Press 9-6-11

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Two Harbors Investment Corp. Issues Open Letter to Shareholders

NEW YORK, September 6, 2011 – Two Harbors Investment Corp. (NYSE: TWO; NYSE Amex: TWO.WS), a real estate investment trust that invests in residential mortgage-backed securities, residential mortgage loans and other financial assets, today issued the following open letter to all Two Harbors shareholders:

September 6, 2011

Dear Fellow Shareholders,

Last week, the Securities and Exchange Commission (“SEC”) issued a release requesting public comment concerning the application of the Investment Company Act of 1940 (the “Act”) to mortgage REITs. Among the matters the SEC intends to review is the scope of the exemption that applies to such REITs under Section 3(c)(5)(C) of the Act. The full text of the SEC release is available at
In its release, the SEC expresses concern that companies not regulated by the Act may (i) deliberately mis-value the company’s assets; (ii) use excessive amounts of leverage; and (iii) operate in a manner that is in the interests of company insiders, rather than the interests of its shareholders.

We take our obligations to our shareholders and the investing public very seriously, and we continually strive to meet the highest standards of corporate governance and transparency in our financial disclosures and our management of the company. For example, (i) we engage third-party pricing services and other independent sources to value our assets; (ii) we use, in our estimation, prudent amounts of leverage to finance our portfolio of RMBS and we provide extensive disclosure concerning our leverage in our investor presentations and public filings with the SEC; and (iii) we seek to align the interests of our management team with the interests of shareholders, as evidenced by the significant purchases of Two Harbors stock over time by our officers and directors.

We recognize that the SEC’s release, while not directed at Two Harbors specifically, nonetheless has –created uncertainty about the future regulatory framework of the mortgage REIT industry. However, we want to assure you that we are reviewing this matter very closely and intend to work with and offer support to the SEC in this process.

Without a doubt, the housing and mortgage markets face significant challenges. Mortgage REITs provide private capital to these markets, while allowing individual investors to opt in or out of the associated risks. From this perspective, mortgage REITs support important public policy objectives. Thus, rather than being part of the problem, we truly feel that our industry is a part of the solution.

More information about our company can be found at Thank you for your continued interest and support.

Thomas E. Siering
President and Chief Executive Officer

Two Harbors Investment Corp.
Two Harbors Investment Corp., a Maryland corporation, is a real estate investment trust that invests in residential mortgage-backed securities, residential mortgage loans and other financial assets. Two Harbors is headquartered in Minnetonka, Minnesota, and is externally managed and advised by PRCM Advisers, LLC, a wholly-owned subsidiary of Pine River Capital Management L.P. Additional information is available at

Additional Information
Stockholders and warrant holders of Two Harbors, and other interested persons, may find additional information regarding the company at the Securities and Exchange Commission’s Internet site at or by directing requests to: Two Harbors Investment Corp., 601 Carlson Parkway, Suite 150, Minnetonka, MN 55305, telephone 612-629-2500.

Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Actual results may differ from expectations, estimates and projections and, consequently, readers should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “target,” “assume,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believe,” “predicts,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expected results. Factors that could cause actual results to differ include, but are not limited to, higher than expected operating costs, changes in prepayment speeds of mortgages underlying our RMBS, the rates of default or decreased recovery on the mortgages underlying our non-Agency securities, failure to recover certain losses that are expected to be temporary, changes in interest rates or the availability of financing, the impact on our operations of new legislation or changes in rules and regulations applicable to us, and unanticipated changes in overall market and economic conditions.

Readers are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Two Harbors does not undertake or accept any obligation to release publicly any updates or revisions to any forward-looking statement to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based. Additional information concerning these and other risk factors is contained in Two Harbors’ most recent filings with the Securities and Exchange Commission (“SEC”). All subsequent written and oral forward looking statements concerning Two Harbors or matters attributable to Two Harbors or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above.

Christine Battist, Investor Relations, Two Harbors Investment Corp., 612-629-2507.


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