The board of Two Harbors Investment Corp. has unanimously rejected the latest takeover proposal from UWM Holdings Corporation, escalating an already bitter public battle over control of the MSR-heavy REIT just days before shareholders are set to vote on a competing deal from CrossCountry Mortgage.
In a sharply worded statement released Wednesday morning, Two Harbors described UWM’s revised May 11 proposal as “illusory, predatory, and unactionable,” while reaffirming its recommendation that shareholders approve CrossCountry’s amended $12-per-share all-cash acquisition at the May 19 special meeting.
The latest rejection marks yet another dramatic turn in this closely watched corporate battle — with accusations over financing risk, MSR valuations, regulatory approvals, shareholder protections, and board motives now playing out publicly.
Two Harbors Targets Structure And Shareholder Impact
At the center of the board’s criticism is how UWM structured its offer.
Two Harbors said UWM is touting a $12.50 per-share cash headline while making UWM stock, valued at approximately $7.58 per share based on its May 12 closing price, the default consideration for shareholders who fail to make a timely election.
The board warned that the structure could materially disadvantage investors, estimating that as many as 30% of shareholders could default into the lower-value stock, adding that UWM is “hoping to take advantage” of that dynamic.
The company also questioned why UWM continues to include stock as the default option at all, pointing to prior comments from CEO Mat Ishbia indicating a preference for an all-cash deal.
Adding to the concern, Two Harbors disclosed that its outside financial advisor previously indicated it would not be in a position to deliver a fairness opinion on UWM’s proposal, given the structure and implied value of the stock component.
Financing Questions And Strategic Contradictions
Beyond deal structure, Two Harbors raised renewed concerns about UWM’s financial condition and ability to close.
The board pointed to:
- Fitch downgrading UWM’s outlook twice in the past six months
- Cash and cash equivalents declining to $425 million as of March 31, down from $503 million at year-end 2025
- Leverage reaching 3.2x, which the board described as an all-time high
- Bloomberg estimates showing UWM’s one-year probability of default doubling in roughly three weeks
Two Harbors also questioned the economics of the transaction itself, noting that UWM would need to issue roughly $1.3 billion in debt to access $1.7 billion in capital, a net gain of about $400 million at what the board characterized as a roughly 14% cost of funds.
“By UWMC’s own admission, synergies and capital markets expertise are not driving this deal,” the company said, raising the question: what is the underlying rationale?
That skepticism extended to mortgage servicing rights, the core asset at the center of the deal.
While UWM has positioned Two Harbors’ MSR portfolio as the primary source of value, the board noted that UWM has historically been a net seller of MSRs, including roughly $40 billion of low-coupon servicing sold in the most recent quarter, and has not been an active buyer of such assets.
The release also cited commentary from banking analyst Christopher Whelan questioning UWM’s MSR valuations and warning of potential write-down risk, echoing concerns raised in prior industry analysis and NMP’s earlier coverage of the saga.
Closing Certainty And Execution Risk In Focus
Two Harbors further challenged UWM’s claims that it could close a transaction within 60 days.
The board said UWM has not explained how it would satisfy required state and agency change-of-control approvals tied to mortgage servicing rights, and questioned whether the company intends to attempt closing before securing those approvals.
“No proxy materials are available, and no stockholder meeting is scheduled” for a UWM transaction, the board noted, adding that any approval process would need to restart.
The company also took aim at UWM’s inclusion of a reverse termination fee, arguing that it raises more concerns than it resolves.
“If UWMC was confident it could close, why would it need to offer a reverse termination fee?” the board said, framing the provision as evidence of execution risk rather than protection.
Two Harbors warned that a failed transaction would cause “irreparable harm” to the company, a risk it said cannot be mitigated by any termination payment.
Responding to criticisms from UWM about potential conflicts of interest, Two Harbors said no members of its board are expected to remain with the combined company under either transaction, and that no employment discussions have taken place with executives.
“For TWO’s Board, this is about doing what is right for all stockholders,” the company said.
Two Harbors reiterated that the CrossCountry transaction offers both value and certainty, highlighting:
- A $12-per-share all-cash offer
- A $0.70 increase from CCM’s prior bid
- A 21% premium to the company’s unaffected share price
The board also noted that 35 of 53 required regulatory and agency approvals tied to the CCM deal have already been obtained.
What It Means
The increasingly public dispute has evolved beyond a traditional M&A negotiation into a broader debate over MSR valuations, leverage, and capital strategy across the nonbank mortgage sector.
For lenders, the fight underscores how servicing-heavy balance sheets, liquidity, and execution certainty are being scrutinized in a higher-rate environment, and how quickly strategic transactions can turn into full-scale proxy battles.
Shareholders are set to vote on the CrossCountry transaction on May 19 — but with each new filing reshaping the narrative, another twist wouldn’t be a surprise.
