What happened Shares of Two Harbors Investment (NYSE: TWO) fell 12.6% today after the company reported earnings results for the first quarter of the year. So what Two Harbors, a mortgage servicing real estate investment trust (REIT), reported a nearly $223 million profit in the first quarter, or $0.81 earnings per share (EPS), up from $192.2 million in the first quarter of 2020. Core earnings of $0.17 EPS, however, which excludes realized and unrealized gains and losses, declined from the first quarter of 2020 and missed analysts' expectations. The book value, or equity, of the company ended the quarter at $7.29 per share, down 2.2% from the previous quarter. Image source: Getty Images. "With mortgage spreads at historically tight levels, our Agency + MSR [mortgage servicing rights] strategy, with its lower exposure to mortgage spreads, is especially attractive," Bill Greenberg, Two Harbors president and CEO, said in a statement. "As spreads normalize, we expect to increase leverage and deploy excess capital at more attractive levels. In the meantime, we are committed to growing our MSR portfolio and have expanded our funding capacity to execute on that strategy." Now what Two Harbors' stock was volatile during the pandemic and still has not recovered from pre-pandemic levels. While some fear the mortgage market may have peaked, Two Harbors has a portfolio of agency residential mortgage-backed securities and a mortgage servicing portfolio that should help it offset the impact of rising interest rates if they come. The REIT, like others, also pays an attractive dividend yield. Trading below book value, there is upside for Two Harbors, but the ride may be a little bumpy. 10 stocks we like better than Two Harbors InvestmentWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Two Harbors Investment wasn't one of them! That's right -- they think these 10 stocks are even better buys. See the 10 stocks *Stock Advisor returns as of February 24, 2021 Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.Source