Company: TWO-PC
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0001465740-25-000083
Chunk: 41

Company: TWO HARBORS INVESTMENT CORP.
Filing Date: 2025-02-18
Form: 10-K
Item: Item 1A
Chunk 41
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 our subsidiaries’ approved status by one or more GSEs, the acceleration and termination of our MSR financing facilities or the assessment of fines and loss of reimbursement of loan-related advances, expenses, interest and servicing fees. In addition, the implementation of more restrictive or operationally intensive guidance may increase the costs associated with owning and managing MSR, our ability to finance MSR and our ability to generate revenue from servicing mortgage loans.

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If our ability to sell loans in the secondary market is impaired, it could affect our volume and margins and we may not be able to continue to originate mortgage loans.

We originate residential mortgage loans and may sell them to the GSEs or other third-party investors in the secondary market. There can be no assurance that we will be able to continue to sell our loans into the secondary market at attractive prices, or at all. If we are unable to sell our mortgage loans to the GSEs or other third-party investors, or the prices for such loans decline, our liquidity may be negatively impacted, we may be unable to continue to fund such loans, our revenues and margins on new loan originations could be reduced and our ability to repay our warehouse facilities could be impaired.

We are directly subject to risks associated with mortgage servicing, including risks related to previous mortgage loan servicers.

Through our operational platform, RoundPoint, we directly service a portion of the mortgage loans underlying our MSR assets as well as mortgage loans underlying MSR owned by third parties in accordance with requirements set forth by regulatory agencies and GSEs. This exposes us to risks inherent in mortgage loan servicing more directly than engaging third-party mortgage loan servicers, including legal or regulatory investigations or actions, adverse operational and reputational impacts resulting from a failure to comply with GSE rules and guidelines, additional servicing costs or servicing advance obligations resulting from payment delinquencies and mortgage defaults, and cybersecurity failures or breaches. Any of the foregoing risks could have a material adverse effect on our business, financial condition, results of operations and liquidity. 

In addition, when the servicing of a mortgage loan is assumed either through the purchase of MSR or through a subservicing arrangement, such loan may have been previously serviced in a manner that could interfere with our ability to meet certain applicable requirements. If not remediated by a prior servicer, such events may lead to the eventual realization of a loss to us. The recovery process against a prior servicer can be prolonged and amounts ultimately recovered from prior servicers may differ from our estimated recoveries recorded based on the prior servicer’s interpretation of responsibility