Company: TWO-PC
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0001465740-25-000083
Chunk: 42

Company: TWO HARBORS INVESTMENT CORP.
Filing Date: 2025-02-18
Form: 10-K
Item: Item 1A
Chunk 42
---
 for loss, which could lead to our realization of additional losses.

Our servicing and origination activities expose us to risk of litigation, which may materially and adversely affect our business and financial condition.

We are obligated to comply with numerous federal and state laws and regulations in connection with our mortgage loan originations and servicing businesses including the Fair Housing Act and Equal Credit Opportunity Act, which are intended to provide protection from intentional and unintentional discriminatory practices to applicants and borrowers. If these anti-discrimination initiatives continue to expand, we could experience increased administrative burdens and incur additional related compliance costs and expenses. If our loan origination or mortgage servicing practices are found to be discriminatory, we may be found liable, experience reputational harm and incur expenses and costs in connection with disputing these allegations or settling claims.

We depend on the accuracy and completeness of information about mortgage loan borrowers and any misrepresented information could adversely affect our business, results of operations and financial condition.

In deciding whether to approve loans through our originations platform, we may rely on information furnished to us by or on behalf of borrowers, including financial statements and other information. We also may rely on representations of borrowers as to the accuracy and completeness of financial and other information provided. If any of this information is intentionally or negligently misrepresented and such misrepresentation is not detected prior to loan funding, the fair value of the loan may be significantly lower than expected. Whether a misrepresentation is made by the loan applicant, another party or one of our employees, we generally bear the risk of loss associated with the misrepresentation and the loan may be unsalable or subject to repurchase. Our controls and processes may not have detected or may not detect all misrepresented information in our loan originations. Any such misrepresented information could have a material adverse effect on our business, results of operations and financial condition.

We may be subject to representation and warranty risk in our capacity as an owner of MSR as well as in connection with our prior securitization transactions and our sales of MSR and other assets.

The MSR we acquire may be subject to existing representations and warranties made to the applicable investor (including, without limitation, the GSEs) regarding, among other things, the origination and prior servicing of those mortgage loans, as well as future servicing practices following our acquisition of such MSR. If such representations and warranties are inaccurate, we may be obligated to repurchase certain mortgage loans or indemnify the applicable investor for any losses suffered as a result of the origination or prior servicing of the mortgage loans. As such, the applicable investor may