CrossCountry Completes Two Harbors Deal as UWM’s $500M-Plus Lawsuit Moves Forward

CrossCountry Completes Two Harbors Acquisition as UWM’s $500 Million-Plus Lawsuit Remains Pending

CrossCountry Mortgage completed its acquisition of Two Harbors Investment Corp. on Tuesday, ending a months-long takeover battle for the mortgage-servicing-focused REIT while leaving a separate lawsuit from UWM Holdings Corp. unresolved.

Under the transaction completed Aug. 25, Two Harbors became a privately held subsidiary of CrossCountry Mortgage. Its common stock will no longer trade on the New York Stock Exchange. Two Harbors shareholders are entitled to $12 per share in cash, while shareholders of record at the close of business Aug. 24 will also receive a $0.20326-per-share stub-period dividend.

The closing also gives CrossCountry control of RoundPoint Mortgage Servicing LLC, substantially expanding the lender’s servicing operation and allowing it to bring more of the servicing function in-house. CrossCountry describes the combined company as the nation’s largest distributed retail mortgage lender and sixth-largest nonbank servicer.

But completing the transaction does not end the dispute over how CrossCountry ultimately won Two Harbors.

UWM Holdings and subsidiary UWM Acquisitions 1 LLC sued Two Harbors in federal court on Aug. 10, seeking more than $500 million and alleging that the company willfully breached its earlier merger agreement with UWM and committed fraud while facilitating a competing transaction.

The case, UWM Holdings Corp. et al. v. Two Harbors Investment Corp., was filed in the U.S. District Court for the District of Maryland and is assigned case number 1:26-cv-03125. The Aug. 10 complaint names Two Harbors as the defendant; CrossCountry is not listed as a defendant in the federal docket.

CrossCountry now owns the servicing platform UWM originally pursued

Two Harbors initially agreed in December 2025 to an approximately $1.3 billion stock-for-stock merger with UWM.

That agreement called for Two Harbors shareholders to receive 2.3328 shares of UWMC Class A common stock for each Two Harbors common share. The transaction would have added a substantial mortgage servicing rights portfolio to UWM’s existing origination and servicing business.

The deal changed course in March after CrossCountry emerged with an unsolicited cash proposal.

Two Harbors ultimately determined CrossCountry’s offer qualified as a superior proposal under the UWM merger agreement and terminated the UWM transaction on March 27. CrossCountry paid the contractually required $25.4 million termination fee to UWM on Two Harbors’ behalf.

CrossCountry’s initial agreement called for $10.80 per share in cash. Competition from UWM subsequently pushed the price higher.

CrossCountry raised its offer to $11.30 per share in April and then to $12 in May. The May amendment also referenced a $1.4 billion unsecured financing commitment supporting the transaction.

Two Harbors shareholders approved the CrossCountry merger July 2, and the final outstanding regulatory approval arrived Aug. 21.

With Tuesday’s closing, the ownership fight is over. The legal fight is not.

UWM says the first merger was deliberately undermined

UWM’s lawsuit argues that the original transaction failed not simply because shareholders preferred another bidder, but because Two Harbors allegedly interfered with the process needed to obtain shareholder approval.

Among other claims, UWM alleges Two Harbors impeded outreach to retail shareholders before the March vote and improperly encouraged CrossCountry to submit a competing bid despite restrictions in the UWM merger agreement.

According to UWM’s complaint, holders of 43.85% of all outstanding Two Harbors shares had voted in favor of the UWM merger by March 16. Those votes represented 69.62% of the shares actually voted at that point, according to the lender, which argues that the transaction fell short because of turnout rather than majority opposition among participating shareholders.

UWM also contends Two Harbors failed to satisfy contractual obligations governing solicitation of competing bids and good-faith negotiations.

Those are allegations, not court findings.

The original merger agreement required a $25.4 million termination payment under specified circumstances, but the contract also states that termination does not eliminate liability for damages resulting from willful breach or intentional fraud. UWM is relying on that distinction in seeking a recovery far exceeding the termination fee.

Two Harbors calls UWM’s claims baseless

Two Harbors has sharply rejected UWM’s version of events.

In an Aug. 11 public statement, the company called the lawsuit “frivolous” and maintained that its board acted consistently with both its contractual duties and its fiduciary responsibilities to shareholders.

Two Harbors has argued that the deterioration in UWMC’s share price materially changed the economics of the original all-stock transaction and that the CrossCountry deal ultimately offered shareholders greater certainty through a fully financed cash purchase. It also pointed to Institutional Shareholder Services’ opposition to the original UWM transaction as evidence that investor concerns extended beyond the proxy-solicitation process.

UWM, however, had continued increasing its competing proposal during the spring. By May, UWM was publicly offering Two Harbors shareholders the ability to elect $12.50 per share in cash or 2.3328 UWMC shares, while criticizing the Two Harbors board for continuing to support CrossCountry.

The court will ultimately have to determine whether Two Harbors merely exercised rights available under the merger agreement in pursuing a superior proposal or crossed the contractual lines alleged by UWM.

UWM’s derivatives loss is a separate issue from its damages claim

The fight has also become intertwined publicly with UWM’s second-quarter financial results.

UWM reported a $451.9 million net loss for the second quarter of 2026 and disclosed a $603.2 million loss on other interest-rate derivatives during the quarter. Its SEC filing said a significant portion of those derivative positions was entered into late in the first quarter and during the second quarter as part of its interest-rate risk mitigation strategy.

Two Harbors has cited the derivatives loss in attacking UWM’s financial management and questioning its ability to complete an acquisition.

UWM’s legal claims should not, however, be treated as synonymous with that accounting loss. The lawsuit seeks damages based on alleged lost profits, lost business opportunities, expected synergies and other costs arising from the failed transaction. Whether those alleged damages are recoverable — and in what amount — remains for the court to decide.

UWM also strengthened its capital position this month through a strategic transaction involving Oaktree Capital Management and an Ishbia-family investment vehicle. The company announced $2.05 billion of planned capital support, including a $1.65 billion preferred-equity investment that closed Aug. 5.

That financing provides important context to Two Harbors’ criticism of UWM’s financial condition, but it does not resolve the contractual questions raised by UWM’s complaint.

What the closing means for the mortgage industry

For CrossCountry, the immediate consequence is strategic rather than legal.

The company now combines its large retail origination network with RoundPoint’s established servicing infrastructure and Two Harbors’ servicing assets. CrossCountry says the integration should give it greater control of borrower relationships after closing, creating more opportunities for customer retention and future refinance or purchase recapture.

For UWM, the Two Harbors acquisition opportunity is gone, but the company is attempting to recover value through litigation.

The Aug. 25 closing therefore creates a clear divide between the two remaining stories: CrossCountry has secured the servicing platform it spent months pursuing, while UWM’s contention that Two Harbors improperly deprived it of that opportunity will now be tested in federal court.

The transaction has closed. The question of whether the path to that closing violated Two Harbors’ earlier agreement with UWM remains unresolved.