[LETTERHEAD
OF VENABLE LLP]
December
22, 2010
Two
Harbors Investment Corp.
601
Carlson Parkway, Suite 330
Minnetonka,
Minnesota 55305
Ladies
and Gentlemen:
We have acted as your special tax
counsel in connection with the issuance of up to 14,375,000 shares (the
“Shares”) of common stock, $0.01 par value per share, of Two Harbors Investment
Corp. (the “Company”) (including up to 1,875,000 Shares to cover
over-allotments) pursuant to the Registration Statement on Form S-3 (File No.
333-170251) filed by the Company with the United States Securities and Exchange
Commission (the “Commission”), and all amendments thereto (collectively, the
“Registration Statement”).
In rendering this opinion, we have
examined and relied on the following documents, among other items:
1. Articles
of Amendment and Restatement of the Company;
2. Bylaws
of the Company;
3. Limited
Liability Company Agreement of Two Harbors Operating Company LLC;
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4.
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a
letter of certain factual representations of the Company dated December
22, 2010 (the “Certificate of Representations”);
and
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5.
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the
Registration Statement and the related form of prospectus included therein
in the form in which it was transmitted to the Commission under the
Securities Act of 1933, as amended.
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In our
examination of the foregoing documents, we have assumed that (i) all factual
representations and statements in such documents are true and correct, (ii) each
party who has executed or adopted, or will execute or adopt, the documents had,
or will have, the proper authority and capacity, (iii) any documents that have
been provided to us in draft form will be executed, adopted and/or filed without
material modification, and (iv) the Company will operate in accordance with the
method of operation described in its organizational documents, the Registration
Statement and the Certificate of Representations.
Two
Harbors Investment Corp
December
22, 2010
Page
2
For
purposes of rendering this opinion, we have also assumed (i) the accuracy of the
factual representations contained in the Certificate of Representations and that
each representation contained in the Certificate of Representations to the best
of the Company’s knowledge is accurate and complete without regard to such
qualification as to the best of the Company’s knowledge, (ii) that the
Certificate of Representations has been executed by an appropriate and
authorized officer of the Company, and (iii) the genuineness of the signature on
the Certificate of Representations.
Based on the foregoing and in reliance
thereon, and subject thereto and on an analysis of the Internal Revenue Code of
1986, as amended (the “Code”), Treasury Regulations thereunder, judicial
authority and current administrative rulings and such other laws and facts as we
have deemed relevant and necessary, we hereby state our opinion that (1)
commencing with its initial taxable year that ended on December 31, 2009, the
Company has been organized and operated in conformity with the requirements for
qualification and taxation as a real estate investment trust (a “REIT”) under
the Code, and its actual method of operation through the date of this opinion
has enabled, and its proposed method of operation will continue to enable, it to
meet the requirements for qualification and taxation as a REIT for its taxable
year ending December 31, 2010 and subsequent years, and (2) the discussion set
forth in the Registration Statement under the heading “U.S. Federal Income Tax
Considerations” constitutes, in all material respects, a fair and accurate
summary under current law of the material United States Federal income tax
consequences of the ownership and disposition of the securities being registered
on the Registration Statement, subject to the qualifications set forth
therein. This opinion represents our legal judgment, but it has no
binding effect or official status of any kind, and no assurance can be given
that contrary positions may not be taken by the Internal Revenue Service or a
court.
The Company’s qualification as a REIT
will depend upon the continuing satisfaction by the Company of the requirements
of the Code relating to qualification for REIT status, which requirements
include those that are dependent upon actual operating results, distribution
levels, diversity of stock ownership, asset composition, source of income and
record keeping. We do not undertake to monitor whether the Company
actually will satisfy the various REIT qualification tests. We
express no opinion as to the laws of any jurisdiction other than the Federal
income tax laws of the United States of America to the extent specifically
referred to herein.
This opinion is furnished in connection
with the transaction described herein. We hereby consent to the
filing of this opinion as an exhibit to the Company’s Current Report on Form 8-K
relating to the Shares (the “Current Report”). We hereby consent to
the filing of this opinion as an exhibit to the Current Report and to
the use of the name of our firm therein. In giving such consent, we
do not thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Securities Act. This opinion is
expressed as of the date hereof, and we disclaim any undertaking to advise you
of any subsequent changes in the matters stated, represented or assumed herein,
or of any subsequent changes in applicable law.
Very
truly yours,
/s/
Venable LLP