An investment banking firm out of New York has decided to pull the plug on its mortgage loan conduit and securitization business.
A challenging market environment for Two Harbors Investment Corp. was cited as the reason for its decision to exit the business.
A statement Thursday said Two Harbors’ board of directors approved a plan to substantially wind down the operation by December.
The company describes itself as a
real estate investment trust that invests in residential and commercial mortgage-related assets.
Also impacting the decision to abandon the conduit and securitization business was
“the intent to reduce operating complexity and costs.”
That move will allow for Two Harbors’ reallocation of capital to more attractive and efficient target assets.
“I am extremely proud of the efforts of our team since embarking on this initiative in 2011, as the company was able to build out a best-in-class infrastructure, develop a high quality network of mortgage loan originators and establish Agate Bay Mortgage Trust as a well-respected securitization platform,” Two Harbors President and Chief Executive Officer Thomas Siering said in the statement. “However, we believe that current and expected mortgage market conditions and competitive pressures will prevent us from growing this business to a scale that meets our long-term goals and financial expectations.
“While the decision to exit this business was difficult, we believe it is in the best interest of our shareholders.”
The news release said employees at companies which provide services to Two Harbors under an external management agreement with PRCM Advisers LLC will be impacted by the decision to discontinue the business.
“I would like to thank all personnel impacted by this decision for their dedication and service to the company over the past several years,” Siering added.
The CEO addressed shareholders in the statement, saying the company has continued optimism about its current and future state.
