Key facts
- United Wholesale Mortgage (UWM) has sued Two Harbors Investment Corp. (TWO) for over $500 million.
- UWM alleges TWO willfully breached their merger agreement and committed fraud.
- The lawsuit claims TWO's management prioritized self-interest, including executive compensation, over the deal.
- UWM accuses TWO of sabotaging the stockholder approval process and threatening to sell a subsidiary.
- Two Harbors ultimately rejected UWM's deal and accepted a competing bid from CrossCountry Mortgage (CCM).
United Wholesale Mortgage (UWM) has filed a lawsuit in U.S. District Court for the District of Maryland, accusing Two Harbors Investment Corp. (TWO) of fraud and willful breach of their merger agreement. UWM is seeking over $500 million in damages, citing lost profits, synergies, and incurred costs.
UWM alleges that Two Harbors' leadership deliberately undermined the stockholder approval process for the merger, including sabotaging a March 16 meeting. The complaint states that Two Harbors threatened to sell its subsidiary, RoundPoint Mortgage Servicing Corp., to a competitor, CrossCountry Mortgage (CCM), if UWM did not agree to specific terms regarding the operation of Two Harbors' business post-acquisition.
The lawsuit further claims that Two Harbors' management prioritized their own interests, particularly executive compensation packages potentially totaling $35 million, over maximizing stockholder value. UWM contends that Two Harbors' management preferred cash-out options available through CCM's offer over the stock-for-stock exchange with UWM, which would have tied their gains to the combined company's performance.
UWM also alleges that Two Harbors' chief legal officer, Rebecca Sandberg, misrepresented the company's investor base to hinder the merger's approval. According to UWM, Sandberg overstated retail ownership, making it harder to secure necessary votes. The complaint details issues with obtaining stockholder information and delays in the proxy solicitation process, which UWM claims prevented adequate outreach.
Two Harbors ultimately rejected UWM's deal, which was valued at $1.3 billion in December 2025, and accepted a bid from CCM. UWM argues its own proposal offered higher guaranteed value, a faster closing, and tax benefits for stockholders, especially its retail-heavy base. UWM asserts that Two Harbors violated a "good faith negotiation" provision by failing to constructively engage on potential deal improvements.
While the UWM-Two Harbors agreement included a $25.4 million termination fee, UWM contends that liability is not capped by this fee due to the alleged willful breach and intentional fraud.