**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      DC 20549**





**FORM
      10-Q**





x
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR
                15(d)OF
                THE SECURITIES EXCHANGE ACT OF 1934For
                the quarterly period ended June 30, 2008ORo
            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 **001-32216**





**NEW
      YORK MORTGAGE TRUST, INC.**


(Exact
      Name of Registrant as Specified in Its Charter)




**Maryland**
            **47-0934168**(State
                or Other Jurisdiction of
              Incorporation
                or Organization)
            (I.R.S.
                Employer
              Identification
                No.)




**52
      Vanderbilt Avenue, Suite 403, New York, New York 10017**


(Address
      of Principal Executive Office) (Zip Code)




**(212)
      792-0107**


(Registrant's
      Telephone Number, Including Area Code)




**1301
      Avenue of the Americas, New Yok, New York
      10019**


(Former
      Name, Former Address and Former Fiscal year,
      if Changed Since


Last
      Report)




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 x No o




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      See
      definitions of  “large accelerated filers” “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act. (Check
      one.):




Large
                Accelerated Filero
            Accelerated
                Filero
            Non-Accelerated
                Filerx
            Smaller
                Reporting Companyo




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes o No x




The
      number of shares of the registrant's common stock, par value $.01 per share,
      outstanding on August 8, 2008 was 9,320,104









**NEW
      YORK MORTGAGE TRUST, INC.**


**FORM
      10-Q**





**Page****Part
                I. Financial Information**Item
                1. Condensed Consolidated Financial Statements
                (unaudited):Condensed
                Consolidated Balance Sheets
            
            
            3Condensed
                Consolidated Statements of Operations
            
            
            4Condensed
                Consolidated Statement of Stockholders' Equity
            
            
            5Condensed
                Consolidated Statements of Cash Flows
            
            
            6Notes
                to Condensed Consolidated Financial Statements
            
            
            8Item
                2. Management's Discussion and Analysis of Financial Condition and
                Results
                of Operations
            
            
            25Item
                3. Quantitative and Qualitative Disclosures about Market
                Risk
            
            
            42Item
                4. Controls and Procedures
            
            
            47**Part
                II. Other Information**
            
            
            48Item
                1. Legal Proceedings
            
            
            48Item
                1A. Risk Factors
            
            
            48Item
                4. Submission of Matters to a Vote of Security Holders
            
            
            49Item
                6. Exhibits
            
            
            49Signatures
            
            
            50




2





**NEW
      YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


(dollar
      amounts in thousands, except per share data)


(unaudited)




**June
                30,**
              **2008**
            
            **December 31,**
              **2007****ASSETS**Cash
                and cash equivalents
            
            $
            4,938
            
            $
            5,508Restricted
                cash
            
            
            1,229
            
            
            7,515Investment
                securities - available for sale
            
            
            499,404
            
            
            350,484Accounts
                and accrued interest receivable
            
            
            3,278
            
            
            3,485Mortgage
                loans held in securitization trusts (net)
            
            
            376,984
            
            
            430,715Derivative
                assets
            
            
            2,440
            
            
            416Prepaid
                and other assets
            
            
            2,336
            
            
            2,262Assets
                related to discontinued operation
            
            
            6,702
            
            
            8,876**Total
                Assets**
            
            $
            897,311
            
            $
            809,261**LIABILITIES
                AND STOCKHOLDERS' EQUITY****Liabilities:**Financing
                arrangements, portfolio investments
            
            $
            417,949
            
            $
            315,714Collateralized
                debt obligations
            
            
            365,200
            
            
            417,027Derivative
                liabilities
            
            
            —
            
            
            3,517Accounts
                payable and accrued expenses
            
            
            4,689
            
            
            3,752Subordinated
                debentures
            
            
            45,000
            
            
            45,000Convertible
                preferred debentures
            
            
            19,627
            
            
            -Liabilities
                related to discontinued operation
            
            
            2,925
            
            
            5,833Total
                liabilities
            
            
            855,390
            
            
            790,843**Commitments
                and Contingencies****Stockholders'
                Equity:**Common
                stock, $0.01 par value, 400,000,000 shares authorized, 9,320,104
                shares
                issued and outstanding at June 30, 2008 and 1,817,927 shares issued
                and
                outstanding at December 31, 2007
            
            
            93
            
            
            18Additional
                paid-in capital
            
            
            153,251
            
            
            99,357Accumulated
                other comprehensive loss
            
            
            (12,421
            )
            
            (1,950
            )Accumulated
                deficit
            
            
            (99,002
            )
            
            (79,007
            )Total
                stockholders' equity
            
            
            41,921
            
            
            18,418**Total
                Liabilities and Stockholders' Equity**
            
            $
            897,311
            
            $
            809,261




*See
      notes to condensed consolidated financial statements.*





3





**NEW
      YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENT OF OPERATIONS**


(dollar
      amounts in thousands, except per share data)


(unaudited)





**For the Three Months Ended**
              **June
                30,**
            
            **For the Six Months Ended**
              **June
                30,****2008**
            
            **2007**
            
            **2008**
            
            **2007**REVENUE:Interest
                income-investment securities and loans held in securitization
                trusts
            
            $
            10,755
            
            $
            12,898
            
            $
            24,008
            
            $
            26,611Interest
                expense-investment securities and loans held in securitization
                trusts
            
            
            6,791
            
            
            11,892
            
            
            17,305
            
            
            24,976Net
                interest income from investment securities and loans held in
                securitization trusts
            
            
            3,964
            
            
            1,006
            
            
            6,703
            
            
            1,635Interest
                expense - subordinated debentures
            
            
            896
            
            
            894
            
            
            1,855
            
            
            1,776Interest
                expense – convertible preferred debentures
            
            
            569
            
            
            —
            
            
            1,075
            
            
            —Net
                interest income (expense)
            
            
            2,499
            
            
            112
            
            
            3,773
            
            
            (141
            )OTHER
                EXPENSE:Loan
                losses
            
            
            (22
            )
            
            (940
            )
            
            (1,455
            )
            
            (940
            )Loss
                on securities and related hedges
            
            
            (83
            )
            
            (3,821
            )
            
            (19,931
            )
            
            (3,821
            )Total
                other expense
            
            
            (105
            )
            
            (4,761
            )
            
            (21,386
            )
            
            (4,761
            )EXPENSES:Salaries
                and benefits
            
            
            417
            
            
            151
            
            
            730
            
            
            496Marketing
                and promotion
            
            
            53
            
            
            39
            
            
            92
            
            
            62Data
                processing and communications
            
            
            75
            
            
            56
            
            
            138
            
            
            93Professional
                fees
            
            
            346
            
            
            105
            
            
            698
            
            
            205Depreciation
                and amortization
            
            
            74
            
            
            81
            
            
            149
            
            
            149Other
            
            
            995
            
            
            97
            
            
            1,584
            
            
            171Total
                expenses
            
            
            1,960
            
            
            529
            
            
            3,391
            
            
            1,176INCOME
                (LOSS) FROM CONTINUING OPERATIONS
            
            
            434
            
            
            (5,178
            )
            
            (21,004
            )
            
            (6,078
            )Income
                (Loss) from discontinued operation - net of tax
            
            
            829
            
            
            (9,018
            )
            
            1,009
            
            
            (12,859
            )NET
                INCOME (LOSS)
            
            $
            1,263
            
            $
            (14,196
            )
            $
            (19,995
            )
            $
            (18,937
            )Basic
                income (loss) per share
            
            $
            0.14
            
            $
            (7.84
            )
            $
            (2.77
            )
            $
            (10.46
            )Diluted
                income (loss) per share
            
            $
            0.14
            
            $
            (7.84
            )
            $
            (2.77
            )
            $
            (10.46
            )Weighted
                average shares outstanding-basic
            
            
            9,320
            
            
            1,811
            
            
            7,218
            
            
            1,810Weighted
                average shares outstanding- diluted
            
            
            9,320
            
            
            1,811
            
            
            7,218
            
            
            1,810




*See
      notes to condensed consolidated financial statements.*





4





**NEW
      YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY**


(dollar
      amounts in thousands)


(unaudited)





**For
                the Six Months Ended June 30, 2008****Common**
              **Stock**
            
            **Additional**
              **Paid-In**
              **Capital**
            
            **Accumulated**
              **Other**
              **Comprehensive**
              **Loss**
            
            **Accumulated**
              **Deficit**
            
            **Total****Balance, January
                1, 2008 -**Stockholders' Equity
            
            $
            18
            
            $
            99,357
            
            $
            (1,950
            )
            $
            (79,007
            )
            $
            18,418Comprehensive
                Income:Net
                loss
            
            
            —
            
            
            —
            
            
            —
            
            
            (19,995
            )
            
            (19,995
            )Other
                comprehensive loss:Increase
                in net unrealized loss on available for sale
                securities
            
            
            —
            
            
            —
            
            
            (12,994
            )
            
            —
            
            
            (12,994
            )Increase in
                net unrealized gain on derivative instruments
            
            
            —
            
            
            —
            
            
            2,523
            
            
            —
            
            
            2,523Dividends
            
            
            
            
            
            (2,610
            )
            
            —
            
            
            —
            
            
            (2,610
            )Common
                Stock Issuance
            
            
            75
            
            
            56,504
            
            
            —
            
            
            —
            
            
            56,579**Balance,
                June 30, 2008 -**Stockholders' Equity
            
            $
            93
            
            $
            153,251
            
            $
            (12,421
            )
            $
            (99,002
            )
            $
            41,921




*See
      notes to condensed consolidated financial statements.*





5





**NEW
      YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


(dollar
      amounts in thousands)


(unaudited)




**For the Six Months Ended**
              **June
                30,****2008**
            
            **2007****Cash
                Flows from Operating Activities:**Net
                loss
            
            $
            (19,995
            )
            $
            (18,937
            )Adjustments
                to reconcile net loss to net cash (used in) provided by
                operating activities:Depreciation
                and amortization
            
            
            721
            
            
            601Amortization
                of premium on investment securities and mortgage loans held in
                securitization trusts
            
            
            498
            
            
            1,103Origination
                of mortgage loans held for sale
            
            
            —
            
            
            (300,863
            )Proceeds
                from sales or repayments of mortgage loans
            
            
            1,844
            
            
            398,418Restricted
                stock compensation expense
            
            
            —
            
            
            467Loss
                of securities and related hedges
            
            
            19,931
            
            
            3,821Gain
                on sale of retail lending segment
            
            
            —
            
            
            (4,946
            )Loan
                losses
            
            
            799
            
            
            6,372Other
            
            
            —
            
            
            714Changes
                in operating assets and liabilities:Due
                from loan purchasers
            
            
            —
            
            
            87,982Escrow
                deposits - pending loan closings
            
            
            —
            
            
            3,814Accounts
                and accrued interest receivable
            
            
            193
            
            
            2,009Prepaid
                and other assets
            
            
            78
            
            
            1,946Due
                to loan purchasers
            
            
            185
            
            
            (7,162
            )Accounts
                payable and accrued expenses
            
            
            (3,323
            )
            
            (3,452
            )Other
                liabilities
            
            
            —
            
            
            (96
            )Net
                cash provided by operating activities:
            
            
            931
            
            
            171,791**Cash
                Flows from Investing Activities:**Restricted
                cash
            
            
            6,286
            
            
            (1,047
            )Purchases
                of investment securities
            
            
            (825,933
            )
            
            (49,557
            )Proceeds
                from sale of investment securities
            
            
            601,309
            
            
            —Principal
                repayments received on mortgage loans held in securitization
                trusts
            
            
            52,293
            
            
            82,136Principal
                paydown on investment securities - available for sale
            
            
            47,692
            
            
            82,622Proceeds
                from sale of retail lending platform
            
            
            —
            
            
            12,936Purchases
                of property and equipment
            
            
            —
            
            
            (396
            )Disposal
                of fixed assets
            
            
            11
            
            
            485Net
                cash (used in) provided by investing activities
            
            
            (118,342
            )
            
            127,179**Cash
                Flows from Financing Activities:**Proceeds
                from common stock issued (net)
            
            
            56,579
            
            
            —Proceeds
                from convertible preferred debentures
 (net)
            
            
            19,553
            
            
            —Payments
                made for termination of swaps
            
            
            (8,333
            )
            
            —Increase
                (decrease) in financing arrangements
            
            
            102,235
            
            
            (564,544
            )Collateralized
                debt obligation borrowings
            
            
            —
            
            
            315,908Collateralized
                debt obligation paydowns
            
            
            (52,075
            )
            
            (47,594
            )Common
                stock dividends paid
            
            
            (1,118
            )
            
            (1,826
            )Net
                cash provided by (used in) financing activities
            
            
            116,841
            
            
            (298,056
            )




*See
      notes to condensed consolidated financial statements.*




6





**NEW
      YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS - (continued)**


(dollar
      amounts in thousands)


(unaudited)




**For the Six Months**
              **Ended June 30,****2008**
            
            **2007****Net
                (Decrease) Increase in Cash and Cash
                Equivalents**
            
            
            (570
            )
            
            914**Cash
                and Cash Equivalents - Beginning of Period**
            
            
            5,508
            
            
            969**Cash
                and Cash Equivalents - End of Period**
            
            $
            4,938
            
            $
            1,883**Supplemental
                Disclosure**Cash
                paid for interest
            
            $
            21,244
            
            $
            29,613**Non
                Cash Financing Activities**Dividends
                declared to be paid in subsequent period
            
            $
            1,492
            
            $
            —




*See
      notes to condensed consolidated financial statements.*




7




**NEW
      YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2008**


**(unaudited)**





**1.**
            **Organization
                and Summary of Significant Accounting
                Policies**





*Organization* - New
      York Mortgage Trust, Inc. together with its consolidated subsidiaries (“NYMT”,
      the “Company”, “we”, “our”, and “us”) is a self-advised real estate investment
      trust, or REIT, in the business of investing in residential adjustable rate
      mortgage-backed securities issued by a United States government-sponsored
      enterprise (“GSE” or “Agency”), such as the Federal National Mortgage
      Association (“Fannie Mae”), or the Federal Home Loan Mortgage Corporation
      (“Freddie Mac”), prime credit quality residential adjustable-rate mortgage
      (“ARM”) loans, or prime ARM loans, and non-agency mortgage-backed securities. We
      refer to residential adjustable rate mortgage-backed securities throughout
      this Quarterly Report on Form 10-Q as “MBS” and MBS issued by a GSE as
“Agency MBS”. We seek attractive long-term investment returns by investing our
      equity capital and borrowed funds in such securities. Our principal business
      objective is to generate net income for distribution to our stockholders
      resulting from the spread between the interest and other income we earn on
      our
      interest-earning assets and the interest expense we pay on the borrowings that
      we use to finance these assets, which we refer to as our net interest
      income.




The
      Company is organized and conducts its operations to qualify as a REIT for
      federal income tax purposes. As such, the Company will generally not be subject
      to federal income tax on that portion of its income that is distributed to
      stockholders if it distributes at least 90% of its REIT taxable income to its
      stockholders by the due date of its federal income tax return and complies
      with
      various other requirements.





In
      connection with the sale of the assets of our wholesale mortgage origination
      platform assets to Tribeca Lending Corp. (“Tribeca Lending”) on February 22,
      2007 and the sale of the assets of our retail mortgage lending platform, Indymac
      Bank, F.S.B. (“Indymac”) on March 31, 2007, we classified our mortgage lending
      business as a discontinued operation in accordance with the provisions of
      Statement of Financial Accounting Standard (“SFAS”) No. 144 *Accounting
      for the Impairment or Disposal of Long-Lived Assets* . As a
      result, we have reported revenues and expenses related to the mortgage lending
      business as a discontinued operation and the related assets and liabilities
      as
      assets and liabilities related to the discontinued operation for all periods
      presented in the accompanying condensed consolidated financial statements,
      except for the condensed consolidated statements of cash flows. Certain assets
      and liabilities, not assigned to Indymac or Tribeca Lending have become part
      of
      the ongoing operations of NYMT and accordingly, have not been classified as
      a
      discontinued operation in accordance with the provisions of SFAS No. 144 (see
      note 7).




Under
      the
      advisory agreement with JMP Asset Management LLC (“JMPAM”), which was entered
      into concurrent with our issuance of 1.0 million shares of Series A Cumulative
      Convertible Redeemable Preferred Stock (“Series A Preferred Stock”) to JMP
      Group, Inc. and certain of its affiliates, JMPAM advises two of our wholly-owned
      subsidiaries, Hypotheca Capital, LLC (formerly known as The New York Mortgage
      Company, LLC) (“HC”) and New York Mortgage Funding, LLC, as well as any
      additional subsidiaries acquired or formed in the future to hold investments
      made on our behalf by JMPAM. We refer to these subsidiaries in our periodic
      reports filed with the Securities and Exchange Commission (“SEC”) as the
“Managed Subsidiaries.” As an advisor to the Managed Subsidiaries, we expect
      that JMPAM will focus on the acquisition of alternative mortgage related
      investments. As of the date of the filing of this report, we have not commenced
      investments pursuant to this strategy; however, this strategy, if and when
      implemented, will vary from our core strategy and we can provide no assurance
      that we will be successful at implementing any alternative investment
      strategy.





8




**NEW
      YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2008**


**(unaudited)**





*Basis
      of Presentation* - The
      condensed consolidated balance sheets at June 30, 2008, the condensed
      consolidated statements of operations for the three months and six months ended
      June 30, 2008 and 2007, and the condensed consolidated statements of cash flows
      for the six months ended June 30, 2008 and 2007 are unaudited. In our opinion,
      all adjustments (which include only normal recurring adjustments) necessary
      to
      present fairly the financial position, results of operations and cash flows
      have
      been made. Certain information and footnote disclosures normally included in
      financial statements prepared in accordance with accounting principles generally
      accepted in the United States of America have been condensed or omitted in
      accordance with Article 10 of Regulation S-X and the instructions to Form 10-Q.
      These condensed consolidated financial statements should be read in conjunction
      with the consolidated financial statements and notes thereto included in our
      Annual Report on Form 10-K for the year ended December 31, 2007, as filed with
      the Securities and Exchange Commission (“SEC”). The results of operations for
      the three and six months ended June 30, 2008 are not necessarily indicative
      of
      the operating results for the full year.




The
      accompanying condensed consolidated financial statements include our accounts
      and that of our consolidated subsidiaries. All significant intercompany amounts
      have been eliminated. The preparation of financial statements in conformity
      with
      accounting principles generally accepted in the United States of America
      requires us to make estimates and assumptions that affect the reported amounts
      of assets and liabilities and disclosure of contingent assets and liabilities
      at
      the date of the financial statements and the reported amounts of revenues and
      expenses during the reporting periods. Actual results could differ from those
      estimates.





The
      Board
      of Directors declared a one for five reverse stock split of our common stock,
      as
      of October 9, 2007 and a one for two reverse stock split of our common stock,
      as
      of May 29, 2008, decreasing the number of common shares then outstanding to
      approximately 9.3 million. Prior and current period share amounts and earnings
      per share disclosures have been restated to reflect the reverse stock split.
      In
      addition, the terms of our Series A Preferred Stock provide that the conversion
      rate for the Series A Preferred Stock be appropriately adjusted to reflect
      any
      reverse stock split. As a result, the description of our Series A Preferred
      Stock reflects the May 2008 reverse stock split.





*New
      Accounting Pronouncements -* On
      January 1, 2008, the Company adopted SFAS No. 157, *Fair
      Value Measurements* , which
      defines fair value, establishes a framework for measuring fair value in
      accordance with GAAP and expands disclosures about fair value
      measurements.




The
      changes to previous practice resulting from the application of SFAS No. 157
      relate to the definition of fair value, the methods used to measure fair value,
      and the expanded disclosures about fair value measurements.  The
      definition of fair value retains the exchange price notion used in earlier
      definitions of fair value.  SFAS No. 157 clarifies that the
      exchange price is the price in an orderly transaction between market
      participants to sell the asset or transfer the liability in the market in which
      the reporting entity would transact for the asset or liability, that is, the
      principal or most advantageous market for the asset or liability.  The
      transaction to sell the asset or transfer the liability is a hypothetical
      transaction at the measurement date, considered from the perspective of a market
      participant that holds the asset or owes the liability.  SFAS No. 157
      provides a consistent definition of fair value which focuses on exit price
      and
      prioritizes, within a measurement of fair value, the use of market-based inputs
      over entity-specific inputs.  In addition, SFAS No. 157 provides a
      framework for measuring fair value, and establishes a three-level hierarchy
      for
      fair value measurements based upon the transparency of inputs to the valuation
      of an asset or liability as of the measurement date (see note 10).





On
      January 1, 2008, the Company adopted SFAS No. 159, *The
      Fair Value Option for Financial Assets and Financial
      Liabilities* , which
      provides companies with an option to report selected financial assets and
      liabilities at fair value.





The
      objective of SFAS No. 159 is to reduce both complexity in accounting for
      financial instruments and the volatility in earnings caused by measuring related
      assets and liabilities differently. SFAS No. 159 establishes presentation and
      disclosure requirements and requires companies to provide additional information
      that will help investors and other users of financial statements to more easily
      understand the effect of the company's choice to use fair value on its earnings.
      SFAS No. 159 also requires entities to display the fair value of those assets
      and liabilities for which the Company has chosen to use fair value on the face
      of the balance sheet. The Company’s adoption of SFAS No. 159 did not have a
      material impact on the condensed consolidated financial statements as the
      Company did not elect the fair value option for any of its existing financial
      assets or liabilities as of January 1, 2008.





9





**NEW
      YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2008**


**(unaudited)**




In
      June
      2007, the Emerging Issues Task Force (“EITF”) reached consensus on Issue
      No. 06-11, *Accounting
      for Income Tax Benefits of Dividends on Share-Based Payment
      Awards* . EITF
      Issue No. 06-11 requires that the tax benefit related to dividend
      equivalents paid on restricted stock units, which are expected to vest, be
      recorded as an increase to additional paid-in capital. The Company
      currently accounts for this tax benefit as a reduction to income tax expense.
      EITF Issue No. 06-11 is to be applied prospectively for tax benefits on
      dividends declared in fiscal years beginning after December 15, 2008, and
      the Company expects to adopt the provisions of EITF Issue No. 06-11
      beginning in the first quarter of 2009. The Company does not expect the adoption
      of EITF Issue No. 06-11 to have a material effect on its financial
      condition, results of operations or cash flows.





In
      December 2007, the FASB issued SFAS No. 141, *Business
      Combinations*and issued SFAS 141(R) *Business
      Combinations* . 
      SFAS No. 141R broadens the guidance of SFAS No. 141, extending its applicability
      to all transactions and other events in which one entity obtains control over
      one or more other businesses. It broadens the fair value measurement and
      recognition of assets acquired, liabilities assumed, and interests transferred
      as a result of business combinations; and it stipulates that acquisition related
      costs be expensed rather than included as part of the basis of the
      acquisition.  SFAS No. 141(R) expands required disclosures to improve the
      ability to evaluate the nature and financial effects of business combinations.
      SFAS No. 141(R) is effective for all transactions the Company closes, on or
      after January 1, 2009.  We are currently evaluating the impact SFAS No.
      141(R) will have on our consolidated financial statements.





In
      December 2007, the FASB issued SFAS No. 160, *Noncontrolling Interests in Consolidated Financial Statements - An Amendment
      of
      ARB No. 51* . 
      SFAS No. 160 requires a noncontrolling interest in a subsidiary to be reported
      as equity and the amount of consolidated net income specifically attributable
      to
      the noncontrolling interest to be identified in the consolidated financial
      statements.  SFAS No. 160 also calls for consistency in the manner of
      reporting changes in the parent’s ownership interest and requires fair value
      measurement of any noncontrolling equity investment retained in a
      deconsolidation. SFAS No. 160 is effective for the Company on January 1, 2009
      and most of its provisions will apply prospectively. We are currently evaluating
      the impact SFAS No. 160 will have on our consolidated financial
      statements.





In
      February 2008, the FASB issued FASB Staff Position (“FSP”)
      No. 140-3, *Accounting
      for Transfers of Financial Assets and Repurchase Financing
      Transactions* . SFAS
      No. 140-3 requires an initial transfer of a financial asset and a
      repurchase financing that was entered into contemporaneously or in contemplation
      of the initial transfer to be evaluated as a linked transaction under
      SFAS No. 140, *Accounting for Transfers and Servicing of Financial
      Assets and Extinguishments of Liabilities*unless certain criteria are
      met, including that the transferred asset must be readily obtainable in the
      marketplace. FSP No. 140-3 is effective for the Company’s fiscal
      years
      beginning after November 15, 2010, and will be applied to new transactions
      entered into after the date of adoption. Early adoption is prohibited.
      The Company is currently evaluating the impact of adopting FSP
      No. 140-3 on its financial condition and cash flows. Adoption of FSP
      No. 140-3 will have no effect on the Company’s results of
      operations.




In
      March 2008, the FASB issued SFAS No. 161, *Disclosures
      about Derivative Instruments and Hedging Activities — an amendment of FASB
      Statement No. 133.* SFAS No. 161 requires enhanced disclosures about an entity’s
      derivative and hedging activities, and is effective for financial
      statements the Company’s issues for
      fiscal years beginning after November 15, 2008, with early application
      encouraged. The Company will adopt SFAS No. 161 in the first quarter
      of 2009. Because SFAS No. 161 requires only additional
      disclosures concerning derivatives and hedging activities, adoption of
      SFAS No. 161 will not affect the Company’s financial condition,
      results of operations or cash flows.




In
        May
        2008, the FASB issued Staff Position No. APB 14-1, *Accounting for Convertible Debt Instruments that may be*  *Settled
        in Cash upon Conversion (Including Partial Cash Settlement)* ,
        (the
“FSP”). The adoption of this FSP would affect  the
        accounting for our convertible preferred debentures. The FSP requires the
        initial proceeds from the sale of our convertible preferred debentures to
        be
        allocated between a liability component and an equity component. The resulting
        discount would be amortized using the effective interest method over the
        period
        the debt is expected to remain outstanding as  additional
        interest expense. The FSP would be effective for our fiscal year beginning
        on
        January 1, 2009 and requires  retroactive
        application. We are currently evaluating the impact of the FSP on our financial
        statements.





10





**NEW
      YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2008**


**(unaudited)**




**2.
      Investment Securities - Available for Sale**




Investment
      securities available for sale consist of the following as of June 30, 2008
      and
      December 31, 2007 (dollar amounts in thousands):





**June 30,**
              **2008**
            
            **December 31,**
              **2007**Amortized
                cost
            
            $
            512,398
            
            $
            350,484Gross
                unrealized losses
            
            
            (12,994
            )
            
            —Fair
                value
            
            $
            499,404
            
            $
            350,484




During
      March 2008, news of security liquidations increased the volatility of many
      financial assets, including those held in our portfolio. The significant
      liquidation of MBS by several large financial institutions in early March 2008
      caused a significant decline in the fair market value of our MBS portfolio,
      including Agency ARM MBS and CMO Floaters that we pledge as collateral
      for borrowings under our repurchase agreements. As a result of the significant
      decline in the fair value of our Agency securities, as determined by the lenders
      under our repurchase agreements, the haircut required by our lenders to obtain
      new or additional financing on these securities experienced, in some
      cases, a significant increase. As of June 30, 2008, the average haircut on
      the CMO Floaters in our portfolio was 12% or an advance rate of 88%, as
      compared to 5% or an advance rate of 95% at December 31, 2007. As a result
      of the combination of lower fair values on our Agency securities and rising
      haircut requirements to finance those securities, we elected to improve our
      liquidity position by selling approximately $592.8 million of Agency MBS
      securities, including $516.4 million of Agency ARM MBS and $76.4
      million of CMO Floaters from our portfolio in March 2008. The sales resulted
      in
      a realized loss of $15.0 million.





As
      result
      of the timing of these sales occurring prior to the release of our December
      31,
      2007 results, the Company determined that the unrealized losses on our entire
      MBS securities portfolio were considered to be other than temporarily impaired
      as of December 31, 2007 and incurred an $8.5 million impairment
      charge for the quarter ended December 31, 2007.





As
      of
      June 30, 2008 and the date of this filing, we have the intent, and believe
      we
      have the ability, to hold our portfolio of securities which are currently in
      unrealized loss positions until recovery of their amortized cost,
      which  may be until maturity.  Given the uncertain state of the market
      for such securities, should conditions change that would require us to sell
      securities at a loss, we may no longer be able to assert that we have the
      ability to hold our remaining securities until recovery, and we would then
      be
      required to record impairment charges related to these securities. Substantially
      all of the Company's investment securities available for sale are pledged as
      collateral for borrowings under financing arrangements (see note
      5).




All
      securities held in Investment Securities Available for Sale, including Agency,
      investment and non-investment grade securities, are based on unadjusted price
      quotes for similar securities in active markets and are categorized as Level
      2
      per SFAS No. 157 (see note 10).




11




**NEW
      YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2008**


**(unaudited)**




The
      following tables set forth the stated reset periods and weighted average yields
      of our investment securities at June 30, 2008: (dollar amounts in
      thousands):





**Less than 6 Months**
            
            **More than 6Months**
              **to 24 Months**
            
            **More than 24Months**
              **to 60 Months**
            
            **Total****Carrying**
              **Value**
            
            **Weighted**
              **Average**
              **Yield**
            
            **Carrying**
              **Value**
            
            **Weighted**
              **Average**
              **Yield**
            
            **Carrying**
              **Value**
            
            **Weighted**
              **Average**
              **Yield**
            
            **Carrying**
              **Value**
            
            **Weighted**
              **Average**
              **Yield**Agency
                REMIC CMO floaters
            
            $
            199,349
            
            
            3.93
            %
            $
            —
            
            
            —
            
            $
            —
            
            
            —
            
            $
            199,349
            
            
            3.93
            %Agency
                Hybrid ARM securities
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            272,948
            
            
            4.70
            %
            
            272,948
            
            
            4.70
            %Non-Agency
                floaters
            
            
            24,552
            
            
            6.00
            %
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            24,552
            
            
            6.00
            %NYMT
                Retained Securities (1)
            
            
            2,158
            
            
            5.67
            %
            
            —
            
            
            —
            
            
            397
            
            
            11.69
            %
            
            2,555
            
            
            9.03
            %Total/Weighted
                average
            
            $
            226,059
            
            
            4.20
            %
            $
            —
            
            
            —
            
            $
            273,345
            
            
            4.77
            %
            $
            499,404
            
            
            4.50
            %




(1)
      The
      NYMT retained securities includes $0.4 million of residual interests related
      to
      the NYMT 2006-1 transaction.





The
      following table sets forth the stated reset periods and weighted average yields
      of our investment securities at December 31, 2007 (dollar amounts in
      thousands):





**Less than 6 Months**
            
            **More than 6 Months**
              **to 24 Months**
            
            **More than 24 Months**
              **to 60 Months**
            
            **Total****Carrying**
              **Value**
            
            **Weighted**
              **Average**
              **Yield**
            
            **Carrying**
                **Value**
            
            **Weighted**
              **Average**
              **Yield**
            
            **Carrying**
              **Value**
            
            **Weighted**
              **Average**
              **Yield**
            
            **Carrying**
              **Value**
            
            **Weighted**
              **Average**
              **Yield**Agency
                REMIC CMO Floating Rate
            
            $
            318,689
            
            
            5.55
            %
            $
            —
            
            
            —
            
            $
            —
            
            
            —
            
            $
            318,689
            
            
            5.55
            %Non-Agency
                Floaters
            
            
            28,401
            
            
            5.50
            %
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            28,401
            
            
            5.50
            %NYMT
                Retained Securities (2)
            
            
            2,165
            
            
            6.28
            %
            
            —
            
            
            —
            
            
            1,229
            
            
            12.99
            %
            
            3,394
            
            
            10.03
            %Total/Weighted
                Average
            
            $
            349,255
            
            
            5.55
            %
            $
            —
            
            
            —
            
            $
            1,229
            
            
            12.99
            %
            $
            350,484
            
            
            5.61
            %




(2)
      The
      NYMT retained securities includes $1.2 million of residual interests related
      to
      the NYMT 2006-1 transaction.





12




**NEW
      YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2008**


**(unaudited)**





The
      following table presents the Company's investment securities available for
      sale
      in an unrealized loss position, aggregated by investment category and length
      of
      time that individual securities have been in a continuous unrealized loss
      position at June 30, 2008. There were no unrealized positions as of December
      31,
      2007 as the Company incurred an $8.5 million impairment charge (dollar
      amounts in thousands):





**Less than 12 Months**
            
            **12 Months or More**
            
            **Total****June
                30, 2008**
            
            **Carrying**
              **Value**
            
            **Gross**
              **Unrealized**
              **Losses**
            
            **Carrying**
              **Value**
            
            **Gross**
              **Unrealized**
              **Losses**
            
            **Carrying**
              **Value**
            
            **Gross**
              **Unrealized**
              **Losses**Agency
                REMIC CMO floaters
            
            $
            199,349
            
            $
            6,349
            
            $
            —
            
            $
            —
            
            $
            199,349
            
            $
            6,349Agency
                Hybrid ARM securities
            
            
            272,948
            
            
            2,673
            
            
            —
            
            
            —
            
            
            272,948
            
            
            2,673Non-Agency
                floaters
            
            
            24,552
            
            
            3,135
            
            
            —
            
            
            —
            
            
            24,552
            
            
            3,135NYMT
                retained securities
            
            
            2,555
            
            
            837
            
            
            —
            
            
            —
            
            
            2,555
            
            
            837Total
            
            $
            499,404
            
            $
            12,994
            
            $
            —
            
            $
            —
            
            $
            499,404
            
            $
            12,994





**3** . **Mortgage
      Loans Held in Securitization Trusts (net)**




Mortgage
      loans held in securitization trusts consist of the following as of June 30,
      2008
      and December 31, 2007 (dollar amounts in thousands):





**June
                30,**
              **2008**
            
            **December
                31,**
              **2007**Mortgage
                loans principal amount
            
            $
            377,336
            
            $
            429,629Deferred
                origination costs – net
            
            
            2,386
            
            
            2,733Reserve
                for loan losses
            
            
            (2,738
            )
            
            (1,647
            )Total
                mortgage loans held in securitization trusts (net)
            
            $
            376,984
            
            $
            430,715




*Reserve
      for Loan losses -* The
      following table presents the activity in the Company's reserve for loan losses
      on mortgage loans held in securitization trusts for the six months
      ended June 30, 2008 and 2007 (dollar amounts in
      thousands).





**June
                30,****2008**
            
            **2007**Balance at
                beginning of period
            
            $
            1,647
            
            $
            —Provisions
                for loan losses
            
            
            1,455
            
            
            940Charge-offs
            
            
            (364
            )
            
            —Balance
                of the end of period
            
            $
            2,738
            
            $
            940





All
      of
      the Company's mortgage loans held in securitization trusts are pledged as
      collateral for the collateralized debt obligations (“CDO”) (see note 6). The
      Company’s net investment, the difference between the carrying amount of the
      loans and the amount of CDO outstanding, as of June 30, 2008 was $11.8
      million.




13




**NEW
      YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2008**


**(unaudited)**





The
      following tables set forth delinquent loans in our portfolio as of June 30,
      2008
      and December 31, 2007 (dollar amounts in thousands):




**June
                30, 2008****Days
                Late**
            
            **Number of**
              **Delinquent**
              **Loans**
            
            **Total**
              **Dollar**
              **Amount**
            
            **% of Loan**
              **Portfolio**30-60
            
            
            2
            
            $
            2,256
            
            
            0.60
            %61-90
            
            
            —
            
            
            —
            
            
            —
            %90+
            
            
            12
            
            
            6,843
            
            
            1.81
            %Real
                estate owned through foreclosure
            
            
            3
            
            $
            3,747
            
            
            0.99
            %




**December
                31, 2007****Days
                Late**
            
            **Number of**
              **Delinquent**
              **Loans**
            
            **Total**
              **Dollar**
              **Amount**
            
            **% of Loan**
              **Portfolio**30-60
            
            
            —
            
            $
            —
            
            
            —
            %61-90
            
            
            2
            
            
            1,859
            
            
            0.43
            %90+
            
            
            12
            
            
            6,910
            
            
            1.61
            %Real
                estate owned through foreclosure
            
            
            4
            
            $
            4,145
            
            
            0.96
            %





14




**NEW
      YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2008**


**(unaudited)**





**4.
      Derivative Instruments and Hedging Activities**





The
      Company enters into derivatives to manage its interest rate and market risk
      exposure associated with its MBS investment activities and its subordinated
      debentures. These derivatives include interest rate swaps and caps to mitigate
      the effects of major interest rate changes on net investment
      spread.




During
      the six months ended June 30, 2008, the Company
      terminated a total of $517.7 million of notional interest rate swaps resulting
      in a realized loss of $4.8 million.




The
      following table summarizes the estimated fair value of derivative assets and
      liabilities as of June 30, 2008 and December 31, 2007 (see Note 10) (dollar
      amounts in thousands):





**June
                30,**
              **2008**
            
            **December 31,**
              **2007****Derivative
                Assets:**Interest
                rate caps
            
            $
            355
            
            $
            416Interest
                rate swaps
            
            
            2,085**Total
                derivative assets**
            
            $
            2,440
            
            $
            416**Derivative
                Liabilities:**Interest
                rate swaps
            
            $
            —
            
            $
            3,517**Total
                derivative liabilities**
            
            $
            —
            
            $
            3,517




The
      notional amounts of the Company's interest rate swaps and interest rate caps
      as
      of June 30, 2008 were $158.0 million and $687.6 million,
      respectively.




The
      notional amounts of the Company's interest rate swaps and interest rate caps
      as
      of December 31, 2007 were $220.0 million and $749.6 million,
      respectively.




The
      Company estimates that over the next 12 months, approximately $27,000 of
      the net unrealized gains on the interest rate swaps will be reclassified
      from accumulated OCI into earnings.





The
      Company received $0.8 million in cash related to margin owed to the Company
      for
      interest rate swaps as of June 30, 2008 and had $4.7 million of restricted
      cash
      related to margin posted for interest rate swaps as of December 31, 2007. The
      Company is required to post margin in the form of either cash or Agency ARM
      MBS
      to cover fair value deficits from our interest rate swap counterparties.




**5.**  **Financing
      Arrangements, Portfolio Investments**





The
      Company has entered into repurchase agreements with third party financial
      institutions to finance its mortgage-backed securities portfolio. The repurchase
      agreements are short-term borrowings that bear interest rates based on a spread
      to LIBOR, and are secured by the MBS which they finance. At June 30, 2008,
      the Company had repurchase agreements with an outstanding balance of $417.9
      million and a weighted average interest rate of 2.60%. As of December 31, 2007,
      the Company had repurchase agreements with an outstanding balance of $315.7
      million and a weighted average interest rate of 5.02%. At June 30, 2008 and
      December 31, 2007, securities pledged as collateral for repurchase agreements
      had estimated fair values of $466.8 million and $337.4 million, respectively.
      All outstanding borrowings under our repurchase agreements mature within 30
      days. As of June 30, 2008, the average days to maturity for all
      repurchase agreements are 17 days. The Company had outstanding repurchase
      agreements with seven different financial institutions as of June 30, 2008
      as
      compared to four as of December 31, 2007.





15




**NEW
      YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2008**


**(unaudited)**





As
      of
      June 30, 2008, our Agency ARM MBS are financed with $242.1 million of repurchase
      agreement funding with an advance rate of 94% that implies a haircut of 6%,
      our Agency CMO floaters are financed with $160.0 million of repurchase agreement
      financing equating to an advance rate of 88% that implies a haircut of 12%
      and
      the non-Agency CMO floater was financed with $15.9 million of repurchase
      agreements funding with an advance rate of 80% or a 20% haircut.  As
      discussed in Note 2, we experienced a combination of declining fair market
      value
      for the securities in our portfolio and increasing haircut requirement in March
      2008 that resulted in our selling approximately $592.8 million of Agency MBS
      in
      our portfolio during March 2008. We undertook these actions to reduce our
      leverage and improve our liquidity position.





In
      the
      event we are unable to obtain sufficient short-term financing through repurchase
      agreements or otherwise, or our lenders start to require additional collateral,
      we may have to liquidate our investment securities at a disadvantageous time,
      which could result in losses. Any losses resulting from the disposition of
      our investment securities in this manner could have a material adverse effect
      on
      our operating results and net profitability.




As
      of
      June 30, 2008, the Company had $4.9 million in cash and $31.9 million in
      unencumbered securities including $25.0 million in Agency MBS to meet additional
      haircut or market valuation requirements.





**6** . **Collateralized
      Debt Obligations**




The
      Company’s CDOs, which are recorded as liabilities on the Company’s balance
      sheet, are secured by ARM loans pledged as collateral, which are recorded as
      assets of the Company. As of June 30, 2008 and December 31, 2007, the Company
      had CDOs outstanding of $365.2 million and $417.0 million, respectively. As
      of
      June 30, 2008 and December 31, 2007, the current weighted average interest
      rate
      on these CDOs was 2.87% and 5.25%, respectively. The CDOs are collateralized
      by
      ARM loans with a principal balance of $377.3 million and $429.6 million at
      June
      30, 2008 and December 31, 2007, respectively. The Company retained the owner
      trust certificates, or residual interest for the three securitizations, and,
      as
      of June 30, 2008 and December 31, 2007, had net investment after loan loss
      reserves of $11.8 million and $13.7 million, respectively.





The
      CDO
      transactions include an amortizing interest rate cap contracts with a notional
      amount of $255.9 million as of June 30, 2008 and a notional amount of $286.9
      million as of December 31, 2007, which is recorded as an asset of the Company.
      The interest rate caps are carried at fair value and totaled $0.2 million as
      of
      June 30, 2008 and $0.1 million as of December 31, 2007, respectively. The
      interest rate cap reduces interest rate exposure on these
      transactions.




**7.
      Discontinued Operation**




In
      connection with the sale of our mortgage origination platform assets during
      the quarter ended March 31, 2007, we classified our mortgage lending
      segment as a discontinued operation in accordance with the provisions of SFAS
      No. 144. As a result, we have reported revenues and expenses related to the
      segment as a discontinued operation and the related assets and liabilities
      as
      assets and liabilities related to a discontinued operation for all periods
      presented in the accompanying condensed consolidated financial statements.
      Certain assets, such as the deferred tax asset, and certain liabilities, such
      as
      subordinated debt and liabilities related to leased facilities not assigned
      to
      Indymac, will become part of our ongoing operations and accordingly, we have
      not
      included these items as part of the discontinued operation in accordance with
      the provisions of SFAS No. 144.




16





**NEW
      YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2008**


**(unaudited)**





***Balance
      Sheet Data***





The
      components of assets related to the discontinued operation as of June 30, 2008
      and December 31, 2007 are as follows (dollar amounts in thousands):




**June 30,**
              **2008**
            
            **December 31,**
              **2007**Accounts
                and accrued interest receivable
            
            $
            65
            
            $
            51Mortgage
                loans held for sale (net of reserves of $1.2 million as of June 30,
                2008
                and $1.5 million as of December 31, 2007)
            
            
            6,200
            
            
            8,077Prepaid
                and other assets
            
            
            437
            
            
            737Property
                and equipment, net
            
            
            —
            
            
            11Total assets
            
            $
            6,702
            
            $
            8,876




The
      components of liabilities related to the discontinued operation as of June
      30,
      2008 and December 31, 2007 are as follows (dollar amounts in
      thousands):





**June 30,**
              **2008**
            
            **December 31,**
              **2007**Due
                to loan purchasers
            
            $
            755
            
            $
            894Accounts
                payable and accrued expenses
            
            
            2,170
            
            
            4,939Total liabilities
            
            $
            2,925
            
            $
            5,833




***Statements
      of Operations Data***




The
      statements of operations of the discontinued operation for the three and six
      months ended June 30, 2008 and 2007 are as follows (dollar amounts in
      thousands):




**For the Three Months Ended**
            
            **For the Six Months Ended****June
                30,**
            
            **June
                30,****2008**
            
            **2007**
            
            **2008**
            
            **2007**Revenues
            
            $
            762
            
            $
            (5,178
            )
            $
            933
            
            $
            1,916Expenses
            
            
            (67
            )
            
            3,840
            
            
            (76
            )
            
            14,775Loss
                from discontinued operations - net of tax
            
            
            829
            
            
            (9,018
            )
            
            1,009
            
            
            (12,859
            )





17




**NEW
      YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2008**


**(unaudited)**




**8.** **Commitments
      and Contingencies**




*Loans
      Sold to Investors* *-* For
      loans originated and sold by our discontinued mortgage lending business, the
      Company is not exposed to long term credit risk.  In the normal course of
      business however, the Company is obligated to repurchase loans based on
      violations of representations and warranties in the sale agreement, or early
      payment defaults.  The Company has not repurchased loans for the
      three months ended June 30, 2008.





As
      of
      June 30, 2008 we had a total of $1.5 million of unresolved repurchase requests,
      against which the Company has a reserve of approximately $0.5 million. The
      reserve is based on one or more of the following factors, including historical
      settlement rates, property value securing the loan in question and specific
      settlement discussion with third parties.




*Outstanding
      Litigation* - The
      Company is at times subject to various legal proceedings arising in the ordinary
      course of business other than as described below, the Company does not believe
      that any of its current legal proceedings, individually or in the aggregate,
      will have a material adverse effect on its operations, financial condition
      or cash flows.




On
      December 13, 2006, Steven B. Yang and Christopher Daubiere (“Plaintiffs”), filed
      suit in the United States District Court for the Southern District of New York
      against HC and us, alleging that we failed to pay them, and similarly situated
      employees, overtime in violation of the Fair Labor Standards Act (“FLSA”) and
      New York State law.  The Plaintiffs, each of whom were former employees in
      our discontinued mortgage lending business, purported to bring a FLSA
“collective action” on behalf of similarly situated loan officers in our now
      discontinued mortgage lending business and sought unspecified amounts for
      alleged unpaid overtime wages, liquidated damages, attorney’s fees and
      costs.





On
      December 30, 2007 we entered into an agreement in principle with the Plaintiffs
      to settle this suit. On June 2, 2008, the court granted a preliminary approval
      of settlement and authorized notification to plaintiffs and set a fairness
      hearing for September 18, 2008. As part of the preliminary settlement the
      Company funded the settlement in the amount of $1.4 million into an escrow
      account for the plaintiffs. The amount was previously reserved and expensed
      in
      the year ended December 31, 2007.




*Leases* - The
      Company leases its corporate offices and certain office space related to our
      discontinued mortgage lending operation not assumed by IndyMac and equipment
      under short-term lease agreements expiring at various dates through 2013. All
      such leases are accounted for as operating leases. Total rental income for
      property and equipment amounted to $0.3 million and $0.1 million for the six
      months and three months ended June 30, 2008. As of June 30, 2008, the Company
      had been reimbursed for $1.0 million by Indymac representing the reduction
      in
      escrow from the non performance of vacating the premise as described below
      and
      is included in other income.




Pursuant
      to an Assignment and Assumption of Sublease and an Escrow Agreement, each with
      Lehman Brothers Holdings Inc. (“Lehman”) (collectively, the “Agreements”), the
      Company assigned and Lehman assumed the sublease for the Company's corporate
      headquarters at 1301 Avenue of the Americas. Pursuant to the Agreements,
      Lehman funded an escrow account, containing $3.0 million for the
      benefit of HC. The escrow amount is reduced by $0.2 million for each month
      the
      Company remains in the leased space beginning February 1, 2008. As of June
      30,
      2008, the escrow has been reduced by $1.0 million due to the Company’s failure
      to vacate the leased space, which amount has been reimbursed to us by IndyMac.
      The Company relocated its corporate offices to 52 Vanderbilt Avenue in New
      York,
      New York on July 3, 2008. IndyMac occupied the leased space at 1301 Avenue
      of
      the Americas pursuant to contractual provisions related to the sale of mortgage
      origination business until July 31, 2008. Pursuant to the provisions of the
      sale
      transaction with IndyMac, IndyMac paid rent equal to the Company’s cost,
      including any penalties and foregone bonuses resulting from the delay in
      vacating the leased premises. The Company expects to receive the remaining
      amount held in the escrow account in the quarter ending September 30,
      2008.





18





**NEW
      YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2008**


**(unaudited)**





*Letters
      of Credit* –
      The Company maintains a letter of credit in the amount of $178,200 in lieu
      of a
      cash security deposit for its current corporate headquarters located at 52
      Vanderbilt Avenue in New York City for its landlord, Vanderbilt Associates
      I,
      L.L.C, as beneficiary. This letter of credit is secured by cash deposited in
      a
      bank account maintained at JP Morgan Chase bank.





HC
      maintains a letter of credit in the amount of $100,000 in lieu of a cash
      security deposit for an office lease dated June 1998 for the Company's former
      headquarters located at 304 Park Avenue South in New York City. The sole
      beneficiary of this letter of credit is the owner of the building, 304 Park
      Avenue South LLC. This letter of credit is secured by cash deposited in a bank
      account maintained at JP Morgan Chase bank.




HC
      maintains a letter of credit in the amount of $313,000 in lieu of a cash
      security deposit for its former corporate headquarters located at 1301 Avenue
      of
      the Amercias in New York City for its sub landlord, PricewaterhouseCoopers,
      LLP,
      as beneficiary. This letter of credit is secured by cash deposited in a bank
      account maintained at JP Morgan Chase bank.





*Registration
      Rights Agreement -* On
      February 21, 2008, the Company completed the issuance and sale of 7.5 million
      shares of its common stock in a private placement at a price of $8.00 per share.
      In connection with this private offering of our common stock, we entered into
      a
      registration rights agreement, which we refer to as the Common Stock
      Registration Rights Agreement, pursuant to which we were required, among other
      things, to file with the Securities and Exchange Commission, or SEC, a resale
      shelf registration statement registering for resale the 7.5 million shares
      sold
      in this private offering on or before March 12, 2008 and obtain listing for
      our
      common stock on the NASDAQ Stock Market on or before the effective date of
      the
      resale shelf registration statement. In the event we fail to satisfy these
      requirements, we may be subject to payment of liquidated damages to the
      investors in the transaction. The Company filed the resale shelf registration
      statement on April 4, 2008 and it became effective on April 18, 2008. As a
      result, we incurred a penalty fee (liquidated damages) of approximately $0.2
      million which was paid on May 2, 2008. Because the Company was unable to obtain
      listing on the NASDAQ stock market until June 4, 2008, we incurred a penalty
      fee
      (liquidated damages) of approximately $0.5 million which was paid on July 3,
      2008. The Company does not expect to incur future penalty fees under this
      agreement.




**9.**  **Concentrations
      of Credit Risk**




At
      June
      30, 2008 and December 31, 2007, there were geographic concentrations of credit
      risk exceeding 5% of the total loan balances within mortgage loans held in
      the
      securitization trusts and retained interests in our REMIC securitization, NYMT
      2006-1, as follows:





**June 30,**
              **2008**
            
            **December 31,**
              **2007**New
                York
            
            
            30.8
            %
            
            31.2
            %Massachusetts
            
            
            17.3
            %
            
            17.4
            %Florida
            
            
            8.2
            %
            
            8.3
            %California
            
            
            7.0
            %
            
            7.2
            %New
                Jersey
            
            
            5.9
            %
            
            5.7
            %





19




**NEW
      YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2008**


**(unaudited)**





**10** . **Fair
      Value of Financial Instruments**





The
      Company adopted SFAS No. 157 effective January 1, 2008, and accordingly all
      assets and liabilities measured at fair value will utilize valuation
      methodologies in accordance with the statement.  The Company has
      established and documented processes for determining fair
      values.  Fair value is based upon quoted market prices, where
      available.  If listed prices or quotes are not available, then fair
      value is based upon internally developed models that primarily use inputs that
      are market-based or independently-sourced market parameters, including interest
      rate yield curves.




A
      financial instrument’s categorization within the valuation hierarchy is based
      upon the lowest level of input that is significant to the fair value
      measurement.  The three levels of valuation hierarchy established by
      FAS 157 are defined as follows:




*Level
      1* - inputs
      to the valuation methodology are quoted prices (unadjusted) for identical assets
      or liabilities in active markets.




*Level
      2* - inputs
      to the valuation methodology include quoted prices for similar assets and
      liabilities in active markets, and inputs that are observable for the asset
      or
      liability, either directly or indirectly, for substantially the full term of
      the
      financial instrument.




*Level
      3* - inputs
      to the valuation methodology are unobservable and significant to the fair value
      measurement.




The
      following describes the valuation methodologies used for the Company’s financial
      instruments measured at fair value, as well as the general classification of
      such instruments pursuant to the valuation hierarchy.




*a.
      Investment Securities Available for Sale* - Fair
      value is generally based on quoted prices provided by dealers who make markets
      in similar financial instruments. The dealers will incorporate common market
      pricing methods, including a spread measurement to the Treasury curve or
      Interest Rate Swap Cure as well as underlying characteristics of the particular
      security including coupon, periodic and life caps, collateral type, rate reset
      period and seasoning or age of the security. If the fair value of a security
      is
      not reasonably available from a dealer, management estimates the fair value
      based on characteristics of the security that the Company receives from the
      issuer and based on available market information. Management reviews all prices
      used in determining valuation to ensure they represent current market
      conditions. This review includes surveying similar market transactions,
      comparisons to interest pricing models as well as offerings of like securities
      by dealers. The Company’s investment securities are valued based upon readily
      observable market parameters and are classified as Level 2 fair
      values.





b. *Interest
      Rate Swaps and Caps* - The
      fair value of interest rate swaps and caps are based on using market accepted
      financial models as well as dealer quotes. The model utilizes readily observable
      market parameters, including treasury rates, interest rate swap spreads and
      swaption volatility curves. The Company’s interest rate caps and swaps are
      classified as Level 2 fair values.




The
      following table presents the Company’s financial instruments carried at fair
      value, at the dates indicated below as of June 30, 2008, on the condensed
      consolidated balance sheet by SFAS No. 157 valuation hierarchy, as previously
      described (dollar amounts in thousands):




**Fair
                Value at June 30, 2008****
            
            **Level 1**
            
            **Level 2**
            
            **Level 3**
            
            **Total**Assets:Investment
                securities - available for sale
            
            $
            —
            
            $
            499,404
            
            $
            —
            
            $
            499,404Mortgage
                loans held for sale (net)
            
            
            —
            
            
            —
            
            
            6,200
            
            
            6,200Interest
                Rate Caps
            
            
            —
            
            
            355
            
            
            —
            
            
            355Interest
                Rate Swaps
            
            
            —
            
            
            2,085
            
            
            —
            
            
            2,085Total
                assets carried at fair value
            
            $
            —
            
            $
            501,844
            
            $
            6,200
            
            $
            508,044




The
        following table provides a summary of changes in fair value of the Level
        3
        financial asset for the three and six months ended June 30, 2008 (dollar
        amounts in thousands):
  Mortgage
                    Loans Held for Sale (Net)
                
                Three
                    MonthsEnded
                  June
                    30, 2008
                
                Six
                    Months Ended
                  June
                    30, 2008Beginning
                    Balance
                
                $
                6,209
                
                $
                8,077Principal
                    Paydown
                
                
                (8
                )
                
                (1,844
                )Provision
                    for loan losses
                
                
                (1
                )
                
                (399
                )Charge-offs
                
                
                
                
                
                366Ending
                    Balance
                
                $
                6,200
                
                $
                6,200


20




**NEW
      YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2008**


**(unaudited)**




Any
      changes to the valuation methodology are reviewed by management to ensure the
      changes are appropriate.  As markets and products develop and the
      pricing for certain products becomes more transparent, the Company continues
      to
      refine its valuation methodologies.  The methods described above may
      produce a fair value calculation that may not be indicative of net realizable
      value or reflective of future fair values.  Furthermore, while the
      Company believes its valuation methods are appropriate and consistent with
      other
      market participants, the use of different methodologies, or assumptions, to
      determine the fair value of certain financial instruments could result in a
      different estimate of fair value at the reporting date.  The Company
      uses inputs that are current as of the measurement date, which may include
      periods of market dislocation, during which price transparency may be
      reduced.  This condition could cause the Company’s financial
      instruments to be reclassified from Level 2 to Level 3 in future
      periods.





**11.**  **Segment
      Reporting**




Until
      March 31, 2007, the Company operated two reportable segments, the mortgage
      portfolio management segment and the mortgage lending segment. Upon the sale
      of
      substantially all the mortgage lending operating assets on March 31, 2007,
      the
      Company exited the mortgage lending business and accordingly will no longer
      report segment information.





**12.
      Capital Stock and Earnings per Share**




The
      Company had 400,000,000 shares of common stock, par value $0.01 per share,
      authorized with 9,320,104 shares issued and outstanding as of June 30, 2008
      and
      1,817,927 shares issued and outstanding as of December 31, 2007. The Company
      had
      200,000,000 shares of preferred stock, par value $0.01 per share, authorized,
      including 2,000,000 shares of Series A Cumulative Convertible Redeemable
      Preferred Stock ( “ Series A Preferred Stock ” ) authorized. As of June 30, 2008
      and December 31, 2007, the Company had issued and outstanding 1,000,000
      and 0 shares, respectively, of Series A Preferred Stock. Of the common
      stock authorized, 103,111 shares (plus forfeited shares of 32,832
      previously granted) were reserved for issuance as restricted stock awards to
      employees, officers and directors pursuant to the 2005 Stock Incentive Plan.
      As
      of June 30, 2008, 135,943 shares remain reserved for issuance under the 2005
      Plan.





On
      February 21, 2008, the Company completed the issuance and sale of 7.5 million
      shares of its common stock in a private placement at a price of $8.00 per
      share.  This private offering of the Company's common stock generated net
      proceeds to the Company of $56.6 million after payment of private placement
      fees
      and expenses.  In connection with this private offering of our common
      stock, we entered into the Common Stock Registration Rights Agreement, pursuant
      to which we are required to file with the Securities and Exchange Commission,
      or
      SEC, a resale shelf registration statement registering for resale the 7.5
      million shares sold in this private offering. The Company filed a resale
      shelf registration statement on Form S-3 on April 4, 2008 which became
      effective on April 18, 2008.





On
      April
      21, 2008, the Company declared a $0.12 per share cash dividend on its common
      stock. The dividend was payable on May 15, 2008 to common stockholders of record
      as of April 30, 2008. On June 26, 2008, the Company declared a $0.16 per share
      cash dividend on its common stock. The dividend was payable on July 25, 2008
      to
      common stockholders of record as of July 10, 2008.





On
      June
      26, 2008 the Company declared a $0.50 per share cash dividend, or an
      aggregate of $0.5 million, payable on July 31, 2008 to holders of record of
      our
      Series A Preferred Stock as of June 30, 2008.





The
      Board
      of Directors declared a one-for-two reverse stock split of the Company’s common
      stock, effective on May 27, 2008, decreasing the number of shares outstanding
      to
      approximately 9.3 million.





The
      Board
      of Directors declared a one for five reverse stock split of the Company's common
      stock, effective on October 9, 2007, decreasing the number of common shares
      outstanding at the time to approximately 3.6 million.





All
      per
      share and share amounts provided in the quarterly report have been restated
      to give effect to both reverse stock splits.





21





**NEW
      YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2008**


**(unaudited)**




The
      Company calculates basic net income (loss) per share by dividing net income
      (loss) for the period by weighted-average shares of common stock outstanding
      for
      that period. Diluted net income (loss) per share takes into account the effect
      of dilutive instruments, such as convertible preferred stock, stock options
      and unvested restricted or performance stock, but uses the average share price
      for the period in determining the number of incremental shares that are to
      be
      added to the weighted-average number of shares outstanding.




The
      following table presents the computation of basic and diluted net income (loss)
      per share for the periods indicated (in thousands, except per share
      amounts):








**For the Three Months Ended**
              **June
                30,**
            
            **For the Six Months Ended**
              **June
                30,****2008**
            
            **2007**
            
            **2008**
            
            **2007****Numerator**:Net
                income (loss) – Basic
            
            $
            1,263
            
            $
            (14,196
            )
            $
            (19,995
            )
            $
            (18,937
            )Net
                income (loss) from continuing operations
            
            
            434
            
            
            (5,178
            )
            
            (21,004
            )
            
            (6,078
            )Net
                income (loss) from discontinued operations (net of tax)
            
            
            829
            
            
            (9,018
            )
            
            1,009
            
            
            (12,859
            )Effect
                of dilutive instruments:Convertible
                preferred debentures (1)
            
            
            569
            
            
            —
            
            
            1,075
            
            
            —Net
                income (loss) – Dilutive
            
            
            1,263
            
            
            (14,196
            )
            
            (19,995
            )
            
            (18,937
            )Net
                income (loss) from continuing operations
            
            
            434
            
            
            (5,178
            )
            
            (21,004
            )
            
            (6,078
            )Net
                income (loss) from discontinued operations (net of tax)
            
            $
            829
            
            $
            (9,018
            )
            $
            1,009
            
            $
            (12,859
            )**Denominator:**Weighted
                average basis shares outstanding
            
            
            9,320
            
            
            1,811
            
            
            7,218
            
            
            1,810Effect
                of dilutive instruments:Convertible
                preferred debentures (1)
            
            
            2,500
            
            
            —
            
            
            2,267
            
            
            —Weighted
                average dilutive shares outstanding
            
            
            9,320
            
            
            1,811
            
            
            7,218
            
            
            1,810**EPS:**Basic
                EPS
            
            $
            0.14
            
            $
            (7.84
            )
            $
            (2.77
            )
            $
            (10.46
            )Basic
                EPS from continuing operations
            
            
            0.05
            
            
            (2.86
            )
            
            (2.91
            )
            
            (3.36
            )Basic
                EPS from discontinued operations (net of tax)
            
            
            0.09
            
            
            (4.98
            )
            
            0.14
            
            
            (7.10
            )Dilutive
                EPS
            
            $
            0.14
            
            $
            (7.84
            )
            $
            (2.77
            )
            $
            (10.46
            )Dilutive
                EPS from continuing operations
            
            
            0.05
            
            
            (2.86
            )
            
            (2.91
            )
            
            (3.36
            )Dilutive
                EPS from discontinued operations (net of tax)
            
            
            0.09
            
            
            (4.98
            )
            
            0.14
            
            
            (7.10
            )


(1)
–
      Amount excluded from dilutive calculation as it is anti-dilutive.





22




**NEW
      YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2008**


**(unaudited)**




**13.
        Convertible Preferred Debentures**


As
      of
      June 30, 2008, there were 1.0 million shares of our Series A Preferred Stock
      outstanding, with an aggregate redemption value of $20.0 million and current
      dividend payment rate of 10% per year. The Series A Preferred Stock
      matures on December 31, 2010, at which time any outstanding shares
      must be redeemed by the Company at the $20.00 per share liquidation
      preference. Pursuant to SFAS No. 150, *Accounting*  *for
      Certain Financial Instruments with Characteristics of both Liabilities and
      Equity* ,
      because
      of this mandatory redemption feature, the
      Company classifies these securities as  a liability on its
      balance sheet.





We
      issued
      these shares of Series A Preferred Stock, to JMP Group Inc. and certain of
      its
      affiliates for an aggregate purchase price of $20.0 million. The Series A
      Preferred Stock entitles the holders to receive a cumulative dividend
      of 10% per year, subject to an increase to the extent any future quarterly
      common stock dividends exceed $0.20 per share. The Series A Preferred
      Stock is convertible into shares of the Company's common stock based on a
      conversion price of $8.00 per share of common stock, which represents a
      conversion rate of two and one-half (2 1⁄2) shares of common stock for each share
      of Series A Preferred Stock.




**14.
      Related Party Transactions**





Concurrent
      and in connection with the issuance of our Series A Preferred Stock on January
      18, 2008, we entered into an advisory agreement with JMPAM, which is an
      affiliate of JMP Group, Inc. and JMP Realty Trust, Inc. As of April 23, 2008,
      JMPAM and JMP Group, Inc. beneficially owned approximately 16.8% and 12.2%
      of
      our common stock. Under the agreement, JMPAM advises the Managed Subsidiaries.
      As previously disclosed, we have an approximately $63.7 million net operating
      loss carry-forward that remains with us after the sale of our mortgage lending
      business. As an advisor to the Managed Subsidiaries, we expect that JMPAM will,
      at some point in the future, focus on the acquisition of alternative mortgage
      related investments on behalf of the Managed Subsidiaries. Some of those
      investments may allow us to utilize all or a portion of the net operating loss
      carry-forward to the extent available by law. The commencement of any activity
      by JMPAM must be approved by the Board of Directors and any subsequent
      investment on behalf of Managed Subsidiaries must adhere to investment
      guidelines adopted by our board of directors. JMPAM will earn a base advisory
      fee of 1.5% of the “equity capital” (as defined in the advisory agreement) of
      the Managed Subsidiaries and is also eligible to earn incentive compensation
      if
      the Managed Subsidiaries achieve certain performance thresholds. As of June
      30,
      2008, JMPAM was not managing any assets in the Managed Subsidiaries, but was
      earning a base advisory fee on the net proceeds to our Company from our private
      offerings in each of January 2008 and February 2008. For the three and six
      months ended June 30, 2008, we paid JMPAM $0.2 million and $0.3 million
      respectively, in advisory fees. As of the date of this report, we expect to
      pay
      approximately $0.7 million in advisory fees to JMPAM during the 2008 fiscal
      year.





In
      addition, pursuant to the stock purchase agreement providing for the sale of
      the
      Series A Preferred Stock to JMP Group, Inc. and certain of its affiliates,
      James
      J. Fowler and Steven M. Abreu were appointed to our Board of Directors, with
      Mr.
      Fowler being appointed the non-executive chairman of our Board of Directors.
      In
      addition, concurrent with the completion of the issuance and sale of the Series
      A Preferred Stock and pursuant to the stock purchase agreement, four of our
      then-existing directors resigned from the Board.





James
      J.
      Fowler, the Non-Executive Chairman of our Board of Directors and also the
      non-compensated Chief Investment Officer of Hypotheca Capital, LLC and New
      York
      Mortgage Funding, LLC, is a managing director of JMPAM and the president of
      JMP
      Realty Trust, Inc., a private REIT that is externally managed by JMPAM and
      which
      is one of the investors in our Series A Preferred Stock. JMPAM and JMP Realty
      Trust, Inc. are affiliates of JMP Group, Inc.





On
      February 21, 2008, we completed the issuance of 7.5 million shares of our common
      stock in a private placement to certain accredited investors, resulting in
      $56.6
      million in net proceeds to the Company. JMP Securities LLC, an affiliate of
      JMPAM, JMP Group, Inc. and JMP Realty Trust, Inc., served as the sole placement
      agent for the transaction and was paid a $3.0 million placement fee from the
      gross proceeds.





23





**NEW
      YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2008**


**(unaudited)**


**15** . **Income
        Taxes**
  All
        income tax benefits relate to HC and are included in the results of operations
        of the discontinued operation. Deferred taxes at June 30, 2008 include a
        deferred tax asset of $0.1 million and a deferred tax liability of $0.1 million
        which represents the tax effect of differences between tax basis and financial
        statement carrying amounts of assets and liabilities. The
        $63.7
        million net operating loss carry-forward expires at various intervals between
        2024 and 2028. During the quarter ended September 30, 2007 management
        determined that the Company would likely not be able to utilize the deferred
        tax
        asset and accordingly recorded a 100% valuation allowance. The Company continued
        to reserve 100% of deferred tax benefit in the quarter ended June 30, 2008
        as
        the facts continue to support the Company's inability to utilize the deferred
        tax asset.




24





**Item
      2. Management's Discussion and Analysis of Financial Condition and Results
      of
      Operations**




**CAUTIONARY
      NOTE REGARDING FORWARD-LOOKING STATEMENTS**




This
      Quarterly Report on Form 10-Q contains certain forward-looking statements.
      Forward-looking statements are those which are not historical in nature. They
      can often be identified by their inclusion of words such as “will,”
“anticipate,” “estimate,” “should,” “expect,” “believe,” “intend” and similar
      expressions. Any projection of revenues, earnings or losses, capital
      expenditures, distributions, capital structure or other financial terms is
      a
      forward-looking statement. Certain statements regarding the following
      particularly are forward-looking in nature:




·
            our
                business strategy;




·
            future
                performance, developments, market forecasts or projected
                dividends;




·
            projected
                acquisitions or joint ventures; and




·
            projected
                capital expenditures.




It
      is
      important to note that the description of our business in general and our
      investment in mortgage loans and mortgage-backed securities holdings in
      particular, is a statement about our operations as of a specific point in time
      and is not meant to be construed as an investment policy. The types of
      assets we hold, the amount of leverage we use or the liabilities we incur and
      other characteristics of our assets and liabilities disclosed in this report
      as
      of a specified period of time are subject to reevaluation and change without
      notice.




Our
      forward-looking statements are based upon our management's beliefs, assumptions
      and expectations of our future operations and economic performance, taking
      into
      account the information currently available to us. Forward-looking statements
      involve risks and uncertainties, some of which are not currently known to us
      and
      many of which are beyond our control and that might cause our actual results,
      performance or financial condition to be materially different from the
      expectations of future results, performance or financial condition we express
      or
      imply in any forward-looking statements. Some of the important factors that
      could cause our actual results, performance or financial condition to differ
      materially from expectations are:




·
            our
                portfolio strategy and operating strategy may be changed or modified
                by
                our management without advance notice to you or stockholder approval
                and
                we may suffer losses as a result of such modifications or
                changes;




·
            market
                changes in the terms and availability of repurchase agreements used
                to
                finance our investment portfolio
                activities;




·
            reduced
                demand for our securities in the mortgage securitization and secondary
                markets;




·
            interest
                rate mismatches between our mortgage-backed securities and our borrowings
                used to fund such purchases;




·
            changes
                in interest rates and mortgage prepayment
                rates;




·
            effects
                of interest rate caps on our adjustable-rate mortgage-backed
                securities;




·
            the
                degree to which our hedging strategies may or may not protect us
                from
                interest rate volatility;




·
            potential
                impacts of our leveraging policies on our net income and cash available
                for distribution;




·
            our
                board's ability to change our operating policies and strategies without
                notice to you or stockholder
                approval;




·
            our
                ability to manage, minimize or eliminate liabilities stemming from
                the
                discontinued operations including, among other things, litigation,
                repurchase obligations on the sales of mortgage loans and property
                leases;
                and




·
            the
                other important factors identified, or incorporated by reference
                into this
                report, including, but not limited to those under the captions
                “Management's Discussion and Analysis of Financial Condition and Results
                of Operations” and “Quantitative and Qualitative Disclosures about Market
                Risk”, and those described in Part I, Item 1A of our Annual Report on
                Form 10-K for the year ended December 31, 2007, Part II, Item 1A
                of our
                Quarterly Report on Form 10-Q for the three months ended June 30,
                2008 and
                the various other factors identified in any other documents filed
                by us
                with the Securities and Exchange Commission, or
                SEC.




25




We
      undertake no obligation to publicly update or revise any forward-looking
      statements, whether as a result of new information, future events or otherwise.
      In light of these risks, uncertainties and assumptions, the events described
      by
      our forward-looking events might not occur. We qualify any and all of our
      forward-looking statements by these cautionary factors. In addition, you should
      carefully review the risk factors described in other documents we file from
      time
      to time with the Securities and Exchange Commission.




**General**





New
      York
      Mortgage Trust, Inc. together with its consolidated subsidiaries (“NYMT”, the
“Company”, “we”, “our”, and “us”) is a self-advised real estate investment
      trust, or REIT, in the business of investing in residential adjustable rate
      mortgage-backed securities issued by a United States government-sponsored
      enterprise (“GSE” or “Agency”), such as the Federal National Mortgage
      Association (“Fannie Mae”), or the Federal Home Loan Mortgage Corporation
      (“Freddie Mac”), prime credit quality residential adjustable-rate mortgage
      (“ARM”) loans, or prime ARM loans, and non-agency mortgage-backed securities. We
      refer to residential adjustable rate mortgage-backed securities throughout
      this Quarterly Report on Form 10-Q as “MBS” and MBS issued by a GSE as “
Agency MBS”. We seek attractive long-term investment returns by investing our
      equity capital and borrowed funds in such securities. Our principal business
      objective is to generate net income for distribution to our stockholders
      resulting from the spread between the interest and other income we earn on
      our
      interest-earning assets and the interest expense we pay on the borrowings that
      we use to finance these assets, which we refer to as our net interest income.
      We
      believe that the best approach to generating a positive net interest income
      is
      to manage our liabilities, principally in the form of short-term indebtedness
      (maturities of one year or less), in relation to the interest rate risks of
      our
      investments. To help achieve this result, we employ repurchase
      agreement financing, generally short-term, and over time will combine our
      financings with hedging techniques, primarily interest rate swaps. We may,
      subject to maintaining our REIT qualification, also employ other hedging
      techniques from time to time, including interest rate caps, floors and swap
      options to protect against adverse interest rate movements.




Since
      inception, our investment portfolio strategy has focused on the acquisition
      of
      high-credit quality ARM loans and securities. Moreover, since our exit from
      the
      mortgage lending business on March 31, 2007, we have exclusively focused our
      resources and efforts on investing, on a leveraged basis, in MBS and, since
      August 2007, we have employed a portfolio strategy that focuses on
      investments in Agency MBS. As of June 30, 2008, our investment portfolio was
      comprised of $499.4 million in MBS, including $273.0 million of Agency ARM
      MBS,
      $199.3 million of Agency CMO floaters and $27.1 million of non-Agency MBS,
      of
      which $26.7 million are rated in the highest category by two rating agencies
      (either Moody's Investor Service, Inc. or Standard &
Poor's, Inc.), and $377.0 million of prime ARM loans held in
      securitization trusts.  As of June 30, 2008, we had approximately $897.3
      million of total assets as compared to $809.3 million at December 31,
      2007.




26




***Our
      Alternative Investment Strategy Under Our Advisory
      Agreement***





Although
      we are in the business of investing in MBS and have most recently employed
      a
      portfolio strategy that focuses on investments in Agency MBS, we may engage
      in
      an alternative mortgage related investment strategy in the near future that
      would potentially allow us to utilize an approximately $63.7 million net
      operating loss carry-forward that resulted from our exit from the mortgage
      lending business. We expect this alternative mortgage-related investment
      strategy, which will be managed by JMP Asset Management LLC (“JMPAM”) pursuant
      to an advisory agreement between JMPAM and our company, to primarily take the
      form of equity investments in unaffiliated third party entities, or Funds,
      that
      acquire or manage a portfolio of non-Agency MBS, some or all of which may be
      classified as non-investment grade securities. Under the advisory agreement
      with
      JMPAM, which was entered into concurrent with our issuance of 1.0 million shares
      of Series A Cumulative Convertible Redeemable Preferred Stock to JMP Group,
      Inc.
      and certain of its affiliates, JMPAM advises two of our wholly-owned
      subsidiaries, Hypotheca Capital, LLC, or HC (formerly known as The New York
      Mortgage Company, LLC), and New York Mortgage Funding, LLC, or NYMF, as well
      as
      any additional subsidiaries acquired or formed in the future to hold investments
      made on our behalf by JMPAM. We refer to these subsidiaries in our periodic
      reports filed with the SEC as the “Managed Subsidiaries.” As an advisor to the
      Managed Subsidiaries, we expect that JMPAM will focus on the acquisition of
      alternative mortgage related investments. Investments by us in Funds will
      generally expose us to greater credit risk and less interest rate risk than
      investments in Agency MBS. Although our investment strategy thus far in 2008
      has
      focused on the acquisition of Agency MBS, JMPAM may commence investments under
      this alternative mortgage related investment strategy in the near future;*provided,
      however,*that
      the
      commencement of investments by JMPAM under this strategy must first be approved
      by our board of directors and any subsequent investment on behalf of Managed
      Subsidiaries must adhere to investment guidelines adopted by our board of
      directors. This strategy, if and when implemented, will vary from our core
      strategy and we can provide no assurance that we will be successful at
      implementing any alternative investment strategy.




**Significant
      Events Second Quarter**




***Reverse
      Stock Split***




On
      May
      27, 2008, we completed a one-for-two reverse stock split of our common stock.
      The one-for-two reverse stock split (the “2008 Reverse Stock Split”) provided
      stockholders of record as of 12:01 a.m. on May 27, 2008, which we refer to
      as
      the effective time, with one share of our common stock for every two shares
      of
      common stock owned as of the effective time. The Articles Supplementary
      Establishing and Fixing the Rights and Preferences of the Series A Preferred
      Stock, or Articles Supplementary, provide that the conversion rate and effective
      conversion price for our Series A Preferred Stock be appropriately adjusted
      to
      reflect any reverse stock split. As a result, the conversion rate on our Series
      A Preferred Stock was automatically adjusted to two and one-half to one (2
1⁄2 to
      1) from the original five to one (5 to 1) conversion rate and the effective
      conversion price on our Series A Preferred Stock was adjusted to $8.00 per
      share
      from the original $4.00 per share.





***Common
      Stock Approved for Listing on NASDAQ Capital Market***




Our
      common stock was approved for listing on the NASDAQ Capital Market on June
      4,
      2008 and began trading on the NASDAQ Capital Market effective June 5, 2008
      under
      the symbol “NYMT”. Prior to our listing on the NASDAQ Capital Market, our common
      stock was most recently quoted on the Over-the-Counter Bulletin Board, or OTCBB,
      under the stock symbol “NYMO”. Our Series A Preferred Stock is not currently
      listed on any securities exchange.





Pursuant
      to a registration rights agreement between our company and the investors in
      our
      February 2008 private placement of common stock, we are subject to a liquidated
      damages penalty upon certain events. Because our common stock was not listed
      on
      the NASDAQ Capital Market for the period April 19, 2008 through the date of
      our
      initial listing, we paid the investors in our February 2008 private placement
      approximately $0.5 million in liquidated damages on July 3, 2008. In
      addition, in May 2008, we paid these same investors approximately $0.2 million
      in liquidated damages as a result of our failure to file a resale registration
      statement during the time period required pursuant to the registration rights
      agreement. Although we do not expect to incur additional liquidated damages
      under this agreement in the future, there can be no assurance that we will
      remain in compliance with the liquidated damage provisions in the
      future.




27





**Known
      Material Trends and Commentary**





*Declines
      in the prices of mortgage assets* -
      Investors’ appetite for U.S. mortgage assets continued to be weak in the first
      half of 2008. In addition, the market disruption of March 2008 and related
      de-leveraging in the mortgage asset industry involved the liquidation or sale
      of
      a significant amount of Agency securities. This selling, along with decreased
      demand for these assets among investors, caused mortgage asset prices to decline
      in the quarter ended March 31, 2008. Prices improved during the second quarter
      as FNMA and FHLMC increased buying of Agency securities for their portfolio.
      The
      increased buying by the agencies was a direct result of the removal of the
      consent order that restricted portfolio growth by the Office of Federal Housing
      Enterprise Oversight (OFHEO)





*Tightening
      in the financing markets and reduced liquidity -* As
      prices of mortgage assets decreased, many lenders that finance mortgage assets
      took measures to insure their liquidity needs would not be compromised,
      particularly in March 2008. In connection with the market disruption of March
      2008, many financial institutions withdrew financing and liquidity that they
      typically offered clients as part of their daily business operations. The most
      common forms of liquidity provided to the mortgage market are in the form of
      repurchase agreements for MBS. This reduced availability of financing
      subsequently led to de-leveraging by many in the industry and, in some cases,
      forced liquidations, all of which exacerbated the problem. During the
      second quarter liquidity stabilized and there were no significant failures
      or
      disruptions.





*Volatility
      in financing costs –* The
      dislocations in the mortgage market led to increased volatility in the cost
      of
      financing. The relationships between certain short-term interest rates, normally
      very consistent, became less so in the second half of 2007 and has continued
      to
      widen during the first half of 2008. The Federal Funds rate, an interest rate
      used by banks for overnight loans to each other and determined by the Federal
      Reserve Board, is a benchmark used by others to determine similar short term
      rates. The London Inter Bank Offered Rate (“LIBOR”), a market determined rate
      for short term loans, is typically 10 basis points higher than the
      Federal Funds rate. LIBOR averaged 12 basis points above the Fed Funds target
      during the first quarter and 50 basis points during the second quarter. Because
      our repurchase agreements rates generally move with one month LIBOR,
      our costs have not decreased on a relative basis as would be expected given
      the
      225 basis points reduction in the Fed Funds rate since the beginning of the
      year.





*Hedging
      –* We
      generally seek to reduce the volatility of our net income by entering into
      interest rate swap agreements. As of June 30, 2008, we are a party to interest
      rate swap agreements with an aggregate notional amount of $158 million. The
      Company discontinued hedge accounting treatment for the interest rate swap
      positions during the fourth quarter of 2007 as part of our strategic portfolio
      realignment related to the Series A Preferred Stock offering. Accordingly,
      the
      unrealized loss was recorded as an unrealized loss in our Statement of
      Operations and no longer reflected as part of other comprehensive income in
      our
      Balance Sheet. During the quarter ended March 31, 2008 the Company terminated
      certain swaps resulting in a realized loss of $4.8 million. The Company did
      not
      terminate any additional swaps during the second quarter of 2008.





*Changes
      in the U.S. economy –* Changes
      in the U.S. economy have also affected us. The U.S. economy continued to soften
      in the first half of 2008. Weak demand in the housing market and increased
      stress on borrowers, including in particular, residential mortgage borrowers,
      has had a ripple effect throughout the U.S. economy. As stated in
      testimony  by the Chairman of the Federal Reserve to the U.S. Senate
      Committee on Banking, Housing and Urban Affairs on July 15, 2008, “sales of
      existing homes have been about unchanged this year, sales of new homes have
      continued to fall, and inventories of unsold new homes remain high.” As a
      result, home prices have continued to fall, particularly in regions that
      experienced the largest price increases earlier this decade. This decline in
      home prices has contributed to increased home foreclosures during 2008.The
      Federal Reserve continued to reduce short term interest rates resulting in
      an
      overall reduction of 200 basis points during the first quarter of 2008 with
      another 25 basis points reduction on April 30, 2008. Recently, increased concern
      regarding inflation has arisen principally due to increases in global commodity
      prices. We believe the inflation concerns have kept longer term interest rates
      high relative to short term rates. This so called steep yield curve generally
      results in increased returns on equity for companies that employ an Agency
      MBS
      strategy similar to ours. The possibility of rising inflation, however,
      increases the possibility of interest rates moving higher to slow inflationary
      stresses, which may result in flattening of the yield curve.




28




**Presentation
      Format**




In
      connection with the sale of substantially all of our wholesale and retail
      mortgage lending platform assets during the first quarter of 2007, we classified
      certain assets and liabilities related to our mortgage lending segment as a
      discontinued operation in accordance with the provisions of SFAS No. 144. As
      a
      result, we have reported revenues and expenses related to the segment as a
      discontinued operation and the related assets and liabilities as assets and
      liabilities related to a discontinued operation for all periods presented in
      the
      accompanying condensed consolidated financial statements. Our continuing
      operations are primarily comprised of what had been our portfolio management
      operations. In addition, certain assets such as the deferred tax asset, and
      certain liabilities, such as subordinated debt and liabilities related to leased
      facilities not assigned to Indymac, have become part of the ongoing
      operations of NYMT and accordingly, we have not classified as a discontinued
      operation in accordance with the provisions of SFAS No. 144.




The
      Board
      of Directors declared a one for five reverse stock split of our common
      stock, providing shareholders of record as of October 9, 2007, with one share
      of
      common stock for each five shares owned of record as of October 9, 2007 (the
      "2007 Reverse Stock Split"). Prior and current period share amounts and
      earnings per share disclosures have been restated to reflect the 2008 Reverse
      Stock Split and 2007 Reverse Stock Split.




**Significance
      of Estimates and Critical Accounting Policies**




A
      summary
      of our critical accounting policies is included in our Annual Report on Form
      10-K for the year ended December 31, 2007 in “Item 7. Management’s Discussion
      and Analysis of Financial Condition and Results of Operations” and “Note 2 -
      Summary of Significant Accounting Policies” to the consolidated financial
      statements included therein. There have been no significant changes to those
      policies during 2008.





**Overview
      of Performance**




For
      the
      three and six months ended June 30, 2008, we reported a net income (loss) of
      $1.3 million and $(20.0) million as compared to a net loss of $14.2 million
      and
      $18.9 million, respectively for the same periods in 2007.




The
      main
      components of the change in income (loss) for the three and six months ended
      June 30, 2008 as compared to the same period for the prior year are
      detailed in the following table (dollar amounts in thousands):





**Detailed
                Components of the change**
            
            **For the Three Months Ended June 30,**
            
            **For the Six Months Ended June 30,****in
                income (loss)**
            
            **2008**
            
            **2007**
            
            **Difference**
            
            **2008**
            
            **2007**
            
            **Difference**Net
                interest income on investment portfolio
            
            $
            3,964
            
            $
            1,006
            
            $
            2,958
            
            $
            6,703
            
            $
            1,635
            
            $
            5,068Net
                interest income
            
            
            2,499
            
            
            112
            
            
            2,387
            
            
            3,773
            
            
            (141
            )
            
            3,914Loan
                losses
            
            
            (22
            )
            
            (940
            )
            
            918
            
            
            (1,455
            )
            
            (940
            )
            
            (515
            )Loss
                on securities and related hedges
            
            
            (83
            )
            
            (3,821
            )
            
            3,738
            
            
            (19,931
            )
            
            (3,821
            )
            
            (16,110
            )Income
                (loss) on continuing operations
            
            
            434
            
            
            (5,178
            )
            
            5,612
            
            
            (21,004
            )
            
            (6,078
            )
            
            (14,926
            )Income
                (loss) from discontinued operations - net of tax
            
            
            829
            
            
            (9,018
            )
            
            9,847
            
            
            1,009
            
            
            (12,859
            )
            
            (13,868
            )Net
                income (loss)
            
            $
            1,263
            
            $
            (14,196
            )
            $
            15,549
            
            $
            (19,995
            )
            $
            (18,937
            )
            $
            (1,058
            )




29




**Summary
      of Operations and Key Performance Measurements**




For
        the
        three and six months ended June 30, 2008, our net income was dependent upon
        the
        net interest income (the interest income on portfolio assets net of the interest
        expense and hedging costs associated with the such assets) generated from
        our
        portfolio of MBS and mortgage loans held in securitization trusts, which
        was
        partially offset by losses on delinquent loans held in securitization trusts
        and
        certain other expenses. The
        net
        interest spread on our investment portfolio increased to 143 basis points
        for
        the quarter ended June 30, 2008, as compared with 85 basis points for the
        quarter ended March 31, 2008, and 46 basis points for the quarter ended December
        31, 2007.
 
 Because
        the assets in our MBS portfolio represent approximately 56% of our total
        assets
        as of June 30, 2008 and we fund these assets, which generally have maturities
        with longer terms than their funding source, with short-term borrowings under
        repurchase agreements, our ability to achieve our investment objectives depends
        on our ability to borrow money in sufficient amounts and on favorable terms
        and
        on our ability to renew or replace maturing borrowings on a continuous basis.
        Repurchase agreements provide us with short-term borrowings that are secured
        by
        the securities in our investment portfolio and bear interest rates that are
        closely linked to the LIBOR. During the quarter ended June 30, 2008, we
        continued to employ a balanced and diverse funding mix to finance our investment
        portfolio and assets. At June 30, 2008, our MBS portfolio was funded with
        approximately $417.9 million of repurchase agreement borrowing, or approximately
        48% of our total liabilities, and our loans held in securitization trusts
        were
        permanently financed with approximately $11.8 million of our own equity
        investment in the securitization trusts and the issuance of approximately
        $365.2
        million of CDOs, or approximately 43% of our total liabilities. At June 30,
        2008
        our leverage ratio for our MBS investment portfolio, which we define as our
        outstanding indebtedness under repurchase agreements divided by total
        stockholders’ equity, was 7 to 1. Given the continued uncertainty in the credit
        markets, we believe that maintaining a leverage ratio in the range of 7 to
        10
        times is appropriate at this time.




The
      key
      performance measures for our portfolio management activities are:


·
              net
                  interest spread on the portfolio;
 
 ·
              losses
                  on loans held in securitization
                  trusts;
  ·
              change
                  in book value;
  ·
              return
                  on equity capital invested.




**Financial
      Condition**





As
      of
      June 30, 2008, we had approximately $897.3 million of total assets, as compared
      to approximately $809.3 million of total assets as of December 31, 2007. The
      increase in total assets results primarily from an increase in MBS of $148.9
      million and a decrease of $53.7 million in mortgage loans held in securitization
      trust.




We
      received net proceeds of approximately $19.6 million from our private
      offerings of Series A Preferred Stock and $56.6 million from our common
      stock during the first quarter of 2008. We used substantially all of the net
      proceeds to purchase approximately $714.1 million of Agency MBS during January
      and February 2008. As previously disclosed in our Quarterly Report on Form
      10-Q
      for the three months ended March 31, 2008, we sold an aggregate of $592.8
      million of Agency MBS in our portfolio during March 2008 in an effort to reduce
      our leverage and improve our liquidity position in response to the market
      disruption of March 2008, and incurred a loss of $15.9 million. In addition,
      the
      Company terminated a total of $517.7 million of notional interest rate swaps
      in
      the quarter ended March 31, 2008, resulting in a realized loss of $4.8
      million.




**Balance
      Sheet Analysis - Asset Quality**




*Investment
      Securities - Available for Sale* - Our
      securities portfolio primarily consists of Agency securities or AAA-rated
      residential mortgage-backed securities. At June 30, 2008 and December 31, 2007,
      we had no investment securities in a single issuer or entity (other than a
      government sponsored agency of the U.S. Government) that had an aggregate book
      value in excess of 10% of our total assets. The following tables set forth
      the
      credit characteristics of our securities portfolio as of June 30, 2008 and
      December 31, 2007 (dollar amounts in thousands):





**Credit
      Characteristics of Our Investment Securities**




**June 30, 2008**
              
              **Sponsor or**
                **Rating**
              
              **Par**
                **Value**
              
              **Carrying**
                **Value**
              
              **% of**
                **Portfolio**
              
              **Coupon**
              
              **Yield**Agency
                  REMIC CMO floaters
              
              
              FNMA/
                  FHLMC
              
              $
              208,214
              
              $
              199,349
              
              
              40
              %
              
              3.27
              %
              
              3.93
              %Agency
                  Hybrid Arms
              
              
              FNMA/
                  FHLMC
              
              
              270,553
              
              
              272,948
              
              
              55
              %
              
              5.16
              %
              
              4.70
              %Non-Agency
                  floaters
              
              
              AAA
              
              
              28,530
              
              
              24,552
              
              
              5
              %
              
              3.21
              %
              
              6.00
              %NYMT
                  retained securities
              
              
              AAA-BBB
              
              
              2,169
              
              
              2,158
              
              
              0
              %
              
              6.76
              %
              
              5.67
              %NYMT
                  retained securities
              
              
              Below
                  BBB
              
              
              2,750
              
              
              397
              
              
              0
              %
              
              5.68
              %
              
              11.69
              %Total/Weighted
                  average
              
              
              
              
              $
              512,216
              
              $
              499,404
              
              
              100
              %
              
              4.29
              %
              
              4.50
              %




30




**December
                  31, 2007**
              
              **Sponsor
                  or**
                **Rating**
              
              **Par**
                **Value**
              
              **Carrying**
                **Value**
              
              **%
                  of**
                **Portfolio**
              
              **Coupon**
              
              **Yield**Agency
                  REMIC CMO floaters
              
              
              FNMA/FHLMC
              
              $
              324,676
              
              $
              318,689
              
              
              91
              %
              
              5.98
              %
              
              5.55
              %Non-Agency
                  floaters
              
              
              AAA
              
              
              29,764
              
              
              28,401
              
              
              8
              %
              
              5.66
              %
              
              5.50
              %NYMT
                  retained securities
              
              
              AAA-BBB
              
              
              2,169
              
              
              2,165
              
              
              1
              %
              
              6.31
              %
              
              6.28
              %NYMT
                  retained securities
              
              
              Below
                  BBB
              
              
              2,756
              
              
              1,229
              
              
              0
              %
              
              5.68
              %
              
              12.99
              %Total/Weighted
                  average
              
              
              
              
              $
              359,365
              
              $
              350,484
              
              
              100
              %
              
              5.95
              %
              
              5.61
              %





The
      following table sets forth the stated reset periods and weighted average yields
      of our investment securities at June 30, 2008 and December 31, 2007 (dollar
      amounts in thousands):





**Reset/
      Yield of our Investment Securities**




**Less than**
              **6 Months**
            
            **More than 6**
              **Months**
              **To 24 Months**
            
            **More than 24**
              **Months**
              **To 60 Months**
            
            **Total****June
                30, 2008**
            
            **Carrying**
              **Value**
            
            **Weighted**
              **Average**
              **Yield**
            
            **Carrying**
              **Value**
            
            **Weighted**
              **Average**
              **Yield**
            
            **Carrying**
              **Value**
            
            **Weighted**
              **Average**
              **Yield**
            
            **Carrying**
              **Value**
            
            **Weighted**
              **Average**
              **Yield**Agency
                REMIC CMO floaters
            
            $
            199,349
            
            
            3.93
            %
            $
            —
            
            
            —
            
            $
            —
            
            
            —
            
            $
            199,349
            
            
            3.93
            %Agency
                Hybrid Arms
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            272,948
            
            
            4.70
            %
            
            272,948
            
            
            6.00
            %Non-Agency
                floaters
            
            
            24,552
            
            
            6.00
            %
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            24,552
            
            
            4.70
            %NYMT
                retained securities
            
            
            2,158
            
            
            5.67
            %
            
            —
            
            
            —
            
            
            397
            
            
            11.69
            %
            
            2,555
            
            
            9.03
            %Total/Weighted
                average
            
            $
            226,059
            
            
            4.20
            %
            $
            —
            
            
            —
            
            $
            273,345
            
            
            4.77
            %
            $
            499,404
            
            
            4.50
            %




**Less than**
                **6 Months**
              
              **More than 6****Months**
                **To 24 Months**
              
              **More than 24****Months**
                **To 60 Months**
              
              **Total****December 31, 2007**
              
              **Carrying**
                **Value**
              
              **Weighted**
                **Average**
                **Yield**
              
              **Carrying**
                **Value**
              
              **Weighted**
                **Average**
                **Yield**
              
              **Carrying**
                **Value**
              
              **Weighted**
                **Average**
                **Yield**
              
              **Carrying**
                **Value**
              
              **Weighted**
                **Average**
                **Yield**Agency
                  REMIC CMO Floating Rate
              
              $
              318,689
              
              
              5.55
              %
              $
              —
              
              
              —
              %
              $
              —
              
              
              —
              %
              $
              318,689
              
              
              5.55
              %Non-Agency floaters
              
              
              28,401
              
              
              5.50
              %
              
              —
              
              
              —
              %
              
              —
              
              
              —
              %
              
              28,401
              
              
              5.50
              %NYMT
                  Retained Securities
              
              
              2,165
              
              
              6.28
              %
              
              —
              
              
              —
              %
              
              1,229
              
              
              12.99
              %
              
              3,394
              
              
              10.03
              %Total/Weighted
                  Average
              
              $
              349,255
              
              
              5.55
              %
              $
              —
              
              
              —
              %
              $
              1,229
              
              
              12.99
              %
              $
              350,484
              
              
              5.61
              %




*Mortgage
      Loans Held in Securitization Trusts* -
      Included in our portfolio are ARM loans that we originated or purchased in
      bulk from third parties that met our investment criteria and portfolio
      requirements. These loans are classified as “mortgage loans held for investment”
during a period of aggregation and until the portfolio reaches a size sufficient
      for us to securitize such loans. If the securitization qualifies as a
      financing for SFAS No. 140 purposes, the loans are then re-classified as
“mortgage loans held in securitization trusts.”




New
      York
      Mortgage Trust 2006-1, qualified as a sale under SFAS No. 140, which resulted
      in
      the recording of residual assets and mortgage servicing rights. As of June
      30,
      2008 the residual assets totaled $0.4 million and are included in investment
      securities available for sale.




31


The
      following table details mortgage loans held in securitization trusts at June
      30,
      2008 (dollar amounts in thousands):




**Par Value**
            
            
            **Coupon**
            
            
            **Carrying Value**
            
            
            **Yield**June
                30, 2008
            
            $
            377,336
            
            
            5.68
            %
            $
            376,984
            
            
            5.19
            %




At
      June
      30, 2008 mortgage loans held in securitization trusts totaled approximately
      $377.0 million, or 42% of our total assets. Of this mortgage loan investment
      portfolio, 100% are traditional ARMs or hybrid ARMs and 78% are ARM loans that
      are interest only. On our hybrid ARMs, interest rate reset periods are
      predominately five years or less and the interest-only/amortization period
      is
      typically 10 years, which mitigates the “payment shock” at the time of interest
      rate reset. No loans in our investment portfolio of mortgage loans are
      option-ARMs or ARMs with negative amortization.





The
      following table sets forth the composition of our portfolio of
      mortgage loans held in securitization trusts and retained interests in our
      REMIC securitization, NYMT 2006-1, as of June 30, 2008 (dollar amounts in
      thousands):




**#
                of Loans**
            
            **Par
                Value**
            
            **Carrying**
              **Value****Loan
                Characteristics:**Mortgage
                loans held in securitization trusts
            
            
            847
            
            $
            377,336
            
            $
            376,984Retained
                interest in securitization (included in Investment securities
                available for sale)
            
            
            359
            
            
            191,556
            
            
            2,555Total
                Loans Held
            
            
            1,206
            
            $
            568,892
            
            $
            379,539




**Average**
            
            **High**
            
            **Low****General
                Loan Characteristics:**Original
                Loan Balance
            
            $
            494
            
            $
            3,500
            
            $
            48Coupon
                Rate
            
            
            5.76
            %
            
            9.88
            %
            
            3.88
            %Gross
                Margin
            
            
            2.34
            %
            
            6.50
            %
            
            1.13
            %Lifetime
                Cap
            
            
            11.21
            %
            
            13.75
            %
            
            9.13
            %Original
                Term (Months)
            
            
            360
            
            
            360
            
            
            360Remaining
                Term (Months)
            
            
            325
            
            
            333
            
            
            289Average
                Months to Reset
            
            
            20
            
            
            30
            
            
            1Original
                Average FICO Score
            
            
            737
            
            
            820
            
            
            593Original
                Average LTV
            
            
            69.9
            
            
            95.0
            
            
            10.9




32




The
      following table details loan summary information for loans held in
      securitization trust at June 30, 2008 (dollar amounts in thousands)


**Principal****amount
                  of****loans****subject
                  to****Periodic**
              
              
              
              **Face**
              
              **Carrying**
              
              **delinquent****Description**
              
              **Interest
                  Rate %**
              
              **Final
                  Maturity**
              
              **Payment**
              
              
              
              **Amount**
              
              **Amount**
              
              **principal****Property**
              
              
              
              **Loan**
              
              
              
              
              
              
              
              
              
              
              
              **Term**
              
              **Prior**
              
              **of**
              
              **of**
              
              **or****Type**
              
              **Balance**
              
              **Count**
              
              **Max**
              
              **Min**
              
              **Avg**
              
              **Min**
              
              **Max**
              
              **(months)**
              
              **Liens**
              
              **Mortgage**
              
              **Mortgage**
              
              **interest****Single**
              
              
              <=
                  $100
              
              
              13
              
              
              7.75
              
              
              4.75
              
              
              5.60
              
              
              12/01/34
              
              
              11/01/35
              
              
              360
              
              
              NA
              
              $
              1,870
              
              $
              917
              
              $
              69**Family**
              
              $
              <=250
              
              
              95
              
              
              8.50
              
              
              4.75
              
              
              5.73
              
              
              09/01/32
              
              
              12/01/35
              
              
              360
              
              
              NA
              
              
              18,125
              
              
              17,035
              
              
              246<=$500
              
              
              149
              
              
              7.63
              
              
              4.25
              
              
              5.66
              
              
              09/01/32
              
              
              01/01/36
              
              
              360
              
              
              NA
              
              
              54,596
              
              
              52,110
              
              
              500<=$1,000
              
              
              69
              
              
              9.50
              
              
              4.13
              
              
              5.89
              
              
              07/01/33
              
              
              12/01/35
              
              
              360
              
              
              NA
              
              
              50,461
              
              
              48,385
              
              
              3,652>$1,000
              
              
              37
              
              
              7.75
              
              
              4.00
              
              
              5.74
              
              
              06/01/34
              
              
              01/01/36
              
              
              360
              
              
              NA
              
              
              65,127
              
              
              64,488
              
              
              1,999**Summary**
              
              
              **363**
              
              
              **9.50**
              
              
              **4.00**
              
              
              **5.73**
              
              
              **09/01/32**
              
              
              **01/01/36**
              
              
              **360**
              
              
              NA
              
              **$**
              **190,179**
              
              **$**
              **182,935**
              
              **$**
              **6,466****2-4**
              
              
              <=
                  $100
              
              
              1
              
              
              6.63
              
              
              6.63
              
              
              6.63
              
              
              02/01/35
              
              
              02/01/35
              
              
              360
              
              
              NA
              
              $
              80
              
              $
              77
              
              $
              -**FAMILY**
              
              $
              <=250
              
              
              6
              
              
              6.75
              
              
              4.38
              
              
              5.75
              
              
              12/01/34
              
              
              07/01/35
              
              
              360
              
              
              NA
              
              
              1,115
              
              
              1,028
              
              
              -<=$500
              
              
              22
              
              
              7.25
              
              
              4.63
              
              
              5.74
              
              
              09/01/34
              
              
              01/01/36
              
              
              360
              
              
              NA
              
              
              8,110
              
              
              7,924
              
              
              -<=$1,000
              
              
              4
              
              
              7.25
              
              
              5.38
              
              
              6.31
              
              
              10/01/35
              
              
              10/01/35
              
              
              360
              
              
              NA
              
              
              3,068
              
              
              3,050
              
              
              517>$1,000
              
              
              1
              
              
              5.63
              
              
              5.63
              
              
              5.63
              
              
              12/01/34
              
              
              08/01/35
              
              
              360
              
              
              NA
              
              
              2,600
              
              
              2,600
              
              
              -**Summary**
              
              
              **34**
              
              
              **7.25**
              
              
              **4.38**
              
              
              **5.83**
              
              
              **09/01/34**
              
              
              **01/01/36**
              
              
              **360**
              
              
              NA
              
              **$**
              **14,973**
              
              **$**
              **14,679**
              
              **$**
              **517****Condo**
              
              
              <=
                  $100
              
              
              18
              
              
              6.63
              
              
              4.38
              
              
              5.68
              
              
              01/01/35
              
              
              12/01/35
              
              
              360
              
              
              NA
              
              $
              2,368
              
              $
              1,294
              
              $
              -<=$250
              
              
              94
              
              
              7.88
              
              
              4.50
              
              
              5.72
              
              
              08/01/32
              
              
              01/01/36
              
              
              360
              
              
              NA
              
              
              18,313
              
              
              17,118
              
              
              229<=$500
              
              
              102
              
              
              8.13
              
              
              4.00
              
              
              5.60
              
              
              09/01/32
              
              
              12/01/35
              
              
              360
              
              
              NA
              
              
              36,070
              
              
              35,091
              
              
              1,031<=$1,000
              
              
              37
              
              
              7.75
              
              
              4.13
              
              
              5.46
              
              
              08/01/33
              
              
              11/01/35
              
              
              360
              
              
              NA
              
              
              27,137
              
              
              25,379
              
              
              ->$1,000
              
              
              15
              
              
              6.13
              
              
              4.88
              
              
              5.48
              
              
              07/01/34
              
              
              09/01/35
              
              
              360
              
              
              NA
              
              
              24,568
              
              
              22,091
              
              
              -**Summary**
              
              
              **266**
              
              
              **8.13**
              
              
              **4.00**
              
              
              **5.62**
              
              
              **08/01/32**
              
              
              **01/01/36**
              
              
              **360**
              
              
              NA
              
              **$**
              **108,456**
              
              **$**
              **100,973**
              
              **$**
              **1,260****CO-OP**
              
              
              <=
                  $100
              
              
              5
              
              
              7.25
              
              
              4.75
              
              
              6.00
              
              
              09/01/34
              
              
              06/01/35
              
              
              360
              
              
              NA
              
              $
              842
              
              $
              276
              
              $
              -<=$250
              
              
              25
              
              
              7.13
              
              
              4.00
              
              
              5.51
              
              
              10/01/34
              
              
              12/01/35
              
              
              360
              
              
              NA
              
              
              4,782
              
              
              4,431
              
              
              -<=$500
              
              
              51
              
              
              7.75
              
              
              3.88
              
              
              5.51
              
              
              08/01/34
              
              
              12/01/35
              
              
              360
              
              
              NA
              
              
              20,640
              
              
              19,205
              
              
              -<=$1,000
              
              
              30
              
              
              6.75
              
              
              4.75
              
              
              5.35
              
              
              11/01/34
              
              
              11/01/35
              
              
              360
              
              
              NA
              
              
              22,254
              
              
              21,360
              
              
              ->$1,000
              
              
              6
              
              
              6.00
              
              
              4.75
              
              
              5.25
              
              
              11/01/34
              
              
              12/01/35
              
              
              360
              
              
              NA
              
              
              8,664
              
              
              8,488
              
              
              -**Summary**
              
              
              **117**
              
              
              **7.75**
              
              
              **3.88**
              
              
              **5.44**
              
              
              **08/01/34**
              
              
              **12/01/35**
              
              
              **360**
              
              
              NA
              
              **$**
              **57,182**
              
              **$**
              **53,760**
              
              **$**
              **-****PUD**
              
              
              <=
                  $100
              
              
              2
              
              
              5.63
              
              
              5.25
              
              
              5.44
              
              
              07/01/35
              
              
              07/01/35
              
              
              360
              
              
              NA
              
              $
              438
              
              $
              186
              
              $
              -<=$250
              
              
              28
              
              
              7.75
              
              
              4.38
              
              
              5.70
              
              
              01/01/35
              
              
              12/01/35
              
              
              360
              
              
              NA
              
              
              5,578
              
              
              5,187
              
              
              -<=$500
              
              
              24
              
              
              9.88
              
              
              4.38
              
              
              6.40
              
              
              08/01/32
              
              
              12/01/35
              
              
              360
              
              
              NA
              
              
              8,850
              
              
              8,301
              
              
              -<=$1,000
              
              
              9
              
              
              7.50
              
              
              4.75
              
              
              5.72
              
              
              09/01/33
              
              
              12/01/35
              
              
              360
              
              
              NA
              
              
              6,196
              
              
              6,102
              
              
              856>$1,000
              
              
              4
              
              
              6.22
              
              
              5.63
              
              
              5.96
              
              
              04/01/34
              
              
              12/01/35
              
              
              360
              
              
              NA
              
              
              5,233
              
              
              5,213
              
              
              -**Summary**
              
              
              **67**
              
              
              **9.88**
              
              
              **4.38**
              
              
              **5.96**
              
              
              **08/01/32**
              
              
              **01/01/36**
              
              
              **360**
              
              
              NA
              
              **$**
              **26,295**
              
              **$**
              **24,989**
              
              **$**
              **856****Summary**
              
              
              <=
                  $100
              
              
              39
              
              
              7.75
              
              
              4.38
              
              
              5.71
              
              
              09/01/34
              
              
              12/01/35
              
              
              360
              
              
              NA
              
              $
              5,598
              
              $
              2,750
              
              $
              69<=$250
              
              
              248
              
              
              8.50
              
              
              4.00
              
              
              5.70
              
              
              08/01/32
              
              
              01/01/36
              
              
              360
              
              
              NA
              
              
              47,913
              
              
              44,799
              
              
              475<=$500
              
              
              348
              
              
              9.88
              
              
              3.88
              
              
              5.66
              
              
              08/01/32
              
              
              01/01/36
              
              
              360
              
              
              NA
              
              
              128,266
              
              
              122,631
              
              
              1,531<=$1,000
              
              
              149
              
              
              9.50
              
              
              4.13
              
              
              5.68
              
              
              07/01/33
              
              
              12/01/35
              
              
              360
              
              
              NA
              
              
              109,116
              
              
              104,276
              
              
              5,025>$1,000
              
              
              63
              
              
              7.75
              
              
              4.00
              
              
              5.64
              
              
              04/01/34
              
              
              01/01/36
              
              
              360
              
              
              NA
              
              
              106,192
              
              
              102,880
              
              
              1,999**Grand**
                **Total**
              
              
              **847**
              
              
              **9.88**
              
              
              **3.88**
              
              
              **5.68**
              
              
              **08/01/32**
              
              
              **01/01/36**
              
              
              **360**
              
              
              NA
              
              **$**
              **397,085**
              
              **$**
              **377,336**
              
              **$**
              **9,099**





The
      following table details activity for loans held in securitization trust for
      the
      six months ended June 30, 2008.




**Principal**
            
            **Premium**
            
            **Loan
                Reserve**
            
            **Net
                Carrying**
              **Value****Balance,
                January 1, 2008**
            
            **$**
            429,629
            
            $
            2,733
            
            $
            (1,647
            )
            **$**
            430,715Additions
            
            
            -
            
            
            -
            
            
            -
            
            
            -principal
                repayments
            
            
            (52,293
            )
            
            -
            
            
            -
            
            
            (52,293
            )Reserve
                for loan loss
            
            
            -
            
            
            -
            
            
            (1,455
            )
            
            (1,455
            )Charge
                offs
            
            
            -
            
            
            -
            
            
            364
            
            
            364Amortization
                for premium
            
            
            -
            
            
            (347
            )
            
            -
            
            
            (347
            )**Balance,
                June 30, 2008**
            
            $
            377,336
            
            $
            2,386
            
            $$
            (2,738
            )
            $
            376,984




33




*Cash
      and cash equivalents -* We had
      unrestricted cash and cash equivalents of $4.9 million at June 30, 2008 versus
      $5.5 million at December 31, 2007.




*Restricted
      Cash* -
      Restricted cash includes amounts held by counterparties as collateral for
      hedging instruments, amounts held as collateral for three letters of credit
      related to the Company's lease of office space, including its corporate
      headquarters, and amounts held in an escrow account to support warranties and
      indemnifications related to the sale of the retail mortgage lending platform
      to
      IndyMac.




*Accounts
      and accrued interest receivable* -
      Accounts and accrued interest receivable includes accrued interest receivable
      for investment securities and mortgage loans held in securitization trusts
      are
      also included.




*Prepaid
      and other assets* -
      Prepaid and other assets totaled $2.3 million as of June 30, 2008. Prepaid
      and
      other assets consist mainly of $1.2 million of capitalization expenses related
      to equity and bond issuance cost. These costs are being amortized into earnings
      over time related to the maturity of the underlying issuance. In addition,
      $0.3
      million of capitalization servicing costs related to our fourth securitization
      has been accounted for as a sale.





*Assets
      Related to Discontinued Operations:*




*Mortgage
      Loans Held for Sale* -
      Mortgage loans that we have originated but do not intend to hold for investment
      and are held pending sale to investors are classified as mortgage loans held
      for
      sale. We had mortgage loans held for sale (net) of $6.2 million at June 30,
      2008
      as compared to $8.1 million at December 31, 2007.




**Balance
      Sheet Analysis - Financing Arrangements**




*Financing
      Arrangements, Portfolio Investments* - As of
      June 30, 2008, there were approximately $417.9 million of repurchase
      borrowings outstanding. Our repurchase agreements typically have terms of 30
      days or less. As of June 30, 2008, the current weighted average borrowing rate
      on these financing facilities was 2.60%.




*Collateralized
      Debt Obligations* - As of
      June 30, 2008 we have CDOs outstanding of approximately $365.2 million with
      an
      average interest rate of 2.87%.




*Subordinated
      Debentures* - As of
      December 31, 2007, we have trust preferred securities outstanding of $45.0
      million. The securities are fully guaranteed by the Company with respect to
      distributions and amounts payable upon liquidation, redemption or repayment.
      These securities are classified as subordinated debentures in the liability
      section of our balance sheet.





*Convertible
      Preferred Debentures -* As of
      June 30, 2008, there were 1.0 million shares of our Series A Preferred Stock
      outstanding, with an aggregate redemption value of $20.0 million. We issued
      these shares on January 18, 2008 to JMP Group, Inc. and certain of its
      affiliates for an aggregate purchase price of $20.0 million. The Series A
      Preferred Stock entitles the holders to receive a cumulative dividend of 10%
      per
      year, subject to an increase to the extent any future quarterly common stock
      dividends exceed $0.20 per share. The Series A Preferred Stock is convertible
      into shares of our common stock based on a conversion price of $8.00 per share
      of common stock, which represents a conversion rate of two and one-half (2
      1/2)
      shares of common stock for each share of Series A Preferred Stock. The Series
      A
      Preferred Stock matures on December 31, 2010, at which time
      any outstanding shares must be redeemed by us at the $20.00 per share
      liquidation preference. Pursuant to SFAS No. 150, because of this mandatory
      redemption feature, we classify these securities as convertible preferred
      debentures in the liability section of our balance sheet.




34




*Derivative
      Assets and Liabilities* - We
      generally attempt to hedge only the risk related to changes in the interest
      rates, usually a London Interbank Offered Rate, known as LIBOR, or a U.S.
      Treasury rate.




In
      order
      to mitigate these risks, we enter into interest rate swap agreements whereby
      we
      receive floating rate payments in exchange for fixed rate payments, effectively
      converting the borrowing to a fixed rate. We also enter into interest rate
      cap
      agreements whereby, in exchange for a fee, we are reimbursed for interest paid
      in excess of a contractually specified capped rate.




Derivative
      financial instruments contain credit risk to the extent that the institutional
      counterparties may be unable to meet the terms of the agreements. We minimize
      this risk by using multiple counterparties and limiting our counterparties
      to
      major financial institutions with good credit ratings. In addition, we regularly
      monitor the potential risk of loss with any one party resulting from this type
      of credit risk. Accordingly, we do not expect any material losses as a result
      of
      default by other parties.




We
      enter
      into derivative transactions solely for risk management purposes and not for
      speculation. The decision of whether or not a given transaction (or portion
      thereof) is hedged is made on a case-by-case basis, based on the risks involved
      and other factors as determined by senior management, including the financial
      impact on income and asset valuation and the restrictions imposed on REIT
      hedging activities by the Internal Revenue Code, among others. In determining
      whether to hedge a risk, we may consider whether other assets, liabilities,
      firm
      commitments and anticipated transactions already offset or reduce the risk.
      All
      transactions undertaken as a hedge are entered into with a view towards
      minimizing the potential for economic losses that could be incurred by us.
      Generally, all derivatives entered into are intended to qualify as hedges in
      accordance with GAAP, unless specifically precluded under SFAS No. 133,
*Accounting for Derivatives Instruments and Hedging Activities.* To
      this
      end, the terms of the hedges are matched closely to the terms of the hedged
      items.




During
      the six months ended June 30, 2008, the Company terminated a total of $517.7
      million of notional interest rate swaps resulting in a realized loss of $4.8
      million.




The
      following table summarizes the estimated fair value of derivative assets as
      of
      June 30, 2008 and December 31, 2007 (dollar amounts in thousands):





**June
                30,**
              **2008**
            
            **December
                31,**
              **2007****Derivative
                Assets:**Interest
                rate caps
            
            $
            355
            
            $
            416Interest
                rate swaps
            
            
            2,085
            
            
            —**Total
                derivative assets**
            
            $
            2,440
            
            $
            416**Derivative
                Liabilities:**Interest
                rate swaps
            
            $
            —
            
            $
            3,517**Total
                derivative liabilities**
            
            $
            —
            
            $
            3,517




35




**Balance
      Sheet Analysis - Stockholders' Equity**




Stockholders'
      equity at June 30, 2008 was $41.9 million and included $12.4 million of net
      unrealized losses on available for sale securities and cash flow hedges
      presented as accumulated other comprehensive loss.




On
      February 21, 2008, the Company completed the issuance and sale of 7.5 million
      shares of its common stock in a private placement at a price of $8.00 per
      share.  This private offering of the Company's common stock generated net
      proceeds to the Company of $56.6 million after payment of private placement
      fees
      and expenses. In connection with the private offering of our common stock,
      we entered into a registration rights agreement (the “Common Stock Registration
      Rights Agreement”), pursuant to which we were required, among other things, to
      file with the SEC a resale shelf registration statement registering
      for resale the 7.5 million shares sold in this private offering on or before
      March 12, 2008 and obtain listing for our common stock on the NASDAQ Stock
      Market on or before the effective date of the resale shelf registration
      statement. In the event we fail to satisfy these requirements, we may be
      subject to payment of liquidated damages to the investors in the transaction.
      We
      filed the resale shelf registration statement registering the resale of the
      7.5
      million shares on April 4, 2008, which became effective on April 18,
      2008. As a result, we incurred a penalty fee (liquidated
      damages) of approximately $0.2 million, which was paid on May 2,
      2008. The Company obtained listing on the NASDAQ effective June 4, 2008; we
      incurred a penalty fee (liquidated damages) of approximately $0.5 million,
      which
      was paid on July 3, 2008.




**Prepayment
      Experience**




The
      cumulative prepayment rate (“CPR”) on our mortgage portfolio averaged
      approximately 14% during the three months ended June 30, 2008 as compared to
      21%
      for the three months ended June 30, 2007. CPRs on our purchased portfolio of
      investment securities averaged approximately 9% while the CPRs on mortgage
      loans
      held in our securitization trusts averaged approximately 22% during the three
      months ended June 30, 2008. The CPR on our mortgage portfolio averaged
      15% for the three months ended December 31, 2007. When prepayment
      expectations over the remaining life of assets increase, we have to amortize
      premiums over a shorter time period resulting in a reduced yield to maturity
      on
      our investment assets. Conversely, if prepayment expectations decrease, the
      premium would be amortized over a longer period resulting in a higher yield
      to
      maturity. We monitor our prepayment experience on a monthly basis and adjust
      the
      amortization of our net premiums accordingly.




**Results
      of Operations**




Our
      results of operations for our mortgage portfolio during a given period typically
      reflect the net interest spread earned on our investment portfolio of
      residential mortgage loans and mortgage-backed securities. The net interest
      spread is impacted by factors such as our cost of financing, the interest rate
      our investments are earning and our interest hedging strategies. Furthermore,
      the amount of premium or discount paid on purchased portfolio investments and
      the prepayment rates on portfolio investments will impact the net interest
      spread as such factors will be amortized over the expected term of such
      investments.




36





***Other
      Operational Information***




**June
                30****2008**
            
            **2007**
            
            **%
                Change**Employees
            
            
            6
            
            
            12
            
            
            (50.0
            )%





***Comparative
      Net Income (Loss) (dollars in thousands)***




**for the three months ended June 30,**
            
            **for the six months ended June 30,****2008**
            
            **2007**
            
            **Difference**
            
            **2008**
            
            **2007**
            
            **Difference**Net
                interest income on investment portfolio
            
            $
            3,964
            
            $
            1,006
            
            $
            2,958
            
            $
            6,703
            
            $
            1,635
            
            $
            5,068Net
                interest income
            
            
            2,499
            
            
            112
            
            
            2,387
            
            
            3,773
            
            
            (141
            )
            
            3,914Loan
                losses
            
            
            (22
            )
            
            (940
            )
            
            918
            
            
            (1,455
            )
            
            (940
            )
            
            (515
            )Loss
                on securities and related hedges
            
            
            (83
            )
            
            (3,821
            )
            
            3,738
            
            
            (19,931
            )
            
            (3,821
            )
            
            (16,110
            )Total
                Expenses
            
            
            1,960
            
            
            529
            
            
            1,431
            
            
            3,391
            
            
            1,176
            
            
            2,215Income
                (loss) from continuing operations
            
            
            434
            
            
            (5,178
            )
            
            5,612
            
            
            (21,004
            )
            
            (6,078
            )
            
            (14,926
            )Loss
                from discontinued operations - net of tax
            
            
            829
            
            
            (9,018
            )
            
            9,847
            
            
            1,009
            
            
            (12,859
            )
            
            13,868Net
                Income (loss)
            
            $
            1,263
            
            $
            (14,196
            )
            $
            15,459
            
            $
            (19,995
            )
            $
            (18,937
            )
            $
            (1,058
            )EPS
                Basic and Diluted
            
            $
            0.14
            
            $
            (7.84
            )
            $
            7.98
            
            $
            (2.77
            )
            $
            (10.46
            )
            $
            7.69





For
      the
      three months ended June 30, 2008, we reported net income of $1.3 million, as
      compared to a net loss of $14.2 million for the three months ended June 30,
      2007. The increase in net income of $15.4 million is primarily due to the
      improvement in net interest margin of $2.4 million, $3.7 million decrease in
      realized loss on securities and related hedges, and a $9.8 million improvement
      on earnings from the discontinued operations as a result of exiting the lending
      business on March 31, 2007. For the six months ended June 30, 2008, we reported
      a net loss of $20.0 million, as compared to a net loss of $18.9 million for
      the
      six months ended June 30, 2007.





Expenses
      increased by approximately $1.4 million to $2.0 million for three months ended
      June 30, 2008 as compared to the same period in 2007. Of this increase in
      expenses, approximately $0.7 million was the result of allocating to the
      Company 100% of the salaries and benefits payable to the Company’s employees, as
      well as certain professional fees. Previously, these expenses had been allocated
      to both the continuing and discontinued operations of the Company. The remaining
      increase in expenses was due primarily to an increase of approximately $0.9
      million in other expenses, which included $0.2 million in management fees
      payable to JMPAM pursuant to the advisory agreement and $0.5 million in penalty
      fees paid to certain holders of the Company’s common stock pursuant to the
      Common Stock Registration Rights Agreement.





Expenses
      increased by approximately $2.2 million to $3.4 million for six months ended
      June 30, 2008 as compared to the same period in 2007. Of this increase in
      expenses, approximately $1.1 million was the result of the re-allocation of
      expenses between the continuing and discontinued operations, as described above.
      The remaining increase in expenses was due primarily to an increase of
      approximately $1.4 million in other expenses, which included $0.3 million in
      management fees payable to JMPAM pursuant to the advisory agreement and $0.7
      million in penalty fees paid pursuant to the Common Stock Registration Rights
      Agreement.




37




***Comparative
      Net Interest Income***




The
      following table sets forth the changes in net interest income, yields earned
      on
      mortgage loans and securities and rates on financial arrangements for the three
      and six months ended June 30, 2008 and 2007 (dollar amounts in thousands, except
      as noted):





**For the Three Months Ended** **June 30,****2008**
            
            **2007****Average**
              **Balance**
            
            **Amount**
            
            **Yield/**
              **Rate**
            
            **Average**
              **Balance**
            
            **Amount**
            
            **Yield/**
              **Rate**($
                Millions)
            
            ($
                Millions)**Interest
                income:**Investment
                securities and loans held in the securitization
                trusts
            
            $
            897.5
            
            $
            10,912
            
            
            4.86
            %
            $
            945.4
            
            $
            13,388
            
            
            5.77
            %Amortization
                of net premium
            
            
            1.8
            
            
            (157
            )
            
            (0.08
            )%
            
            3.2
            
            $
            (490
            )
            
            (0.22
            )%Interest
                income/weighted average
            
            $
            899.3
            
            $
            10,755
            
            
            4.78
            %
            
            948.6
            
            $
            12,898
            
            
            5.55
            %**Interest
                expense:**Investment
                securities and loans held in the securitization trusts
            
            $
            800.9
            
            $
            6,791
            
            
            3.35
            %
            $
            876.4
            
            $
            11,892
            
            
            4.04
            %Subordinated
                debentures
            
            
            45.0
            
            
            896
            
            
            7.88
            %
            
            45.0
            
            $
            894
            
            
            7.95
            %Convertible
                preferred debentures
            
            
            20.0
            
            
            569
            
            
            11.25
            %
            
            —
            
            
            —
            
            
            —
            %Interest
                expense/weighted average
            
            $
            865.9
            
            $
            8,256
            
            
            3.77
            %
            $
            921.4
            
            $
            12,786
            
            
            5.55
            %Net
                interest income/weighted average
            
            
            
            
            $
            2,499
            
            
            1.01
            %
            
            
            
            $
            112
            
            
            0.00
            %




**For the Six Months Ended** **June 30,****2008**
            
            **2007****Average**
              **Balance**
            
            **Amount**
            
            **Yield/**
              **Rate**
            
            **Average**
              **Balance**
            
            **Amount**
            
            **Yield/**
              **Rate**($
                Millions)
            
            ($
                Millions)**Interest
                income:**Investment
                securities and loans held in the securitization
                trusts
            
            $
            958.5
            
            $
            24,258
            
            
            5.06
            %
            $
            981.7
            
            $
            27,602
            
            
            5.62
            %Amortization
                of net premium
            
            
            0.8
            
            
            (250
            )
            
            (0.05
            )%
            
            4.0
            
            
            (991
            )
            
            (0.16
            )%Interest
                income/weighted average
            
            $
            959.3
            
            $
            24,008
            
            
            5.01
            %
            
            985.70
            
            $
            26,611
            
            
            5.46
            %**Interest
                expense:**Investment
                securities and loans held in the securitization trusts
            
            $
            879.1
            
            $
            17,305
            
            
            3.89
            %
            $
            928.3
            
            $
            24,976
            
            
            5.43
            %Subordinated
                debentures
            
            
            45.0
            
            
            1,855
            
            
            8.15
            %
            
            45.00
            
            
            1,776
            
            
            7.94
            %Convertible
                preferred debentures
            
            
            20.0
            
            
            1,075
            
            
            10.63
            %
            
            —
            
            
            —
            
            
            —
            %Interest
                expense/weighted average
            
            $
            944.1
            
            $
            20,235
            
            
            4.24
            %
            $
            973.30
            
            $
            26,752
            
            
            5.47
            %Net
                interest income/weighted average
            
            
            
            
            $
            3,773
            
            
            0.77
            %
            
            
            
            $
            (141
            )
            
            (0.01
            )%




The
      increase in net interest income for both the three months and six months ended
      June 30, 2008 is due to a more favorable interest rate environment and
      significant portfolio restructuring in 2008.




38




The
      following table sets forth the net interest spread, since inception, for our
      portfolio of investment securities available for sale, mortgage loans held
      for investment and mortgage loans held in securitization trusts, excluding
      the costs of our subordinated debentures.





**Quarter
                Ended**
            
            **Average**
              **Interest**
              **Earning**
              **Assets**
              **($ millions)**
            
            **Weighted**
              **Average**
              **Coupon**
            
            **Weighted**
              **Average**
              **Cash**
              **Yield on**
              **Interest**
              **Earning**
              **Assets**
            
            **Cost
                of**
              **Funds**
            
            **Net**
              **Interest**
              **Spread**June
                30, 2008
            
            $
            899.3
            
            
            4.86
            %
            
            4.78
            %
            
            3.35
            %
            
            1.43
            %March
                31, 2008
            
            $
            1,019.2
            
            
            5.24
            %
            
            5.20
            %
            
            4.35
            %
            
            0.85
            %December
                31, 2007
            
            $
            799.2
            
            
            5.90
            %
            
            5.79
            %
            
            5.33
            %
            
            0.46
            %September
                30, 2007
            
            $
            865.7
            
            
            5.93
            %
            
            5.72
            %
            
            5.38
            %
            
            0.34
            %June
                30, 2007
            
            $
            948.6
            
            
            5.66
            %
            
            5.55
            %
            
            5.43
            %
            
            0.12
            %March
                31, 2007
            
            $
            1,022.7
            
            
            5.59
            %
            
            5.36
            %
            
            5.34
            %
            
            0.02
            %December
                31, 2006
            
            $
            1,111.0
            
            
            5.53
            %
            
            5.35
            %
            
            5.26
            %
            
            0.09
            %September
                30, 2006
            
            $
            1,287.6
            
            
            5.50
            %
            
            5.28
            %
            
            5.12
            %
            
            0.16
            %June
                30, 2006
            
            $
            1,217.9
            
            
            5.29
            %
            
            5.08
            %
            
            4.30
            %
            
            0.78
            %March
                31, 2006
            
            $
            1,478.6
            
            
            4.85
            %
            
            4.75
            %
            
            4.04
            %
            
            0.71
            %December
                31, 2005
            
            $
            1,499.0
            
            
            4.84
            %
            
            4.43
            %
            
            3.81
            %
            
            0.62
            %September
                30, 2005
            
            $
            1,494.0
            
            
            4.69
            %
            
            4.08
            %
            
            3.38
            %
            
            0.70
            %June
                30, 2005
            
            $
            1,590.0
            
            
            4.50
            %
            
            4.06
            %
            
            3.06
            %
            
            1.00
            %March
                31, 2005
            
            $
            1,447.9
            
            
            4.39
            %
            
            4.01
            %
            
            2.86
            %
            
            1.15
            %December
                31, 2004
            
            $
            1,325.7
            
            
            4.29
            %
            
            3.84
            %
            
            2.58
            %
            
            1.26
            %September
                30, 2004
            
            $
            776.5
            
            
            4.04
            %
            
            3.86
            %
            
            2.45
            %
            
            1.41
            %




**Off-Balance
      Sheet Arrangements**




Since
      inception, we have not maintained any relationships with unconsolidated entities
      or financial partnerships, such as entities often referred to as structured
      finance or special purpose entities, established for the purpose of facilitating
      off-balance sheet arrangements or other contractually narrow or limited
      purposes. Further, we have not guaranteed any obligations of unconsolidated
      entities nor do we have any commitment or intent to provide funding to any
      such
      entities. Accordingly, we are not materially exposed to any market, credit,
      liquidity or financing risk that could arise if we had engaged in such
      relationships.




39





**Liquidity
      and Capital Resources**





Liquidity
      is a measure of our ability to meet potential cash requirements, including
      ongoing commitments to repay borrowings, fund and maintain investments, fund
      our
      operations, pay dividends to our stockholders and other general business needs.
      We recognize the need to have funds available for our operating businesses
      and
      meet these potential cash requirements. Our investments and assets generate
      liquidity on an ongoing basis through mortgage principal and interest payments,
      prepayments and net earnings held prior to payment of dividends. In addition,
      depending on market conditions, the sale of investment securities or capital
      market transactions may provide additional liquidity. We intend to meet our
      liquidity needs through normal operations with the goal of avoiding unplanned
      sales of assets or emergency borrowing of funds. However, in March 2008, news
      of
      potential security liquidations by certain of our competitors negatively
      impacted the market value of certain of the investment securities in our
      portfolio. In connection with this market disruption and the anticipated
      increase in collateral requirements by our lenders as a result of such decrease
      in the market value of such securities, we elected to increase our liquidity
      by
      reducing our leverage through the sale of an aggregate of approximately $592.8
      million of Agency MBS in March 2008, which resulted in an aggregate loss of
      approximately $17.1 million, including losses related to the termination of
      interest rate swaps. At June 30, 2008, we had cash balances of $4.9 million,
      $31.6 million in unencumbered securities and borrowings of $417.9 million under
      outstanding repurchase agreements. At June 30, 2008, we also had longer-term
      capital resources, including CDOs outstanding of $365.2 million
      and subordinated debt of $45.0 million. In addition, the Company received
      net proceeds of $19.6 million and $56.6 million from private offerings of its
      Series A Preferred Stock and common stock, respectively, in January and February
      2008. The Series A Preferred Stock is convertible into shares of our common
      stock based on a conversion price of $8.00 per share of common stock, which
      represents a conversion rate of two and one-half (2 1⁄2) shares of common stock
      for each share of Series A Preferred Stock, and matures on December 31,
      2010, at which time any outstanding shares must be redeemed by us at
      the $20.00 per share liquidation preference. As of the date of this report,
      we believe our existing cash balances, funds available under our
      current repurchase agreements and cash flows from operations will meet our
      liquidity requirements for at least the next 12 months, absent any
      significant decline in financing availability or significant increase in
      cost to obtain financing. However, should further volatility and
      deterioration in the broader residential mortgage and MBS markets occur in
      the
      future, we cannot assure you that our existing sources of liquidity will be
      sufficient to meet our liquidity requirements during the next 12
      months.





We
      had
      outstanding repurchase agreements, a form of collateralized short-term
      borrowing, with seven different financial institutions as of June 30, 2008.
      These agreements are secured by our mortgage-backed securities and bear interest
      rates that have historically moved in close relationship to LIBOR. Our
      borrowings under repurchase agreements are based on the fair value of our
      mortgage backed securities portfolio.  Interest rate changes can have a
      negative impact on the valuation of these securities, reducing the amount we
      can
      borrow under these agreements.   Our repurchase agreements allow the
      counterparties to determine a new market value of the collateral to reflect
      current market conditions. If a counterparty determines that the value of the
      collateral has decreased, whether as a result of interest rate changes, concern
      regarding the fair value of our mortgage-backed securities portfolio,
      or other liquidity concerns in the credit markets, it may initiate a margin
      call and require us to either post additional collateral to cover such decrease
      or repay a portion of the outstanding borrowing, on minimal notice. Moreover,
      because these lines of financing are not committed, the counterparty can call
      the loan at any time. In the event an existing counterparty elected to not
      reset
      the outstanding balance at its maturity into a new repurchase agreement, we
      would be required to repay the outstanding balance with proceeds received from
      a
      new counterparty or to surrender the mortgage-backed securities that serve
      as collateral for the outstanding balance. If we are unable to secure financing
      from a new counterparty and had to surrender the collateral, we would expect
      to
      incur a significant loss.




In
      addition, in response to the March 2008 market disruption, investors and
      financial institutions that lend in the mortgage securities repurchase market,
      including the lenders under our repurchase agreements, tightened lending
      standards in an effort to reduce the leverage of their borrowers. While the
      haircut required by our lenders increased in 2007, primarily on non-Agency
      MBS,
      during March 2008, we experienced further increases in the amount of haircut
      required to obtain financing for both our Agency MBS and non-Agency MBS. As
      of
      June 30, 2008, our MBS securities portfolio consisted of approximately of $472.3
      million of Agency MBS and $27.1 million of non-Agency MBS, which was financed
      with approximately $417.9 million of repurchase agreement borrowing with an
      average haircut of 9%. Although average haircuts stabilized in the second
      quarter, if the haircuts required by our lenders increase again, our
      profitability and liquidity will be materially adversely affected.




The
        recent turmoil in the financial markets as it relates to the solvency of major
        financial institution s,
        including certain GSEs, has raised concerns that a material adverse development
        involving one or more major financial institutions could result in lenders
        reducing our access to funds available under our repurchase agreements. Any
        failure or anticipated failure of a major financial institution could adversely
        effect our ability to borrow under repurchase agreements.





To
      finance our MBS investment portfolio, we generally seek to borrow between eight
      and 12 times the amount of our equity, however given the current disruptions
      in
      the credit markets we have lowered our target leverage to seven to 10 times.
      At
      June 30, 2008 our leverage ratio for our MBS investment portfolio, which we
      define as our outstanding indebtedness under repurchase agreements divided
      by
      the sum of total stockholders’ equity and the convertible preferred debentures,
      was 7:1. This definition of the leverage ratio is consistent with the manner
      in
      which the credit providers under our repurchase agreements calculate our
      leverage.




40




We
      enter
      into interest rate swap agreements to extend the maturity of our repurchase
      agreements as a mechanism to reduce the interest rate risk of the securities
      portfolio. At June 30, 2008, we had $158.0 million in notional interest rate
      swaps outstanding. Should market rates for similar term interest rate swaps
      drop
      below the rates we have entered into on our interest rate swaps, we will be
      required to post additional margin to the swap counterparty, reducing available
      liquidity. The weighted average maturity of the swaps was 4.3 years at June
      30,
      2008.




Our
      ability to sell approximately $6.2 million, net of loan loss reserve, of
      mortgage loans we own could adversely affect our profitability as any sale
      for
      less than the current reserved balance would result in a loss. Currently, these
      loans are not financed or pledged.





As
      it
      relates to loans sold previously under certain loan sale agreements by our
      discontinued mortgage lending business, we may be required to repurchase some
      of
      those loans or indemnify the loan purchaser for damages caused by a breach
      of
      the loan sale agreement. While in the past we complied with the repurchase
      demands by repurchasing the loan with cash and reselling it at a loss, thus
      reducing our cash position; more recently we have addressed these requests
      by
      negotiating a net cash settlement based on the actual or assumed loss on the
      loan in lieu of repurchasing the loans. As of June 30, 2008, the amount of
      repurchase requests outstanding was approximately $1.5 million, against which
      we
      had a reserve of approximately $0.5 million. We cannot assure you that we
      will be successful in settling the remaining repurchase demands on favorable
      terms, or at all. If we are unable to continue to resolve our current repurchase
      demands through negotiated net cash settlements, our liquidity could be
      adversely affected. In addition, we may be subject to new
      repurchase requests from investors with whom we have not settled or with
      respect to repurchase obligations not covered under the settlement.




On
        May 2,
        2008 and July 3, 2008, pursuant to the Common Stock Registration Rights
        Agreement, we were required to pay liquidated damage penalties of approximately
        of $0.2 million and $0.5 million respectively. Although we do not expect
        to
        incur additional liquidated damages under the Common Stock Registration Rights
        Agreement, there can be no assurance that we will avoid breaching the liquidated
        damage provisions in the future.


In
      April
      2008 we declared a first quarter cash dividend of $0.12 per common share to
      common stockholders of record of April 30, 2008, that was paid on May 15,
      2008. This dividend represented the first dividend paid on shares of our common
      stock since our Board of Directors elected to suspend the dividend in July
      2007.
      On June 26, 2008, we declared a second quarter cash dividend of $0.16 per common
      share to common stockholders of record of July 10, 2008 and was paid on July
      25,
      2008. On June 26, 2008, we declared a $0.50 per share cash dividend, or
      approximately $0.5 million in the aggregate, on shares of our Series A Preferred
      Stock to holders of record as of June 30, 2008. We also paid $0.50 per share
      cash dividend on shares of our Series A Preferred Stock during the first quarter
      of 2008. The Series A Preferred Stock entitles the holders to receive a
      cumulative dividend of 10% per year (or $0.50 per share per quarter), subject
      to
      increase to the extent any future quarterly common stock dividends exceed $0.10
      per share. Each of these dividends was paid out of the Company’s working
      capital. Our
      board
      of directors will continue to evaluate our dividend policy each quarter and
      will
      make adjustments as necessary, based on a variety of factors, including, among
      other things, the need to maintain our REIT status, our financial condition,
      liquidity, earnings projections and business prospects. Our dividend policy
      does
      not constitute an obligation to pay dividends, which only occurs when our board
      of directors declares a dividend.




We
      intend
      to make distributions to our stockholders to comply with the various
      requirements to maintain our REIT status and to minimize or avoid corporate
      income tax and the nondeductible excise tax. However, differences in timing
      between the recognition of REIT taxable income and the actual receipt of cash
      could require us to sell assets or to borrow funds on a short-term basis to
      meet
      the REIT distribution requirements and to avoid corporate income tax and the
      nondeductible excise tax.




Certain
      of our assets may generate substantial mismatches between REIT taxable income
      and available cash. These assets could include mortgage-backed securities we
      hold that have been issued at a discount and require the accrual of taxable
      income in advance of the receipt of cash. As a result, our REIT taxable income
      may exceed our cash available for distribution and the requirement to distribute
      a substantial portion of our net taxable income could cause us to:





·
            sell
                assets in adverse market
                conditions;





·
            borrow
                on unfavorable terms;





·
            distribute
                amounts that would otherwise be invested in assets or repayment of
                debt,
                in order to comply with the REIT distribution
                requirements.




41




***Advisory
      Agreement***




On
      January 18, 2008, we entered into an advisory agreement with JMPAM, pursuant
      to
      which JMPAM will advise, manage and make investments on behalf of two of our
      wholly-owned subsidiaries. Pursuant to the Advisory Agreement, JMPAM is entitled
      to receive the following compensation:




·
            base
                advisory fee equal to 1.50% per annum of the “equity capital” (as defined
                in Item 1 of this Annual Report) of the Managed Subsidiaries is payable
                by
                us to JMPAM in cash, quarterly in arrears;
                and




·
            incentive
                compensation equal to 25% of the GAAP net income of the Managed
                Subsidiaries attributable to the investments that are managed by
                JMPAM
                that exceed a hurdle rate equal to the greater of (a) 8.00% and (b)
                2.00%
                plus the ten year treasury rate for such fiscal year will be payable
                by us
                to JMPAM in cash, quarterly in arrears;*provided,
                however,*that a portion of the incentive compensation may be paid in shares
                of our
                common stock.




If
      we
      terminate the advisory agreement (other than for cause) or elect not to renew
      it, we will be required to pay JMPAM a cash termination fee equal to the sum
      of
      (i) the average annual base advisory fee and (ii) the average annual incentive
      compensation earned during the 24-month period immediately preceding the date
      of
      termination.




**Inflation**




For
      the
      periods presented herein, inflation has been relatively low and we believe
      that
      inflation has not had a material effect on our results of operations.





**Item
      3. Quantitative and Qualitative Disclosures about Market
      Risk**




Market
      risk is the exposure to loss resulting from changes in interest rates, credit
      spreads, foreign currency exchange rates, commodity prices and equity prices.
      Because we are invested solely in U.S.-dollar denominated instruments, primarily
      residential mortgage instruments, and our borrowings are also domestic and
      U.S.
      dollar denominated, we are not subject to foreign currency exchange, or
      commodity and equity price risk; the primary market risk that we are exposed
      to
      is interest rate risk and its related ancillary risks. Interest rate risk is
      highly sensitive to many factors, including governmental monetary and tax
      policies, domestic and international economic and political considerations
      and
      other factors beyond our control. All of our market risk sensitive assets,
      liabilities and related derivative positions are for non-trading purposes
      only.




Management
      recognizes the following primary risks associated with our business and the
      industry in which we conduct our business:




·
            Interest
                rate risk




·
            Market
                (fair value) risk




·
            Credit
                spread risk




·
            Liquidity
                and funding risk




·
            Prepayment
                risk




·
            Credit
                risk




***Interest
      Rate Risk***





Interest
      rates are sensitive to many factors, including governmental, monetary, tax
      policies, domestic and international economic conditions, and political or
      regulatory matters beyond our control. Changes in interest rates affect the
      value of our MBS and ARM loans we manage and hold in our investment portfolio,
      the variable-rate borrowings we use to finance our portfolio, and the interest
      rate swaps and caps we use to hedge our portfolio. All of our interest rate
      related market risk sensitive assets, liabilities and related derivative
      positions are managed with a long term perspective and are not for trading
      purposes.




42




Interest
      rate risk is measured by the sensitivity of our current and future earnings
      to
      interest rate volatility, variability of spread relationships, the difference
      in
      re-pricing intervals between our assets and liabilities and the effect that
      interest rates may have on our cash flows, especially the speed at which
      prepayments occur on our residential mortgage related assets. Changes in
      interest rates can affect our net interest income, which is the difference
      between the interest income earned on assets and our interest expense incurred
      in connection with our borrowings.





Our
      CMO
      Floaters have interest rates that adjust monthly, at a margin over LIBOR, as
      do
      the repurchase agreement liabilities that we use to finance those
      Floaters.





Our hybrid
      ARM assets reset on various dates that are not matched to the reset dates on
      our
      repurchase agreements.  In general, the repricing of our repurchase
      agreements occurs more quickly than the repricing of our assets. First, our
      floating rate borrowings may react to changes in interest rates before our
      adjustable rate assets because the weighted average next re-pricing dates on
      the
      related borrowings may have shorter time periods than that of the ARM assets.
      Second, interest rates on ARM assets may be limited to a “periodic cap” or
      an increase of typically 1% or 2% per adjustment period, while our borrowings
      do
      not have comparable limitations. Third, our adjustable rate assets typically
      lag
      changes in the applicable interest rate indices by 45 days due to the notice
      period provided to ARM borrowers when the interest rates on their loans are
      scheduled to change.





We
      seek
      to manage interest rate risk in the portfolio by utilizing interest rate swaps,
      caps and Eurodollar futures, with the goal of optimizing the earnings potential
      while seeking to maintain long term stable portfolio values. We continually
      monitor the duration of our mortgage assets and have a policy to hedge the
      financing such that the net duration of the assets, our borrowed funds related
      to such assets, and related hedging instruments, are less than one
      year.





Interest
      rates can also affect our net return on hybrid ARM securities and loans net
      of
      the cost of financing hybrid ARMs. We continually monitor and estimate the
      duration of our hybrid ARMs and have a policy to hedge the financing of the
      hybrid ARMs such that the net duration of the hybrid ARMs, our borrowed funds
      related to such assets, and related hedging instruments are less than one year.
      During a declining interest rate environment, the prepayment of hybrid ARMs
      may
      accelerate (as borrowers may opt to refinance at a lower rate) causing the
      amount of liabilities that have been extended by the use of interest rate swaps
      to increase relative to the amount of hybrid ARMs, possibly resulting in a
      decline in our net return on hybrid ARMs as replacement hybrid ARMs may have
      a
      lower yield than those being prepaid. Conversely, during an increasing interest
      rate environment, hybrid ARMs may prepay slower than expected, requiring us
      to
      finance a higher amount of hybrid ARMs than originally forecast and at a time
      when interest rates may be higher, resulting in a decline in our net return
      on
      hybrid ARMs. Our exposure to changes in the prepayment speed of hybrid ARMs
      is mitigated by regular monitoring of the outstanding balance of hybrid ARMs,
      and adjusting the amounts anticipated to be outstanding in future periods and,
      on a regular basis, making adjustments to the amount of our fixed-rate borrowing
      obligations for future periods.





We
      utilize a model based risk analysis system to assist in projecting portfolio
      performances over a scenario of different interest rates. The model incorporates
      shifts in interest rates, changes in prepayments and other factors impacting
      the
      valuations of our financial securities, including mortgage-backed securities,
      repurchase agreements, interest rate swaps and interest rate caps.




Based
      on
      the results of the model, as of June 30, 2008, changes in interest rates would
      have the following effect on net interest income:





**Changes in Net Interest Income****Changes in Interest Rates**
              
              **Changes in Net Interest Income**(Basis Points)
              
              
              (Dollar
                  amounts in thousands)+200
              
              $
              (7,986)+100
              
              $
              (4,095)-100
              
              $
              4,149





Interest
      rate changes may also impact our net book value as our mortgage assets and
      related hedge derivatives are marked-to-market each quarter. Generally, as
      interest rates increase, the value of our mortgage assets decreases and as
      interest rates decrease, the value of such investments will increase. In
      general, we would expect however that, over time, decreases in the value of
      our
      portfolio attributable to interest rate changes will be offset, to the degree
      we
      are hedged, by increases in value of our interest rate swaps, and vice versa.
      However, the relationship between spreads on securities and spreads on swaps
      may
      vary from time to time, resulting in a net aggregate book value increase or
      decline. Unless there is a material impairment in value that would result in
      a
      payment not being received on a security or loan, changes in the book value
      of
      our portfolio will not directly affect our recurring earnings or our ability
      to
      make a distribution to our stockholders.




43




***Market
      (Fair Value) Risk***




Changes
      in interest rates also expose us to market risk that the market (fair) value
      on
      our assets may decline. For certain of the financial instruments that we own,
      fair values will not be readily available since there are no active trading
      markets for these instruments as characterized by current exchanges between
      willing parties. Accordingly, fair values can only be derived or estimated
      for
      these investments using various valuation techniques, such as computing the
      present value of estimated future cash flows using discount rates commensurate
      with the risks involved. However, the determination of estimated future cash
      flows is inherently subjective and imprecise. Minor changes in assumptions
      or
      estimation methodologies can have a material effect on these derived or
      estimated fair values. These estimates and assumptions are indicative of the
      interest rate environments as of June 30, 2008, and do not take into
      consideration the effects of subsequent interest rate fluctuations.




We
      note
      that the values of our investments in mortgage-backed securities and in
      derivative instruments, primarily interest rate hedges on our debt, will be
      sensitive to changes in market interest rates, interest rate spreads, credit
      spreads and other market factors. The value of these investments can vary and
      has varied materially from period to period. Historically, the values of our
      mortgage loan portfolio have tended to vary inversely with those of its
      derivative instruments.





The
      following table presents the Company’s financial instruments carried at fair
      value as of June 30, 2008, on the condensed consolidated balance sheet by the
      applicable FAS No. 157 valuation hierarchy.




**Fair
                Value at June 30, 2008***(In
                Thousands)*
            
            **Level 1**
            
            **Level 2**
            
            **Level 3**
            
            **Total**Assets:Investment
                securities - available for sale
            
            $
            —
            
            $
            499,404
            
            $
            —
            
            $
            499,404Mortgage
                loans held for sale (net)
            
            
            —
            
            
            —
            
            
            6,200
            
            
            6,200Interest
                Rate Caps
            
            
            —
            
            
            355
            
            
            —
            
            
            355Interest
                Rate Swaps
            
            
            —
            
            
            2,085
            
            
            —
            
            
            2,085Total
                assets carried at fair value
            
            $
            —
            
            $
            501,844
            
            $
            6,200
            
            $
            508,044





The
      fair
      value of our mortgage loans held for sale (net) decreased by $0.4 million during
      the period that commenced on January 1, 2008 and ended on June 30, 2008. This
      decrease in fair value of our mortgage loans held for sale (net) is included
      in
      loan loss in our discontinued operations.




Any
      changes to the valuation methodology are reviewed by management to ensure the
      changes are appropriate. There has been no change in valuation
      methodology since the previous period.  As markets and products develop and
      the pricing for certain products becomes more transparent, the Company continues
      to refine its valuation methodologies.  The methods described above
      may produce a fair value calculation that may not be indicative of net
      realizable value or reflective of future fair values.  Furthermore,
      while the Company believes its valuation methods are appropriate and consistent
      with other market participants, the use of different methodologies or
      assumptions to determine the fair value of certain financial instruments could
      result in a different estimate of fair value at the reporting
      date.  The Company uses inputs that are current as of the measurement
      date, which may include periods of market dislocation, during which price
      transparency may be reduced.  This condition could cause the Company’s
      financial instruments to be reclassified from Level 2 to Level 3 in the
      future.





The
      market risk management discussion and the amounts estimated from the analysis
      that follows are forward-looking statements that assume that certain market
      conditions occur. Actual results may differ materially from these projected
      results due to changes in our portfolio assets and borrowings mix and due to
      developments in the domestic and global financial and real estate markets.
      Developments in the financial markets include the likelihood of changing
      interest rates and the relationship of various interest rates and their impact
      on our portfolio yield, cost of funds and cash flows. The analytical methods
      that we use to assess and mitigate these market risks should not be considered
      projections of future events or operating performance.




44




As
      a
      financial institution that has only invested in U.S.-dollar denominated
      instruments, primarily residential mortgage instruments, and has only borrowed
      money in the domestic market, we are not subject to foreign currency exchange
      or
      commodity price risk. Rather, our market risk exposure is largely due to
      interest rate risk. Interest rate risk impacts our interest income, interest
      expense and the market value on a large portion of our assets and
      liabilities. In managing interest rate risk, we attempt to maximize
      earnings and to preserve capital by minimizing the negative impacts of changing
      market rates, asset and liability mix, and prepayment activity.




The
      table
      below presents the sensitivity of the market value changes of our portfolio
      using a discounted cash flow simulation model. Application of this method
      results in an estimation of the fair market value change of our assets,
      liabilities and hedging instruments per 100 basis point (“bp”) shift in interest
      rates, as well as this same value expressed in years - a measure commonly
      referred to as duration. Positive portfolio duration indicates that the market
      value of the total portfolio will decline if interest rates rise and increase
      if
      interest rates decline. The closer duration is to zero, the less interest rate
      changes are expected to affect earnings.





The
      use
      of hedging instruments is a critical part of our interest rate risk management
      strategies, and the effects of these hedging instruments on the market value
      of
      the portfolio are reflected in the model's output. This analysis also takes
      into
      consideration the value of options embedded in our mortgage assets including
      constraints on the re-pricing of the interest rate of assets resulting from
      periodic and lifetime cap features, as well as prepayment options. Assets and
      liabilities that are not interest rate-sensitive such as cash, payment
      receivables, prepaid expenses, payables and accrued expenses are
      excluded.




Changes
      in assumptions including, but not limited to, volatility, mortgage and financing
      spreads, prepayment behavior, defaults, as well as the timing and level of
      interest rate changes will affect the results of the model. Therefore, actual
      results are likely to vary from modeled results.





**Market Value Changes****Changes
                in**
              **Interest
                Rates**
            
            **Changes
                in**
              **Market
                Value**
            
            **Net**
              **Duration**(Basis
                Points)
            
            (Dollar
                amounts in thousands)
            
            (Years)+200
            
            (23,953)
            
            0.97+100
            
            (10,740)
            
            0.40**Base**
            
            **—**
            
            **0.19**-100
            
            6,715
            
            (0.14)




It
      should
      be noted that the model is used as a tool to identify potential risk in a
      changing interest rate environment but does not include any changes in portfolio
      composition, financing strategies, market spreads or changes in overall market
      liquidity.




Based
      on
      the assumptions used, the model output suggests a very low degree of portfolio
      price change given increases in interest rates, which implies that our cash
      flow
      and earning characteristics should be relatively stable for comparable changes
      in interest rates.




Although
      market value sensitivity analysis is widely accepted in identifying interest
      rate risk, it does not take into consideration changes that may occur such
      as,
      but not limited to, changes in investment and financing strategies, changes
      in
      market spreads and changes in business volumes. Accordingly, we make extensive
      use of an earnings simulation model to further analyze our level of interest
      rate risk.




There
      are
      a number of key assumptions in our earnings simulation model. These key
      assumptions include changes in market conditions that affect interest rates,
      the
      pricing of ARM products, the availability of investment assets and the
      availability and the cost of financing for portfolio assets. Other key
      assumptions made in using the simulation model include prepayment speeds and
      management's investment, financing and hedging strategies, and the issuance
      of
      new equity. We typically run the simulation model under a variety of
      hypothetical business scenarios that may include different interest rate
      scenarios, different investment strategies, different prepayment possibilities
      and other scenarios that provide us with a range of possible earnings outcomes
      in order to assess potential interest rate risk. The assumptions used represent
      our estimate of the likely effect of changes in interest rates and do not
      necessarily reflect actual results. The earnings simulation model takes into
      account periodic and lifetime caps embedded in our assets in determining the
      earnings at risk.




45




***Credit
      Spread Risk***




The
      mortgage-backed securities we currently, and will in the future, own are also
      subject to spread risk. The majority of these securities will be adjustable-rate
      securities that are valued based on a market credit spread to U.S. Treasury
      security yields. In other words, their value is dependent on the yield demanded
      on such securities by the market based on their credit relative to U.S. Treasury
      securities. Excessive supply of such securities combined with reduced demand
      will generally cause the market to require a higher yield on such securities,
      resulting in the use of a higher or wider spread over the benchmark rate
      (usually the applicable U.S. Treasury security yield) to value such securities.
      Under such conditions, the value of our securities portfolio would tend to
      decline. Conversely, if the spread used to value such securities were to
      decrease or tighten, the value of our securities portfolio would tend to
      increase. Such changes in the market value of our portfolio may affect our
      net
      equity, net income or cash flow directly through their impact on unrealized
      gains or losses on available-for-sale securities, and therefore our ability
      to
      realize gains on such securities, or indirectly through their impact on our
      ability to borrow and access capital.




Furthermore,
      shifts in the U.S. Treasury yield curve, which represents the market's
      expectations of future interest rates, would also affect the yield required
      on
      our securities and therefore their value. These shifts, or a change in spreads,
      would have a similar effect on our portfolio, financial position and results
      of
      operations.




***Liquidity
      and Funding Risk***




Liquidity
      is a measure of our ability to meet potential cash requirements, including
      ongoing commitments to repay borrowings, meet margin requirements, fund and
      maintain investments, pay dividends to our stockholders and meet other general
      business needs. We recognize the need to have funds available for our operating.
      It is our policy to have adequate liquidity at all times. We plan to meet
      liquidity through normal operations with the goal of avoiding unplanned sales
      of
      assets or emergency borrowing of funds.





As
      it
      relates to our investment portfolio, derivative financial instruments we use
      also subject us to “margin call” risk based on their market values. Under our
      interest rate swaps, we pay a fixed rate to the counterparties while they pay
      us
      a floating rate. When floating rates are low, on a net basis we pay the
      counterparty and visa-versa. In a declining interest rate environment, we would
      be subject to additional exposure for cash margin calls due to accelerating
      prepayments of mortgage assets. However, the asset side of the balance sheet
      should increase in value in a further declining interest rate scenario. Most
      of
      our interest rate swap agreements provide for a bi-lateral posting of margin,
      the effect being that either swap party must post margin, depending on the
      change in value of the swap over time. Unlike typical unilateral posting of
      margin only in the direction of the swap counterparty, this provides us with
      additional flexibility in meeting our liquidity requirements as we can call
      margin on our counterparty as swap values increase.





Incoming
      cash on our mortgage loans and securities is a principal source of cash. The
      volume of cash depends on, among other things, interest rates. The volume and
      quality of such incoming cash flows can be impacted by severe and immediate
      changes in interest rates. If rates increase dramatically, our short-term
      funding costs will increase quickly. While many of our Agency securities are
      hybrid ARMs, they typically will not reset as quickly as our funding costs
      creating a reduction in incoming cash flow. Our derivative financial instruments
      are used to mitigate the effect of interest rate volatility.




We
      manage
      liquidity to ensure that we have the continuing ability to maintain cash flows
      that are adequate to meet commitments on a timely and cost-effective basis.
      Our
      principal sources of liquidity are the repurchase agreement market, the issuance
      of CDOs, loan warehouse facilities, principal and interest payments from
      portfolio assets and, when market conditions permit, the issuance of common
      or
      preferred equity.




***Prepayment
      Risk***




When
      borrowers repay the principal on their mortgage loans before maturity or faster
      than their scheduled amortization, the effect is to shorten the period over
      which interest is earned, and therefore, reduce the cash flow and yield on
      our
      ARM assets. Furthermore, prepayment speeds exceeding or lower than our
      reasonable estimates for similar assets, impact the effectiveness of any hedges
      we have in place to mitigate financing and/or fair value risk. Generally, when
      market interest rates decline, borrowers have a tendency to refinance their
      mortgages. The higher the interest rate a borrower currently has on his or
      her
      mortgage the more incentive he or she has to refinance the mortgage when rates
      decline. Additionally, when a borrower has a low loan-to-value ratio, he or
      she
      is more likely to do a “cash-out” refinance. Each of these factors increases the
      chance for higher prepayment speeds during the term of the loan.




46




We
      mitigate prepayment risk by constantly evaluating our ARM portfolio at a range
      of reasonable market prepayment speeds observed at the time for assets with
      a
      similar structure, quality and characteristics. In addition, we utilize
      prepayment models to assist in evaluating our hedging strategy.




For
      the
      three months ended June 30, 2008, our mortgage assets paid down at an
      approximate average annualized constant paydown rate (“CPR”) of 14%, compared to
      21% for the comparable period in 2007 and 15% for the quarter ended December
      31,
      2007. When prepayment experience increases, we have to amortize our premiums
      over a shorter time period, resulting in a reduced yield to maturity on our
      ARM
      assets. Conversely, if actual prepayment experience decreases, we would amortize
      the premium over a longer time period, resulting in a higher yield to maturity.
      We monitor our prepayment experience on a monthly basis and adjust the
      amortization of the net premium, as appropriate.





***Credit
      Risk***





Credit
      risk is the risk that we will not fully collect the principal we have invested
      in our MBS or mortgage loans held in securitization trusts. The Company
      minimizes the principal risk related to MBS securities by focusing its
      investment strategy on Agency MBS as well as the highest rated securities for
      non-Agency securities. As of June 30, 2008 the Company had $499.4 million in
      MBS
      securities of which 94.7% were Agency MBS and 5.2% were rated AAA.




With
      regard to loans included in our securitization trusts, factors such as FICO
      score, LTV, debt-to-income ratio, and other borrower and collateral factors
      were
      evaluated. Credit enhancement features, such as mortgage insurance were
      also factored into the credit decision. In some instances, when the borrower
      exhibited strong compensating factors, exceptions to the underwriting
      guidelines were approved.




Our
      mortgage loans held in securitization trusts are concentrated in geographic
      markets that are generally supply constrained. We believe that these markets
      have less exposure to sudden declines in housing values than those markets
      which
      have an oversupply of housing.





**Item
      4. Controls and Procedures**




*Evaluation
      of Disclosure Controls and Procedures* - We
      maintain disclosure controls and procedures that are designed to ensure that
      information required to be disclosed in the reports that we file or submit
      under
      the Securities Exchange Act of 1934, as amended, is recorded, processed,
      summarized and reported within the time periods specified in the rules and
      forms
      of the SEC, and that such information is accumulated and communicated to our
      management as appropriate to allow timely decisions regarding required
      disclosures. An evaluation was performed under the supervision and with the
      participation of our management, including our Co-Chief Executive Officers
      and
      our Chief Financial Officer, of the effectiveness of our disclosure controls
      and
      procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
      Exchange Act of 1934, as amended) as of June 30, 2008. Based upon that
      evaluation, our management, including our Co-Chief Executive Officers and our
      Chief Financial Officer, concluded that our disclosure controls and procedures
      were effective as of June 30, 2008.




*Changes
      in Internal Control over Financial Reporting* –
      There has been no change in our internal control over financial reporting during
      the quarter ended June 30, 2008 that has materially affected, or is reasonably
      likely to materially affect, our internal control over financial
      reporting.




47




**PART
      II: OTHER INFORMATION**





**Item
      1.** ******Legal Proceedings.**


As
        previously disclosed in our Annual Report on Form 10-K for the year ended
        December 31, 2007, Steven B. Yang and Christopher Daubiere (“Plaintiffs”), filed
        suit in the United States District Court for the Southern District of New
        York
        against HC and us on December 13, 2006, alleging that we failed to pay them,
        and
        similarly situated employees, overtime in violation of the Fair Labor Standards
        Act (“FLSA”) and New York State law.  The Plaintiffs, each of whom were
        former employees in our discontinued mortgage lending business, purported
        to
        bring a FLSA “collective action” on behalf of similarly situated loan officers
        in our now discontinued mortgage lending business and sought unspecified
        amounts
        for alleged unpaid overtime wages, liquidated damages, attorney’s fees and
        costs.
 
 On
        December 30, 2007 we entered into an agreement in principle with the Plaintiffs
        to settle this suit. On June 2, 2008, the court granted a preliminary approval
        of settlement and authorized notification to plaintiffs and set a fairness
        hearing for September 18, 2008. As part of the preliminary settlement, we
        funded
        the settlement in the amount of $1.4 million into an escrow account for the
        Plaintiffs. The amount was previously reserved and expensed in the year ended
        December 31, 2007.





**Item
      1A. Risk Factors**




We
      previously disclosed risk factors under "Item 1A. Risk Factors" in our Annual
      Report on Form 10-K for the year ended December 31, 2007 and Part II. "Item
      1A.
      Risk Factors " in our Quarterly Report on Form 10-Q for the three months ended
      March 31, 2008. In addition to those risk factors and the other information
      included elsewhere in this report, you should also carefully consider the risk
      factor discussed below. The risks described below and in our Annual Report
      on
      Form 10-K for the year ended December 31, 2007 and our Quarterly Report on
      Form
      10-Q for the three months ended March 31, 2008 are not the only risks facing
      our
      company. Additional risks and uncertainties not currently known to us or that
      we
      deem to be immaterial also may materially adversely affect our business,
      financial condition and/or results of operations.





***Since
      we invest in Agency MBS********that
      are guaranteed by Fannie Mae and Freddie Mac, we are subject to the risk that
      these U.S. Government-sponsored entities may not be able to fully satisfy their
      guarantee obligations, which may adversely affect the value of our investment
      portfolio and our ability to sell or finance these
      securities.***********




The
      payments we receive on the Agency MBS in which we invest are guaranteed by
      Fannie Mae or Freddie Mac. Unlike the securities issued by Ginnie Mae, the
      principal and interest on securities issued by Fannie Mae and Freddie Mac are
      not guaranteed by the U.S. Government. The recent economic challenges in the
      residential mortgage market have affected the financial results of Fannie Mae
      and Freddie Mac. For the year ended December 31, 2007 and the six months
      ended June 30, 2008, both Fannie Mae and Freddie Mac reported substantial losses
      and have reported significant difficulties stemming from current market
      disruptions. Fannie Mae recently stated that it expects losses on guarantees
      of
      agency securities to continue and expects significant increases in
      credit-related expenses and credit losses through 2008. Freddie Mac has warned
      that it may not have enough capital to cover its mandatory reserves for mortgage
      commitments. If Fannie Mae and Freddie Mac continue to suffer significant
      losses, their ability to honor their respective Agency securities guarantees
      may
      be adversely affected. Further, any actual or perceived financial challenges
      at
      either Fannie Mae or Freddie Mac could cause rating agencies to downgrade the
      corporate credit ratings of Fannie Mae or Freddie Mac. Moody’s Investor
      Services, or Moody’s, Bank Financial Strength Rating, or BFSR, measures the
      likelihood that a financial institution will require financial assistance.
      In
      May 2008, Moody’s downgraded Freddie Mac’s A- BFSR to B+ and downgraded Fannie
      Mae’s B+ BFSR to B. On July 13, 2008, in connection with increased market
      uncertainty regarding Fannie Mae and Freddie Mac, the U.S. Department of the
      Treasury announced a proposal to make substantial equity investments in, and
      extend the lines of credit available to, Fannie Mae and Freddie Mac. In a
      separate announcement on the same day, the Federal Reserve indicated it would
      make one of its short-term lending programs available to each of Fannie Mae
      and
      Freddie Mac. Any failure to honor guarantees on agency securities by Fannie
      Mae
      or Freddie Mac or any downgrade of securities issued by Fannie Mae or Freddie
      Mac by the Rating Agencies could cause a significant decline in the cash flow
      from, and the value of, any Agency MBS we may own, and we may then be unable
      to
      sell or finance Agency MBS on favorable terms or at all.




48





**Item
      4. Submission of Matters to a Vote of Security Holders**





The
      Company held its 2008 annual meeting of stockholders on June 12, 2008. The
      following are the matters considered and voted upon at the annual
      meeting:





***Election
      of Directors***





**Name**
            
            **Term Expires**
            
            **Number of Shares For**
            
            **Number of Shares Withheld**Steven
                  M. Abreu
            
            
            2009
            
            
            20,102,351
            
            
            88,583David
                A. Akre
            
            
            2009
            
            
            20,026,882
            
            
            164,052David
                R. Bock
            
            
            2009
            
            
            20,103,390
            
            
            87,544James
                J. Fowler
            
            
            2009
            
            
            20,102,276
            
            
            88,658Alan
                L. Hainey
            
            
            2009
            
            
            20,103,230
            
            
            87,704Steven
                R. Mumma
            
            
            2009
            
            
            20,027,687
            
            
            163,247Steven
                G. Norcutt
            
            
            2009
            
            
            20,103,398
            
            
            87,536




Stockholders
      also ratified and approved the appointment of Deloitte & Touche LLP as the
      Company's independent registered pubic accounting firm for the fiscal year
      ending December 31, 2008: 18,669,262 shares voted in favor; 16,589 shares
      voted against and 4,958 shares abstained.





**Item
      6. Exhibits**




The
      information set forth under “Exhibit Index” below is incorporated herein by
      reference.




49




**SIGNATURES**




Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.




NEW
                YORK MORTGAGE TRUST, INC.Date:
                August 11, 2008
            By:
            /s/ David
                A. AkreDavid
                A. Akre
              Co-Chief
                Executive Officer




Date:
                August 11, 2008
            By:
            /s/
                Steven R. MummaSteven
                R. Mumma
              Chief
                Financial Officer




50





**EXHIBIT
      INDEX**


**No.**
              
              **Description**3.1(a)
              
              Articles
                  of Amendment and Restatement of the Registrant (incorporated by
                  reference
                  to Exhibit 3.01 to our Registration Statement on Form S-11/A filed
                  on
                  June 18, 2004 (Registration No. 333-111668)).3.1(b)
              
              Articles
                  of Amendment of the Registrant (incorporated by reference to Exhibit
                  3.1
                  to our Current Report on Form 8-K filed on October 4,
                  2007.)3.1(c)
              
              Articles
                  of Amendment of the Registrant (incorporated by reference to Exhibit
                  3.2
                  to our Current Report on Form 8-K filed on October 4,
                  2007.)3.1(d)
              
              Articles
                  of Amendment of the Registrant (incorporated by reference to Exhibit
                  3.1(d) to our Current Report on Form 8-K filed on May 16,
                  2008.)3.1(e)
              
              Articles
                  of Amendment of the Registrant (incorporated by reference to Exhibit
                  3.1(e) to our Current Report on Form 8-K filed on May 16,
                  2008.)3.2(a)
              
              Bylaws
                  of the Registrant (incorporated by reference to Exhibit 3.02 to
                  our
                  Registration Statement on Form S-11/ A filed on June 18, 2004
                  (Registration No. 333-111668)).3.2(b)
              
              Amendment
                  No. 1 to Bylaws of Registrant (incorporated by reference to Exhibit
                  3.2(b)
                  to Registrant's Annual Report on Form 10-K filed on March 16,
                  2006)4.1
              
              Form
                  of Common Stock Certificate (incorporated by reference to Exhibit
                  4.01 to
                  our Registration Statement on Form S-11/ A filed on June 18, 2004
                  (Registration No. 333-111668)).4.2(a)
              
              Junior
                  Subordinated Indenture between The New York Mortgage Company, LLC
                  and
                  JPMorgan Chase Bank, National Association, as trustee, dated
                  September 1, 2005 (incorporated by reference to Exhibit 4.1 to our
                  Current Report on Form 8-K filed on September 6,
                  2005).4.2(b)
              
              Amended
                  and Restated Trust Agreement among The New York Mortgage Company,
                  LLC,
                  JPMorgan Chase Bank, National Association, Chase Bank USA, National
                  Association and the Administrative Trustees named therein, dated
                  September 1, 2005 (incorporated by reference to Exhibit 4.2 to our
                  Current Report on Form 8-K filed on September 6,
                  2005).4.3(a)
              
              Articles
                  Supplementary Establishing and Fixing the Rights and Preferences
                  of
                  Series A Cumulative Redeemable Convertible Preferred Stock of the
                  Company (Incorporated by reference to Exhibit 4.1 to the Company’s
                  Current Report on Form 8-K filed on January 25, 2008).4.3(b)
              
              Form
                  of Series A Cumulative Redeemable Convertible Preferred Stock Certificate
                  (Incorporated by reference to Exhibit 4.2 to the Company’s Current Report
                  on Form 8-K filed on January 25, 2008).31.1
              
              Certification
                  of Co-Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)
                  of the
                  Securities Exchange Act of 1934, as adopted pursuant to Section
                  302 of the
                  Sarbanes-Oxley Act of 2002.*31.2
              
              Certification
                  of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)
                  of the
                  Securities Exchange Act of 1934, as adopted pursuant to Section
                  302 of the
                  Sarbanes-Oxley Act of 2002.*32.1
              
              Certification
                  of Co-Chief Executive Officer pursuant to 18 U.S.C. Section 1350,
                  as
                  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002.*32.2
              
              Certification
                  of Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
                  as adopted
                  pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002.*




*
            Filed
                herewith




51