UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

______________

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2006

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission File Number: 1-13991

MFA MORTGAGE INVESTMENTS, INC.
(Exact name of registrant as specified in its charter)

______________

Maryland
(State or other jurisdiction of
incorporation or organization) 13-3974868
(I.R.S. Employer
Identification No.)

350 Park Avenue, 21st Floor, New York, New York
(Address of principal executive offices)
10022
(Zip Code)

(212) 207-6400
(Registrant’s telephone number, including area code)
______________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer þ Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

79,210,745 shares of the registrant’s common stock, $0.01 par value, were outstanding as of October 31, 2006.

TABLE OF CONTENTS

	Page
PART I
Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 2006 (Unaudited)
and December 31, 2005		1
Consolidated Statements of Results of Operations (Unaudited) for the Three
and Nine Months Ended September 30, 2006 and September 30, 2005		2
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
for the Nine Months Ended September 30, 2006		3
Consolidated Statements of Cash Flows (Unaudited) for the Nine Months
Ended September 30, 2006 and September 30, 2005		4
Consolidated Statements of Comprehensive Income (Unaudited) for the
Nine Months Ended September 30, 2006 and September 30, 2005		5
Notes to the Consolidated Financial Statements (Unaudited)		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
Item 3. Quantitative and Qualitative Disclosures About Market Risk		32
Item 4. Controls and Procedures		35
PART II
Other Information
Item 1. Legal Proceedings		36
Item 1A. Risk Factors		36
Item 6. Exhibits		36
Signatures		38

MFA MORTGAGE INVESTMENTS, INC.
CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Per Share Amounts)	September 30, 2006			December 31, 2005
	(Unaudited)
Assets:
Mortgage-backed securities (“MBS”), at fair value (including pledged
MBS of $4,294,696 and $5,394,144 at September 30, 2006 and
December 31, 2005, respectively) (Notes 3 and 6)	$	4,606,637		$	5,714,906
Cash and cash equivalents		53,143			64,301
Accrued interest receivable		24,115			24,198
Derivative assets (Note 4)		908			5,494
Real estate (Note 5)		11,860			29,398
Real estate held for sale (Note 5)		8,856			–
Goodwill		7,189			7,189
Prepaid and other assets		1,378			1,431
Total Assets	$	4,714,086		$	5,846,917
Liabilities:
Repurchase agreements (Note 6)	$	3,986,090		$	5,099,532
Accrued interest payable		27,538			54,157
Mortgages on real estate, including mortgages on real estate held for sale (Note 5)		16,403			22,552
Derivative liabilities (Note 4)		415			–
Dividends payable		–			4,058
Accrued expenses and other liabilities		3,628			5,516
Total Liabilities		4,034,074			5,185,815
Commitments and contingencies (Note 7)
Stockholders' Equity:
Preferred stock, $.01 par value; series A 8.50% cumulative redeemable;
5,000 shares authorized; 3,840 shares issued and outstanding
at September 30, 2006 and December 31, 2005 ($96,000
aggregate liquidation preference) (Note 8)		38			38
Common stock, $.01 par value; 370,000 shares authorized;
79,211 and 80,121 issued and outstanding at September 30, 2006
and December 31, 2005, respectively (Note 8)		792			801
Additional paid-in capital, in excess of par		765,561			770,789
Accumulated deficit		(64,142	)		(52,315	)
Accumulated other comprehensive loss (Note 10)		(22,237	)		(58,211	)
Total Stockholders’ Equity		680,012			661,102
Total Liabilities and Stockholders’ Equity	$	4,714,086		$	5,846,917

The accompanying notes are an integral part of the consolidated financial statements.

1

MFA MORTGAGE INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF RESULTS OF OPERATIONS

	Three Months Ended September 30,						Nine Months Ended September 30,
	2006			2005			2006			2005
(In Thousands, Except Per Share Amounts)	(Unaudited)
Interest Income:
MBS income (Note 3)	$	47,061		$	56,396		$	146,035		$	178,090
Interest income on temporary cash investments		471			1,135			1,677			1,822
Total Interest Income		47,532			57,531			147,712			179,912
Interest Expense (Note 6)		38,205			49,060			119,808			135,334
Net Interest Income		9,327			8,471			27,904			44,578
Other Operating Income (Loss):
Gain (loss) on sale of MBS, net (Note 3)		36			10			(23,113	)		10
Revenue from operations of real estate (Note 5)		390			378			1,160			1,090
Miscellaneous other, net		143			93			587			125
Total Other Operating Income (Loss)		569			481			(21,366	)		1,225
Operating and Other Expense:
Compensation and benefits		1,446			1,346			4,534			4,399
Real estate operating expense		261			260			743			754
Mortgage interest on real estate		169			172			505			511
Other general and administrative		942			871			3,020			2,757
Total Operating and Other Expense		2,818			2,649			8,802			8,421
Income (Loss) from Continuing Operations, net		7,078			6,303			(2,264	)		37,382
Discontinued Operations: (Note 5)
Loss from discontinued operations, net		(1	)		(32	)		(134	)		(71	)
Gain on sale of real estate, net of tax of $1,820		–			–			4,705			–
(Loss) Income from Discontinued Operations, net		(1	)		(32	)		4,571			(71	)
Net Income Before Preferred Stock Dividends		7,077			6,271			2,307			37,311
Less: Preferred Stock Dividends (Note 8)		2,040			2,040			6,120			6,120
Net Income (Loss) Available to Common Stockholders	$	5,037		$	4,231		$	(3,813	)	$	31,191
Earnings (loss) Per Share of Common Stock: (Note 9)
Earnings (loss) from continuing operations – basic and diluted	$	0.06		$	0.05		$	(0.11	)	$	0.38
Earnings from discontinued operations – basic and diluted		–			–			0.06			–
Earnings (loss) per share of common stock – basic and diluted	$	0.06		$	0.05		$	(0.05	)	$	0.38
Dividends declared per share of common stock (Note 8c)	$	0.05		$	0.125		$	0.10		$	0.305

The accompanying notes are an integral part of the consolidated financial statements.

2

MFA MORTGAGE INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

	For the Nine Months Ended September 30, 2006
(In Thousands, Except Per Share Amounts)	(Unaudited)
8.50% Series A Cumulative Redeemable Preferred Stock – Liquidation
Preference $25.00 per share:
Balance at September 30, 2006 and December 31, 2005 (3,840 shares)	$	38
Common Stock, Par Value $0.01:
Balance at December 31, 2005 (80,121 shares)		801
Repurchase of common stock (927 shares)		(9	)
Issuance of common stock (17 shares)		–
Balance at September 30, 2006 (79,211 shares)		792
Additional Paid-in Capital, in Excess of Par:
Balance at December 31, 2005		770,789
Repurchase of common stock		(5,688	)
Issuance of common stock		100
Compensation expense for common stock options		360
Balance at September 30, 2006		765,561
Accumulated Deficit:
Balance at December 31, 2005		(52,315	)
Net income before preferred stock dividend