MFA Mortgage Investments, Inc. (NYSE:MFA) has reported earnings available to common stockholders of $4.4 million, or $0.06 per share of common stock, for the fourth quarter ended December 31, 2006. On December 15, 2006, MFA announced its fourth quarter dividend of $0.06 per share of common stock. The dividend was paid on January 31, 2007 to stockholders of record as of December 29, 2006.

Stewart Zimmerman, MFA’s Chairman of the Board, Chief Executive Officer and President, said, “In early 2006, our company was faced with the prospect of tight spreads on our hybrid and adjustable-rate mortgage-backed securities (“MBS”) and continued monetary policy tightening by the U.S. Federal Reserve. In response, we generally did not reinvest the proceeds from MBS prepayments and amortization, and sold certain of our MBS that were expected to generate below market returns. By reducing both our asset base and leverage during the first half of 2006, we positioned ourselves to selectively grow our investment portfolio in the second half of 2006 as higher yielding MBS investments with more attractive spreads were identified. As a result, we are optimistic about the potential for increased earnings and dividends in 2007.”

Mr. Zimmerman continued, “The U.S. Federal Open Market Committee (“FOMC”) has held the target federal funds rate steady at 5.25% since June 29, 2006. Prior to that, the FOMC had increased the target federal funds rate by 25 basis points at 17 consecutive meetings raising the federal funds rate from 1.00% as of June 29, 2004 to 5.25% as of June 29, 2006. Despite this prolonged period of monetary policy tightening during which the federal funds rate increased to 5.25%, the ten-year treasury rate has only increased slightly to approximately 4.80%, resulting in an inverted yield curve. Core inflation measures continue to remain somewhat elevated relative to the U.S. Federal Reserve’s goal of 1% to 2%, although inflation pressures have begun to moderate. Considering the U.S. economy’s recent moderate growth rate and the weaker housing market, but with inflation risks still a dominant concern, future FOMC actions are presently uncertain and remain dependent on future incoming data.”

Mr. Zimmerman stated, “In the fourth quarter of 2006, we identified attractive investment opportunities and, as a result, grew our MBS portfolio. MFA’s MBS portfolio, which had increased to $4.61 billion as of September 30, 2006, was further increased to $6.34 billion as of December 31, 2006. MFA’s leverage as measured by debt-to-equity, which had been 5.9:1 as of September 30, 2006, increased to 8.4:1 by the end of 2006.”

Mr. Zimmerman added, “MFA’s primary focus is high quality, higher coupon hybrid and adjustable-rate MBS assets. At December 31, 2006, approximately 99% of MFA’s assets consisted of MBS issued or guaranteed by an agency of the U.S. government or a federally chartered corporation, other MBS rated ‘AAA’ by Standard & Poor’s Corporation, MBS-related receivables and cash. The MBS in MFA’s portfolio are primarily adjustable-rate or hybrids, which have an initial fixed interest rate for a specified period of time and, thereafter, generally reset annually. The average coupon on MFA’s MBS portfolio was 6.06% as of December 31, 2006. Assuming a 25% Constant Prepayment Rate (“CPR”), approximately 46% of the MBS in MFA’s portfolio are expected to prepay or have their interest rates reset within the next 12 months, with a total of 97% expected to reset or prepay during the next 60 months.”

MFA takes into account both coupon resets and expected prepayments when measuring the sensitivity of its MBS portfolio to changing interest rates. In measuring its assets-to-borrowing repricing gap (the “Repricing Gap”), MFA measures the difference between: (a) the weighted average months until coupon adjustment or projected prepayment on its MBS portfolio; and (b) the months remaining on its repurchase agreements applying the same projected prepayment rate and including the impact of interest rate swap agreements. Assuming a 25% CPR, the weighted average time to repricing or assumed prepayment for MFA’s MBS portfolio, as of December 31, 2006, was approximately 23 months and the average term remaining on its repurchase agreements, including the impact of interest rate swaps, was approximately 15 months, resulting in a Repricing Gap of approximately eight months. The prepayment speed on MFA’s MBS portfolio averaged 26.0% CPR during the fourth quarter of 2006.

During the fourth quarter of 2006, the gross yield on MFA’s interest-earning assets was approximately 6.03%, while the net yield on interest-earning assets was reduced to 5.18%, primarily due to the cost of premium amortization on MFA’s MBS portfolio. The portfolio spread, which is the difference between MFA’s interest-earning asset portfolio net yield of 5.18% and its 5.10% cost of funds, was 0.08% for the fourth quarter of 2006. MFA’s costs for compensation and benefits and other general and administrative expense were $2.0 million for the quarter ended December 31, 2006. As of December 31, 2006, book value per share of common stock was $7.22.

Stockholders interested in participating in MFA’s Discount Waiver, Direct Stock Purchase and Dividend Reinvestment Plan (the “Plan”) or receiving a Plan prospectus may do so by contacting Mellon Investor Services, the Plan administrator, at 1-866-249-2610 (toll free). For more information about the Plan, interested stockholders may also go to the website established for the Plan at http://www.melloninvestor.com/ or visit MFA’s website at http://www.mfa-reit.com/.