Company: TWO-PC
Filing Date: 2025-04-29
Form Type: 10-Q
Source: 0001465740-25-000104
Chunk: 247

Company: TWO HARBORS INVESTMENT CORP.
Filing Date: 2025-04-29
Form: 10-Q
Item: Item 2
Chunk 247
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 cost of funds associated with the financing of AFS securities for the three months ended March 31, 2025, as compared to the same period in 2024, was due to declining interest rates.

The decrease in yields on reverse repurchase agreements for the three months ended March 31, 2025, as compared to the same period in 2024, was due to declining interest rates. 

The decrease in cost of funds associated with the financing of MSR assets and related servicing advance obligations for the three months ended March 31, 2025, as compared to the same period in 2024, was primarily due to declining interest rates, as well as a greater portion of our MSR financing from repurchase agreements versus revolving credit facilities. Our repurchase agreements, on average, carry lower floating rate spreads than our revolving credit facilities. We have one revolving credit facility in place to finance our servicing advance obligations, which are included in other assets on our consolidated balance sheets.

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Late in the second quarter of 2024, RoundPoint began operating its in-house, direct-to-consumer originations platform. Prior to the launch of originations, our mortgage loans held-for-sale consisted of a small number of loans purchased from the collateral underlying our MSR, which were not pledged for any form of financing.

The cost of funds associated with our convertible senior notes for the three months ended March 31, 2025, as compared to the same period in 2024, was consistent.

The following table presents the components of the yield earned on our AFS securities portfolio as a percentage of our average amortized cost of securities for the three months ended March 31, 2025 and 2024:

Three Months EndedMarch 31,20252024Gross yield/stated coupon5.0 %4.9 %Net (premium amortization) discount accretion(0.2)%(0.2)%Net yield4.8 %4.7 %

Net Servicing Income

The following table presents the components of net servicing income for the three months ended March 31, 2025 and 2024:

Three Months EndedMarch 31,(in thousands)20252024Servicing fee income$126,171 $134,320 Ancillary and other fee income5,094 3,857 Float income25,594 28,156 Total servicing income156,859 166,333 Total servicing costs3,197 7,119 Net servicing income