Two Harbors countersues UWM over hedging bet, alleged merger breach

Two Harbors Investment Corp. has filed a counterclaim against UWM Holdings Corp., seeking to recover the $25.4 million termination fee it wired to UWM on March 31 and damages for alleged “fraudulent omissions and misstatements.” The filing responds to UWM’s August lawsuit in the U.S. District Court for the District of Maryland’s Northern Division, in which UWM seeks more than $500 million in damages over the collapse of a stock-for-stock transaction valued at $1.3 billion that was announced in December 2025.

The counterclaim, filed Oct. 1, alleges UWM concealed a rapidly deteriorating financial condition and entered an outsized speculative trade. Two Harbors says UWM took a $27.5 billion notional bet that interest rates would fall, with exposure of roughly $15 million per basis point move, compared to just $1.4 million per basis point for TWO’s own hedges. The REIT points to UWM’s second-quarter 2026 net loss exceeding $451 million, which UWM attributed to a derivative hedge position tied to the anticipated acquisition. Two Harbors also claims UWM publicly touted $150 million in synergies before later reversing position and arguing there were no operational synergies.

The filing frames the alleged conduct as part of a structure in which the Ishbia family, which controls UWM, could continue to extract $600 million per year in dividends. Two Harbors claims the derivative losses ultimately forced UWM to secure rescue financing in the form of preferred equity from Oaktree Capital Management and the Ishbia family. The counterclaim states that had TWO known UWM’s true financial condition and intentions, it would never have transacted or negotiated with UWM.

What remains unknown is how the court will weigh the competing claims. UWM has not immediately responded to HousingWire’s request for comment, and a spokesperson for CrossCountry Mortgage, which closed its transaction with Two Harbors in late August, had no comment. The evidence currently rests on a single secondary report, and the underlying court filings have not been independently reviewed.