TWO HARBORS INVESTMENT CORP.TWO
TWO HARBORS INVESTMENT CORP. Debt Disclosure
Financing
Secured Financing
The following tables summarize the Company’s secured financing arrangements by collateral type:
| December 31, 2025 | |||||||||||||||||||||||
Collateral Type | |||||||||||||||||||||||
(in thousands) | RMBS (1) | Mortgage Servicing Rights and Advances | Mortgage Loans Held-for-Sale | Total Secured Financing | |||||||||||||||||||
Repurchase agreements | $ | 6,601,446 | $ | 650,000 | $ | 4,094 | $ | 7,255,540 | |||||||||||||||
Revolving credit facilities | — | 919,371 | — | 919,371 | |||||||||||||||||||
Warehouse lines of credit | — | — | 9,406 | 9,406 | |||||||||||||||||||
Total | $ | 6,601,446 | $ | 1,569,371 | $ | 13,500 | $ | 8,184,317 | |||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||
Collateral Type | |||||||||||||||||||||||
(in thousands) | RMBS (1) | Mortgage Servicing Rights and Advances | Mortgage Loans Held-for-Sale | Total Secured Financing | |||||||||||||||||||
Repurchase agreements | $ | 7,050,057 | $ | 755,000 | $ | — | $ | 7,805,057 | |||||||||||||||
Revolving credit facilities | — | 1,020,171 | — | 1,020,171 | |||||||||||||||||||
Warehouse lines of credit | — | — | 2,032 | 2,032 | |||||||||||||||||||
Total | $ | 7,050,057 | $ | 1,775,171 | $ | 2,032 | $ | 8,827,260 | |||||||||||||||
____________________
(1)Includes Agency and non-Agency AFS securities and Agency derivatives, as detailed within the Repurchase Agreements section of this Note 13.
Repurchase Agreements
The Company finances certain of its investment securities, MSR and mortgage loans held-for-sale through the use of repurchase facilities. At December 31, 2025 and December 31, 2024, the Company’s repurchase agreements had the following characteristics and remaining maturities:
| December 31, 2025 | |||||||||||||||||||||||||||||||||||
| Collateral Type | |||||||||||||||||||||||||||||||||||
(dollars in thousands) | Agency RMBS | Non-Agency Securities | Agency Derivatives | Mortgage Servicing Rights | Mortgage Loans Held-for-Sale | Total Amount Outstanding | |||||||||||||||||||||||||||||
| Within 30 days | $ | 2,194,337 | $ | — | $ | 56,670 | $ | — | $ | — | $ | 2,251,007 | |||||||||||||||||||||||
| 30 to 59 days | 1,744,692 | — | — | — | — | 1,744,692 | |||||||||||||||||||||||||||||
| 60 to 89 days | 1,689,646 | — | — | — | 4,094 | 1,693,740 | |||||||||||||||||||||||||||||
| 90 to 119 days | 916,101 | — | — | — | — | 916,101 | |||||||||||||||||||||||||||||
| 120 to 364 days | — | — | — | 650,000 | — | 650,000 | |||||||||||||||||||||||||||||
| One year and over | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Total | $ | 6,544,776 | $ | — | $ | 56,670 | $ | 650,000 | $ | 4,094 | $ | 7,255,540 | |||||||||||||||||||||||
Weighted average days to maturity | 55 | 0 | 7 | 193 | 83 | 67 | |||||||||||||||||||||||||||||
Weighted average borrowing rate | 4.12 | % | — | % | 4.46 | % | 6.76 | % | 5.88 | % | 4.36 | % | |||||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||||||||
| Collateral Type | |||||||||||||||||||||||||||||||||||
(dollars in thousands) | Agency RMBS | Non-Agency Securities | Agency Derivatives | Mortgage Servicing Rights | Mortgage Loans Held-for-Sale | Total Amount Outstanding | |||||||||||||||||||||||||||||
| Within 30 days | $ | 2,373,562 | $ | — | $ | 4,262 | $ | — | $ | — | $ | 2,377,824 | |||||||||||||||||||||||
| 30 to 59 days | 2,316,237 | — | — | — | — | 2,316,237 | |||||||||||||||||||||||||||||
| 60 to 89 days | 1,304,175 | 207 | 731 | — | — | 1,305,113 | |||||||||||||||||||||||||||||
| 90 to 119 days | 759,177 | — | — | — | — | 759,177 | |||||||||||||||||||||||||||||
| 120 to 364 days | 291,706 | — | — | 75,000 | — | 366,706 | |||||||||||||||||||||||||||||
| One year and over | — | — | — | 680,000 | — | 680,000 | |||||||||||||||||||||||||||||
| Total | $ | 7,044,857 | $ | 207 | $ | 4,993 | $ | 755,000 | $ | — | $ | 7,805,057 | |||||||||||||||||||||||
Weighted average days to maturity | 49 | 66 | 17 | 520 | 0 | 94 | |||||||||||||||||||||||||||||
Weighted average borrowing rate | 4.90 | % | 5.39 | % | 5.31 | % | 7.44 | % | — | % | 5.15 | % | |||||||||||||||||||||||
The following table summarizes assets at carrying value that are pledged or restricted as collateral for the future payment obligations of the Company’s repurchase agreements:
| (in thousands) | December 31, 2025 | December 31, 2024 | |||||||||
| Available-for-sale securities, at fair value | $ | 6,505,374 | $ | 7,097,561 | |||||||
Mortgage servicing rights, at fair value (1) | 958,947 | 1,355,639 | |||||||||
Mortgage loans held-for-sale, at fair value | 3,746 | — | |||||||||
| Restricted cash | 108,367 | 218,363 | |||||||||
| Due from counterparties | 206,514 | 25,231 | |||||||||
| Derivative assets, at fair value | 67,227 | 5,031 | |||||||||
| Total | $ | 7,850,175 | $ | 8,701,825 | |||||||
____________________
(1)As of December 31, 2025 and December 31, 2024, MSR repurchase agreements totaling $650.0 million and $755.0 million, respectively, were secured by VFNs issued in connection with the Company’s securitization of MSR. The VFNs are collateralized by portions of the Company’s MSR portfolio.
Although the transactions under repurchase agreements represent committed borrowings until maturity, the respective lender retains the right to mark the underlying collateral to fair value. A reduction in the value of pledged assets would require the Company to provide additional collateral or fund margin calls.
As of both December 31, 2025 and December 31, 2024, the net carrying value of assets sold under agreements to repurchase, including accrued interest plus any cash or assets on deposit to secure the repurchase obligation, less the amount of the repurchase liability, including accrued interest, with any individual counterparty or group of related counterparties did not exceed 10% of total stockholders’ equity. The Company does not anticipate any defaults by its repurchase agreement counterparties. There can be no assurance, however, that any such default or defaults will not occur.
Revolving Credit Facilities
To finance MSR assets and related servicing advance obligations, the Company has entered into revolving credit facilities collateralized by the value of the MSR and/or servicing advances pledged. As of December 31, 2025 and December 31, 2024, the Company had outstanding short- and long-term borrowings under revolving credit facilities of $919.4 million and $1.0 billion with a weighted average borrowing rate of 6.77% and 7.56% and weighted average remaining maturities of 1.8 and 1.6 years, respectively.
Although the transactions under revolving credit facilities represent committed borrowings from the time of funding until maturity, the respective lender retains the right to mark the underlying collateral to fair value. A reduction in the value of pledged assets below a designated threshold would require the Company to provide additional collateral or pay down the facility. As of December 31, 2025 and December 31, 2024, MSR with a carrying value of $1.5 billion and $1.6 billion, respectively, was pledged as collateral for the Company’s future payment obligations under its MSR revolving credit facilities. As of December 31, 2025 and December 31, 2024, servicing advances with a carrying value of $100.1 million and $118.7 million, respectively, were pledged as collateral for the Company’s future payment obligations under its servicing advance revolving credit facility. The Company does not anticipate any defaults by its revolving credit facility counterparties, although there can be no assurance that any such default or defaults will not occur.
Warehouse Lines of Credit
To finance origination activities, the Company has entered into a warehouse line of credit collateralized by the value of the mortgage loans pledged for a period of up to 90 days or until they are sold to the GSEs or other third-party investors in the secondary market, typically within 60 days of origination. As of December 31, 2025 and December 31, 2024, the Company had outstanding short-term borrowings under its warehouse line of credit of $9.4 million and $2.0 million with a weighted average borrowing rate of 6.00% and 6.64% and weighted average remaining maturities of 80 and 87 days, respectively.
Although transactions under the warehouse line of credit represent committed borrowings from the time of funding until maturity, the respective lender retains the right to mark the underlying collateral to fair value. A reduction in the value of pledged assets below a designated threshold would require the Company to provide additional collateral or pay down the facility. As of December 31, 2025 and December 31, 2024, mortgage loans held-for-sale with a carrying value of $9.6 million and $2.1 million, respectively, were pledged as collateral for the Company’s future payment obligations under its warehouse line of credit. Additionally, as of both December 31, 2025 and December 31, 2024, cash of $0.4 million was held in restricted accounts as collateral for future payment obligations of outstanding balances under the warehouse line of credit. The Company does not anticipate any defaults by its warehouse line of credit counterparties, although there can be no assurance that any such default or defaults will not occur.
Unsecured Financing
Senior Notes
On May 13, 2025, the Company closed an underwritten public offering of $115.0 million aggregate principal amount of its senior notes due in 2030, which included $15.0 million aggregate principal amount sold by the Company to the underwriters of the offering pursuant to an overallotment option. The senior notes are unsecured and bear an interest rate of 9.375% per annum, payable quarterly in arrears on February 15, May 15, August 15 and November 15. The senior notes will mature in August 2030, unless earlier redeemed in accordance with their terms. The Company may redeem the senior notes, in whole or in part, any time on or after May 15, 2027, at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest. The Company may also repurchase the senior notes in open market or privately negotiated transactions at the same or differing price without giving prior notice to or obtaining any consent of the holders. The net proceeds from the offering were approximately $110.6 million after deducting underwriting discounts and offering expenses payable by the Company. As of December 31, 2025, the outstanding amount included on the consolidated balance sheets, net of unamortized deferred issuance costs, was $111.1 million.
Convertible Senior Notes
The Company’s convertible senior notes were unsecured, paid interest semiannually at a rate of 6.25% per annum and were convertible at the option of the holder into shares of the Company’s common stock. As of both December 31, 2025 and December 31, 2024, the convertible senior notes had a conversion rate of 33.8752 shares of common stock per $1,000 principal amount of the notes. The Company’s convertible senior notes were repaid in full on their January 15, 2026 maturity date.
The Company did not have the right to redeem its convertible senior notes prior to maturity, but was able to repurchase the notes in open market or privately negotiated transactions at the same or differing price without giving prior notice to or obtaining any consent of the holders. The Company did not repurchase any of its convertible senior notes during the year ended December 31, 2025. During the years ended December 31, 2024 and 2023, the Company repurchased $10.0 million and $15.6 million principal amount of its convertible senior notes in open market transactions for an aggregate cost of $9.7 million and $13.2 million, respectively. The difference between the consideration transferred and the carrying value of the convertible senior notes repurchased resulted in gains of $0.2 million and $2.2 million for the years ended December 31, 2024 and 2023, respectively, which were recorded within the other income line item on the consolidated statements of comprehensive (loss) income.
As of both December 31, 2025 and December 31, 2024, $261.9 million principal amount of convertible senior notes remained outstanding. As of December 31, 2025 and December 31, 2024, the outstanding amount included on the consolidated balance sheets, net of unamortized deferred issuance costs, was $261.8 million and $260.2 million, respectively.
Future Maturities
At December 31, 2025, the Company had the following remaining maturities on its financing arrangements:
| (in thousands) | Repurchase Agreements | Revolving Credit Facilities | Warehouse Lines of Credit | Senior Notes | Convertible Senior Notes | Total | |||||||||||||||||||||||||||||
| 2026 | $ | 7,255,540 | $ | 71,500 | $ | 9,406 | $ | — | $ | 261,810 | $ | 7,598,256 | |||||||||||||||||||||||
| 2027 | — | 567,731 | — | — | — | 567,731 | |||||||||||||||||||||||||||||
| 2028 | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| 2029 | — | 280,140 | — | — | — | 280,140 | |||||||||||||||||||||||||||||
| 2030 | — | — | — | 111,055 | — | 111,055 | |||||||||||||||||||||||||||||
| Total | $ | 7,255,540 | $ | 919,371 | $ | 9,406 | $ | 111,055 | $ | 261,810 | $ | 8,557,182 | |||||||||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 17, 2026 | Showing above |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 28, 2017 | |
| 2015 | Feb 26, 2016 | |
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.