Two Harbors Investment to pay $375M to settle Pine River litigation

Two Harbors Investment Corp. has settled legal disputes for $375 million related to the termination of its management agreement, while the company's stock fell 3.8% in after-hours trading following the announcement.

The settlement includes Pine River forfeiting claims to intellectual property, which CEO Bill Greenberg views as a significant step for the company, allowing it to move forward with clarity.

Following the settlement, Two Harbors projects an adjusted estimated book value of approximately $11.06 per common share, down from around $12.73 before the payment, indicating a total economic return of about 4.9% since June 30, 2025.

The company has signed a term sheet for a new subservicing client, expanding its third-party subservicing business to a total of $31 billion in unpaid principal balance, following the sale of $20 billion in mortgage servicing rights.

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Two Harbors Investment Corp. (NYSE:TWO) has reached a settlement agreement amounting to $375 million in cash to resolve all legal disputes stemming from its decision to terminate the management agreement with PRCM Advisers LLC, Pine River Capital Management LP, and Pine River Domestic Management LP. This announcement was made by the mortgage Real Estate Investment Trust (REIT) on Wednesday.

Following the news, Two Harbors' stock experienced a decline, falling 3.8% in after-hours trading.

As part of the settlement, Pine River will forfeit any claims to intellectual property previously utilized by Two Harbors. Bill Greenberg, President and CEO of Two Harbors, expressed that this resolution is a significant milestone for the company, providing it with the clarity and purpose needed to advance forward effectively.

To facilitate the settlement, Two Harbors will utilize a combination of available cash and borrowings. Post-payment, the company assures that it will maintain robust liquidity.

Additionally, Two Harbors provided a business update revealing an estimated book value of approximately $12.73 per common share as of August 15, 2025. This figure is presented before accounting for any common stock dividend accrual and after including preferred stock dividend accrual. In comparison, the book value was around $12.14 as of June 30, 2025, indicating a total economic return of roughly 4.9%.

After incorporating the financial impact of the settlement payment, the adjusted estimated book value falls to approximately $11.06 per common share, again before the effect of the common stock accrual but following the preferred stock dividend accrual.

During the third quarter, the company also announced it had signed a term sheet with a new subservicing client, prompted by its sale of about $20 billion in unpaid principal balance (UPB) mortgage servicing rights on a servicing-retained basis. This new partnership is expected to expand Two Harbors’ third-party subservicing business to a total of $31 billion UPB, encompassing around 138,000 loans.