Hanover Capital Mortgage Holdings, Inc. Announces Dividend Tax Information for 2006

Hanover Capital Mortgage Holdings, Inc. (Amex: HCM) announced information about the classification of dividends for tax reporting purposes for the year 2006.

The table below provides tax information for each of Hanover's common stock dividends for 2006.

Common Stock (AMEX: HCM) (CUSIP 410761100)

Per Share Amounts

Long term

Dividend Dividend Ordinary Capital Return of

Record Date Payable Date Dividends Gains Capital Total

May 22, 2006 June 2, 2006 $0.030523 $0.000000 $0.169477 $0.200000

Aug. 21, 2006 Sept. 5, 2006 0.030523 0.000000 0.169477 0.200000

Nov. 22, 2006 Dec. 8, 2006 0.022892 0.000000 0.127108 0.150000

Dec. 26, 2006 Jan. 12, 2007 0.022892 0.000000 0.127108 0.150000

Total for 2006 $0.106830 $0.000000 $0.593170 $0.700000

The dividend paid on January 12, 2007, is considered 2006 income to

recipients.

No "Qualifying Dividends" are included in distributions.

No Long-term Capital Gains.

For shareholders that are corporations, Hanover's dividends are not generally eligible for the corporate dividends-received deduction. No portion of Hanover's 2006 common stock dividends consisted of "excess inclusion" income subject to the specialized tax reporting and other rules applicable to such income.

Hanover Capital Mortgage Holdings, Inc. is a mortgage REIT staffed by seasoned mortgage capital markets professionals. HCM invests in mortgage- backed securities and mortgage loans. For further information, visit HCM's Web site at http://www.hanovercapitalholdings.com.

Certain statements in this press release may constitute "forward-looking" statements as defined in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. HCM is including this cautionary statement to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that are not historical fact are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements, to differ materially from future results, performance or achievements. The forward-looking statements are based on HCM's current belief, intentions and expectations. These statements are not guarantees or indicative of future performance. Important assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements include, but are not limited to, those factors, risks and uncertainties that are described in Item 1A of HCM's Annual Report on Form 10-K for the year ended December 31, 2005 and in other securities filings by HCM. HCM's future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The forward-looking statements contained in this press release are made only as of the date hereof and HCM undertakes no obligation to update or revise the information contained in this announcement whether as a result of new information, subsequent events or circumstances or otherwise, unless otherwise required by law.

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