Two Harbors Investment Corp. (NYSE: TWO), an Agency + MSR mortgage real estate investment trust, announced today the tax treatment of the company’s common stock and preferred stock dividends declared in 2021. This information is provided to assist stockholders with tax reporting requirements related to dividend distribution of taxable income by Two Harbors. Stockholders should review the 2021 tax statements received from their brokerage firms or other institutions to ensure that the statements agree with the information provided below. Additionally, as each stockholder’s tax situation may be different, stockholders are encouraged to consult with their own professional tax advisor with respect to their individual tax consequences.

Tax Treatment of the Common and Preferred Distributions

Two Harbors is required to report the portion of its 2021 dividends that are treated as excess inclusion income for federal income tax purposes. No portion of the company’s 2021 dividend distributions are expected to consist of excess inclusion income, which may be treated as unrelated business taxable income (UBTI) and subject to special tax reporting for certain tax exempt investors.

Pursuant to the Internal Revenue Code of 1986, as amended, dividends declared by a real estate investment trust (REIT) during the last three months of a calendar year that are payable to stockholders of record on a specified date in such three month period, but which are actually paid during January of the following calendar year, are considered paid on December 31st of the calendar year in which the dividends were declared, to the extent of the REIT’s distributable earnings and profits. The company’s common stock distribution, payable to shareholders on January 28, 2022 with a record date of December 29, 2021, is treated as a 2022 distribution for tax purposes and will be reported on the 2022 Form 1099-DIV due to the REIT’s insufficient earnings and profits as of the tax year ending December 31, 2021.

Distributions for Two Harbors Investment Corp.

The federal income tax classification of the Two Harbors’ 2021 common and preferred stock distributions as it is expected to be reported on Form 1099-DIV is set forth in the following tables.

In addition, Two Harbors declared dividends with respect to its Series A, Series B and Series C preferred shares on December 16, 2021. The record date for Series A, Series B and Series C preferred dividends was January 12, 2022. Accordingly, these preferred dividends will be taxable to stockholders for 2022.

Consult Your Tax Advisor

Stockholders may have additional reporting obligations to the Internal Revenue Service and/or other tax authorities.

The U.S. federal income tax treatment of holding Two Harbors common and preferred stock to any particular stockholder will depend on the stockholder’s particular tax circumstances. You are urged to consult your tax advisor regarding the U.S. federal, state, local and foreign income and other tax consequences to you, in light of your particular investment or tax circumstances, of acquiring, holding and disposing of Two Harbors common and preferred stock.

Two Harbors does not provide tax, accounting or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S., federal, state or local tax penalties. Please consult your advisor as to any tax, accounting or legal statements made herein.

Two Harbors Investment Corp.

Two Harbors Investment Corp., a Maryland corporation, is an internally managed real estate investment trust that invests in residential mortgage-backed securities, mortgage servicing rights and other financial assets. Two Harbors is headquartered in St. Louis Park, MN. Additional information is available at www.twoharborsinvestment.com.

Additional Information

Stockholders of Two Harbors and other interested persons may find additional information regarding the company at the SEC’s Internet site at www.sec.gov or by directing requests to: Two Harbors Investment Corp., Attn: Investor Relations, 1601 Utica Ave. S., Suite 900, St. Louis Park, MN, 55416, telephone (612) 453-4100.

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