term.
One of its wholly owned subsidiaries, TH MSR Holdings LLC, holds approvals from Fannie Mae and Freddie Mac to own and manage MSR, which represents a contractual right to control the servicing of a mortgage loan. Additionally, RoundPoint, a subsidiary of Two Harbors, services mortgage loans underlying TH MSR Holdings’ MSR as well as MSR owned by third parties.
The company's Agency RMBS portfolio primarily consists of fixed-rate mortgage-backed securities backed by single-family and multi-family mortgage loans, with the majority being whole pool certificates. Two Harbors Investment Corp. seeks to deploy moderate leverage as part of its investment strategy, financing its assets through short* and long-term borrowings structured as repurchase agreements and revolving credit facilities.
Two Harbors Investment Corp. has elected to be treated as a REIT for U.S. federal income tax purposes and is required to meet certain investment and operating tests and annual distribution requirements to maintain its REIT qualification.
In the report, the company also discussed factors affecting its operating results, including changes in interest rates, market value of target assets, prepayment rates of mortgages, and general economic conditions. It highlighted that a significant portion of its assets and liabilities are reported at fair value, which significantly affects its consolidated balance sheets and statements of comprehensive income.
The company emphasized that it has numerous internal controls in place to ensure the appropriateness of fair value measurements and detailed analytics for significant fair value measures. It also disclosed that its entire Agency RMBS investment portfolio reported at fair value is priced by third-party brokers and/or independent pricing vendors.
Today the company's shares have moved 3.5% to a price of $12.41. For more information, read the company's full 10-Q submission here.
