**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-Q**








þ           **QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF**


**THE
      SECURITIES EXCHANGE ACT OF 1934**





**For
      the quarterly period ended September 30, 2007**





 ̈           **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: 001-32171**





**Bimini
      Capital Management, Inc.**


**(Exact
      name of registrant as specified in its charter)**





**Maryland**
            
            **72-1571637****(State
                or other jurisdiction of**
              **incorporation
                or organization)**
            
            **(I.R.S.
                Employer**
              **Identification
                No.)**





**3305
      Flamingo Drive, Vero Beach, Florida 32963**


**(Address
      of principal executive offices) (Zip Code)**





**(772)
      231-1400**


**(Registrant’s
      telephone number, including area code)**








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





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





Large
                accelerated filer  ̈
            
            Accelerated
                filer þ
            
            Non-accelerated
                filer  ̈





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





As
      of
      November****7, 2007, the number of shares outstanding of the
      registrant’s Class A Common Stock, $0.001****par value, was
      24,814,673**;** the number of shares outstanding of the
      registrant’s Class B Common Stock**,**$0.001 par value, was
      319,388; and the number of shares outstanding of the registrant’s Class C Common
      Stock, $0.001 par value, was 319,388.

















**BIMINI
      CAPITAL MANAGEMENT, INC.**





**INDEX**




PART
                  I. FINANCIAL INFORMATION
              3ITEM
                  1.   FINANCIAL STATEMENTS.
              3Consolidated
                  Balance Sheets as of September 30, 2007 (unaudited) and December
                  31,
                  2006
              3Consolidated
                  Statements of Operations for the nine and three months ended September
                  30,
                  2007 and 2006
                (unaudited)
              4Consolidated
                  Statement of Stockholders’ Equity for the nine months ended September 30,
                  2007 (unaudited)
              6Consolidated
                  Statements of Cash Flows for the nine months ended September 30,
                  2007 and
                  2006
                (unaudited)
              7Notes
                  to Consolidated Financial Statements (unaudited)
              9ITEM
                  2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF
                OPERATIONS.
              37ITEM
                  3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
                  MARKET RISK.
              52ITEM
                  4.    CONTROLS AND PROCEDURES.
              52PART
                  II. OTHER INFORMATIONITEM
                  1.    LEGAL PROCEEDINGS.
              53ITEM
                  1A. RISK FACTORS.
              53ITEM
                  6.    EXHIBITS.
              67
  
 **PART
        I. FINANCIAL INFORMATION**


**ITEM
      1. FINANCIAL STATEMENTS.**


**BIMINI
                CAPITAL MANAGEMENT, INC.****CONSOLIDATED
                BALANCE SHEETS****(Unaudited)**ASSETS
            
            **September 30, 2007**
            
            
            **December
                31, 2006**MORTGAGE-BACKED
                SECURITIES:Available-for-Sale,
                pledged to counterparties, at fair value
            
            $
            706,142,008
            
            
            $
            2,803,019,180Held
                for Trading, pledged to counterparties, at fair value
            
            
            545,857,683
            
            
            
            -Unpledged,
                at fair value
            
            
            1,894,116
            
            
            
            5,714,860TOTAL
                MORTGAGE BACKED SECURITIES
            
            
            1,253,893,807
            
            
            
            2,808,734,040Cash
                and cash equivalents
            
            
            24,873,520
            
            
            
            82,751,795Restricted
                cash
            
            
            35,300,000
            
            
            
            -Principal
                payments receivable
            
            
            141,963
            
            
            
            12,209,825Accrued
                interest receivable
            
            
            7,417,094
            
            
            
            14,072,078Property
                and equipment, net
            
            
            4,220,905
            
            
            
            4,372,997Prepaids
                and other assets
            
            
            6,540,105
            
            
            
            6,168,736Assets
                held for sale
            
            
            100,480,950
            
            
            
            1,009,324,465TOTAL
                ASSETS
            
            $
            1,432,868,344
            
            
            $
            3,937,633,936LIABILITIES
                AND STOCKHOLDERS' EQUITYLIABILITIES:Repurchase
                agreements
            
            $
            1,211,487,000
            
            
            $
            2,741,679,650Junior
                subordinated notes due to Bimini Capital Trust I & II
            
            
            103,097,000
            
            
            
            103,097,000Accrued
                interest payable
            
            
            7,782,597
            
            
            
            17,776,464Unsettled
                security transactions
            
            
            34,284,695
            
            
            
            -Dividends
                payable
            
            
            -
            
            
            
            1,266,937Accounts
                payable, accrued expenses and other
            
            
            569,508
            
            
            
            692,469Minority
                interest in consolidated subsidiary
            
            
            -
            
            
            
            770,563Liabilities
                related to assets held for sale
            
            
            50,891,355
            
            
            
            879,916,024TOTAL
                LIABILITIES
            
            
            1,408,112,155
            
            
            
            3,745,199,107STOCKHOLDERS'
                EQUITY:Preferred
                Stock, $0.001 par value;  10,000,000 shares authorized;
                designated 1,800,000 Class A Redeemable and 2,000,000 Class B Redeemable;
                no shares issued and outstanding as of September 30, 2007 and December
                31,
                2006
            
            
            -
            
            
            
            -Class
                A Common Stock, $0.001 par value; 98,000,000 shares designated:
                24,764,545****shares issued and outstanding as of
                September 30, 2007 and 24,515,717 shares issued and outstanding as
                of
                December 31, 2006
            
            
            24,765
            
            
            
            24,516Class
                B Common Stock, $0.001 par value; 1,000,000 shares designated, 319,388
                shares issued and outstanding as of September 30, 2007 and December
                31,
                2006
            
            
            319
            
            
            
            319Class
                C Common Stock, $0.001 par value; 1,000,000 shares designated, 319,388
                shares issued and outstanding as of September 30, 2007 and December
                31,
                2006
            
            
            319
            
            
            
            319Additional
                paid-in capital
            
            
            337,722,247
            
            
            
            335,646,460Accumulated
                other comprehensive loss
            
            
            -
            
            
            
            (76,773,610
            )Accumulated
                deficit
            
            
            (312,991,461
            )
            
            
            (66,463,175
            )TOTAL
                STOCKHOLDERS' EQUITY
            
            
            24,756,189
            
            
            
            192,434,829TOTAL
                LIABILITIES AND STOCKHOLDERS’ EQUITY
            
            $
            1,432,868,344
            
            
            $
            3,937,633,936See
                notes to consolidated financial statements.





**BIMINI
                CAPITAL MANAGEMENT, INC.****CONSOLIDATED
                STATEMENTS OF OPERATIONS****(Unaudited)****Nine
                Months Ended**
            
            
            **Three
                Months Ended****September
                30, 2007**
            
            
            **September
                30, 2006**
            
            
            **September
                30, 2007**
            
            
            **September
                30, 2006**Interest
                income, net of amortization of premium and discount
            
            $
            90,793,422
            
            
            $
            137,871,403
            
            
            $
            24,634,854
            
            
            $
            43,050,539Interest
                expense
            
            
            (98,557,333
            )
            
            
            (127,619,461
            )
            
            
            (23,233,893
            )
            
            
            (44,917,360
            )NET
                INTEREST INCOME  (EXPENSE)
            
            
            (7,763,911
            )
            
            
            10,251,942
            
            
            
            1,400,961
            
            
            
            (1,866,821
            )FAIR
                VALUE ADJUSTMENT-AVAILABLE-FOR-SALE SECURITIES
            
            
            (1,707,840
            )
            
            
            -
            
            
            
            (1,707,840
            )
            
            
            -FAIR
                VALUE ADJUSTMENT-HELD FOR TRADING SECURITIES
            
            
            282,089
            
            
            
            -
            
            
            
            282,089
            
            
            
            -REALIZED
                LOSS ON SALE OF MORTGAGE-BACKED SECURITIES
            
            
            (20,492,779
            )
            
            
            -
            
            
            
            (1,104,402
            )
            
            
            -OTHER
                EXPENSE, NET
            
            
            -
            
            
            
            (95,155
            )
            
            
            -
            
            
            
            (165,721
            )OTHER-THAN-TEMPORARY
                LOSS ON MORTGAGE-BACKED SECURITIES
            
            
            (55,250,278
            )
            
            
            -
            
            
            
            -
            
            
            
            -TOTAL
                NET REVENUES (DEFICIENCY OF REVENUES)
            
            
            (84,932,719
            )
            
            
            10,156,787
            
            
            
            (1,129,192
            )
            
            
            (2,032,542
            )DIRECT
                REIT OPERATING EXPENSES
            
            
            632,709
            
            
            
            742,376
            
            
            
            181,007
            
            
            
            196,552GENERAL
                AND ADMINISTRATIVE EXPENSES:Compensation
                and related benefits
            
            
            3,562,711
            
            
            
            4,867,274
            
            
            
            1,218,881
            
            
            
            1,296,758Directors’
                fees and liability insurance
            
            
            581,608
            
            
            
            630,069
            
            
            
            197,634
            
            
            
            210,035Audit,
                legal and other professional fees
            
            
            1,004,987
            
            
            
            890,202
            
            
            
            323,761
            
            
            
            213,901Other
                administrative expenses
            
            
            507,811
            
            
            
            646,706
            
            
            
            174,634
            
            
            
            156,204TOTAL
                GENERAL AND ADMINISTRATIVE EXPENSES
            
            
            5,657,117
            
            
            
            7,034,251
            
            
            
            1,914,910
            
            
            
            1,876,898TOTAL
                EXPENSES
            
            
            6,289,826
            
            
            
            7,776,627
            
            
            
            2,095,917
            
            
            
            2,073,450INCOME
                (LOSS) FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST
            
            
            (91,222,545
            )
            
            
            2,380,160
            
            
            
            (3,225,109
            )
            
            
            (4,105,992
            )MINORITY
                INTEREST IN CONSOLIDATED SUBSIDIARY
            
            
            770,563
            
            
            
            -
            
            
            
            -
            
            
            
            -INCOME
                (LOSS) FROM CONTINUING OPERATIONS
            
            
            (90,451,982
            )
            
            
            2,380,160
            
            
            
            (3,225,109
            )
            
            
            (4,105,992
            )DISCONTINUED
                OPERATIONS (see Note 11**)**:Loss
                from discontinued operations, net of tax
            
            
            (148,451,063
            )
            
            
            (18,003,022
            )
            
            ****
            (5,609,698
            )
            
            
            (2,149,703
            )Gain(loss)
                on sale and disposal of assets of discontinued operations, net of
                tax
            
            
            (6,357,596
            )
            
            
            -
            
            
            
            4,111,607
            
            
            
            -TOTAL
                LOSS FROM DISCONTINUTED OPERATIONS, NET OF TAX
            
            
            (154,808,659
            )
            
            
            (18,003,022
            )
            
            
            (1,498,091
            )
            
            
            (2,149,703
            )NET
                LOSS
            
            $
            (245,260,641
            )
            
            $
            (15,622,862
            )
            
            $
            (4,723,200
            )
            
            $
            (6,255,695
            )












**BIMINI
                CAPITAL MANAGEMENT, INC.**
              **CONSOLIDATED
                STATEMENTS OF OPERATIONS (continued)**
              **(Unaudited)****Nine
                Months Ended**
            
            
            **Three
                Months Ended****September
                30, 2007**
            
            
            **September
                30, 2006**
            
            
            **September
                30, 2007**
            
            
            **September
                30, 2006**BASIC
                AND DILUTED NET INCOME (LOSS) PER SHARE OF:CLASS
                A COMMON STOCKContinuing
                operations
            
            $
            (3.63
            )
            
            $
            0.10
            
            
            $
            (0.13
            )
            
            $
            (0.16
            )Discontinued
                operations
            
            
            (6.21
            )
            
            
            (0.73
            )
            
            
            (0.06
            )
            
            
            (0.09
            )Total
                basic and diluted net (loss) per Class A share
            
            $
            (9.84
            )
            
            $
            (0.63
            )
            
            $
            (0.19
            )
            
            $
            (0.25
            )CLASS
                B COMMON STOCKContinuing
                operations
            
            $
            (3.61
            )
            
            $
            0.10
            
            
            $
            (0.13
            )
            
            $
            (0.16
            )Discontinued
                operations
            
            
            (6.18
            )
            
            
            (0.73
            )
            
            
            (0.06
            )
            
            
            (0.09
            )Total
                basic and diluted net (loss) per Class B share
            
            $
            (9.79
            )
            
            $
            (0.63
            )
            
            $
            (0.19
            )
            
            $
            (0.25
            )WEIGHTED
                AVERAGE SHARES OUTSTANDING USED IN COMPUTING BASIC AND DILUTED PER
                SHARE
                AMOUNTS:Class
                A Common Stock
            
            
            24,600,795
            
            
            
            24,644,020
            
            
            
            24,690,089
            
            
            
            24,376,375Class
                B Common Stock
            
            
            319,388
            
            
            
            319,388
            
            
            
            319,388
            
            
            
            319,388CASH
                DIVIDENDS DECLARED PER SHARE OF:CLASS
                A COMMON STOCK
            
            $
            0.05
            
            
            $
            0.41
            
            
            $
            -
            
            
            $
            0.05CLASS
                B COMMON STOCK
            
            $
            0.05
            
            
            $
            0.41
            
            
            $
            -
            
            
            $
            0.05See
                notes to consolidated financial statements.











**BIMINI
                CAPITAL MANAGEMENT, INC.**
              **CONSOLIDATED
                STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited)**
              **Nine
                Months Ended**
              **September
                30, 2007**Common
                Stock,
              Amounts
                at par value
            
            
            Additional
                Paid-in
            
            
            Accumulated
                Other Comprehensive
            
            
            AccumulatedClass
                A
            
            
            Class
                B
            
            
            Class
                C
            
            
            Capital
            
            
            Loss
            
            
            Deficit
            
            
            TotalBalances,
                December 31, 2006
            
            $
            24,516
            
            
            $
            319
            
            
            $
            319
            
            
            $
            335,646,460
            
            
            $
            (76,773,610
            )
            
            $
            (66,463,175
            )
            
            $
            192,434,829Issuance
                of Class A Common Stock for board compensation and equity plan share
                exercises, net
            
            
            249
            
            
            
            -
            
            
            
            -
            
            
            
            129,934
            
            
            
            -
            
            
            
            -
            
            
            
            130,183Cash
                dividends declared, March 2007
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (1,267,645
            )
            
            
            (1,267,645
            )Amortization
                of equity plan compensation
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            2,196,682
            
            
            
            -
            
            
            
            -
            
            
            
            2,196,682Equity
                plan shares withheld for statutory minimum withholding
                taxes
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (250,829
            )
            
            
            -
            
            
            
            -
            
            
            
            (250,829
            )Reclassify
                net realized loss on mortgage-backed security sales
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            19,388,377
            
            
            
            -
            
            
            
            19,388,377Net  loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (245,260,641
            )
            
            
            (245,260,641
            )Unrealized
                gain on available-for-sale securities, net
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            2,134,955
            
            
            
            -
            
            
            
            2,134,955Other-than-temporary
                loss on mortgage-backed securities
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            55,250,278
            
            
            
            -
            
            
            
            55,250,278Comprehensive
                loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (168,487,031
            )Balances,
                September 30, 2007
            
            $
            24,765
            
            
            $
            319
            
            
            $
            319
            
            
            $
            337,722,247
            
            
            $
            -
            
            
            $
            (312,991,461
            )
            
            $
            24,756,189See
                notes to consolidated financial statements.










**BIMINI
                CAPITAL MANAGEMENT, INC.****CONSOLIDATED
                STATEMENTS OF CASH FLOWS****(Unaudited)****Nine
                Months Ended****September
                30, 2007**
            
            
            **September
                30, 2006**CASH
                FLOWS FROM OPERATING ACTIVITIES:Income
                (loss) from continuing operations
            
            $
            (90,451,982
            )
            
            $
            2,380,160Adjustments
                to reconcile income (loss) from continuing operations
              to
                net cash provided by (used in) operating activities:Other-than-temporary
                loss on mortgage backed securities
            
            
            55,250,278
            
            
            
            -Amortization
                of premium and discount on mortgage backed securities
            
            
            8,759,452
            
            
            
            (8,939,798
            )Stock
                compensation
            
            
            2,076,036
            
            
            
            2,655,358Depreciation
                and amortization
            
            
            627,044
            
            
            
            562,817Loss
                on sales of mortgage-backed securities
            
            
            20,492,779
            
            
            
            -Fair
                value adjustments, net on mortgage-backed securities
            
            
            1,425,751
            
            
            
            -Changes
                in operating assets and liabilities:Decrease
                in accrued interest receivable
            
            
            6,654,984
            
            
            
            713,042Decrease
                in prepaids and other assets
            
            
            371,367
            
            
            
            2,292,900(Decrease)
                in accrued interest payable
            
            
            (9,993,867
            )
            
            
            (10,156,981
            )(Decrease)
                increase in accounts payable, accrued expenses and other
            
            
            (122,961
            )
            
            
            651,095NET
                CASH USED IN OPERATING ACTIVITIES
            
            
            (4,911,119
            )
            
            
            (9,841,407
            )CASH
                FLOWS FROM INVESTING ACTIVITIES:From
                available-for-sale securities:Purchases
            
            
            (1,140,585,456
            )
            
            
            (706,141,129
            )Sales
            
            
            1,896,831,041
            
            
            
            -Principal
                repayments
            
            
            835,792,555
            
            
            
            1,054,217,682Purchases
                of property and equipment, and other
            
            
            (3,937
            )
            
            
            (754,294
            )NET
                CASH PROVIDED BY INVESTING ACTIVITIES
            
            
            1,592,034,203
            
            
            
            347,322,259CASH
                FLOWS FROM FINANCING ACTIVITIES:(Increase)/decrease
                in restricted cash
            
            
            (35,300,000
            )
            
            
            1,480,000Proceeds
                from repurchase agreements
            
            
            13,167,044,670
            
            
            
            18,264,624,674Principal
                payments on repurchase agreements
            
            
            (14,697,237,320
            )
            
            
            (18,605,483,307
            )Stock
                issuance and other costs
            
            
            -
            
            
            
            (128,384
            )Purchase
                of treasury stock
            
            
            -
            
            
            
            (4,500,327
            )Cash
                dividends paid
            
            
            (2,534,582
            )
            
            
            (8,967,293
            )NET
                CASH USED IN FINANCING ACTIVITIES
            
            
            (1,568,027,232
            )
            
            
            (352,974,637
            )CASH
                FLOWS FROM DISCONTINUED OPERATIONS:Net
                cash provided by (used in) operating activities
            
            
            734,846,245
            
            
            
            (23,073,187
            )Net
                cash provided by (used in) investing activities
            
            
            1,195,582
            
            
            
            (2,521,423
            )Net
                cash (used in) financing activities
            
            
            (813,015,954
            )
            
            
            (21,164,599
            )NET
                CASH USED IN DISCONTINUED OPERATIONS
            
            
            (76,974,127
            )
            
            
            (46,759,209
            )NET
                CHANGE IN CASH AND CASH EQUIVALENTS
            
            
            (57,878,275
            )
            
            
            (62,252,994
            )CASH
                AND CASH EQUIVALENTS, Beginning of the period
            
            
            82,751,795
            
            
            
            122,072,166CASH
                AND CASH EQUIVALENTS, End of the period
            
            $
            24,873,520
            
            
            $
            59,819,172









**BIMINI
                CAPITAL MANAGEMENT, INC.****CONSOLIDATED
                STATEMENTS OF CASH FLOWS (continued)****(Unaudited)****Nine
                Months Ended****September
                30, 2007**
            
            
            **September
                30, 2006**SUPPLEMENTAL
                DISCLOSURES OF CASH FLOW INFORMATION:Cash
                paid during the period for interest
            
            $
            108,551,200
            
            
            $
            199,590,000SUPPLEMENTAL
                SCHEDULE OF NONCASH INVESTING AND
                FINANCING  ACTIVITIES:Cash
                dividends declared and payable, not yet paid
            
            $
            -
            
            
            $
            1,267,736See
                notes to consolidated financial statements.










**BIMINI
      CAPITAL MANAGEMENT, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**(UNAUDITED)**


**September
      30, 2007**








**NOTE
      1.   ORGANIZATION AND SIGNIFICANT ACCOUNTING
      POLICIES**





**Organization
      and Business Description**





Bimini
      Capital Management, Inc., a Maryland corporation (“Bimini Capital”), was
      originally formed in September 2003 as Bimini Mortgage Management, Inc. (“Bimini
      Mortgage”) for the purpose of creating and managing a leveraged investment
      portfolio consisting of residential mortgage backed securities (“MBS”). Bimini
      Capital’s website is located at http://www.biminicapital.com.





On
      November 3, 2005, Bimini Capital, then known as Bimini Mortgage, acquired Opteum
      Financial Services, LLC.  This entity, which was previously referred
      to as “OFS,” was renamed Orchid Island TRS, LLC effective July 3,
      2007.   Hereinafter, any historical mention, discussion or references
      to Opteum Financial Services, LLC or to OFS (such as in previously filed
      documents or Exhibits) now means Orchid Island TRS, LLC or
“OITRS.”  Upon closing of the transaction, OITRS became a wholly-owned
      taxable REIT subsidiary of Bimini Mortgage.  Under the terms of the
      transaction, Bimini Mortgage issued 3.7 million shares of Class A Common Stock
      and 1.2 million shares of Class A Redeemable Preferred Stock to the former
      members of OITRS.





On
      February 10, 2006, Bimini Mortgage changed its name to Opteum Inc.
      (“Opteum”).  At Opteum’s 2006 Annual Meeting of Stockholders, the
      shares of Class A Redeemable Preferred Stock issued to the former members of
      OITRS were converted into shares of Opteum’s Class A Common Stock on a
      one-for-one basis following the approval of such conversion by Opteum’s
      stockholders.





On
      December 21, 2006, Opteum sold to Citigroup Global Markets Realty Corp.
      (“Citigroup Realty”) a Class B non-voting limited liability company membership
      interest in OITRS, representing 7.5% of all of OITRS’s outstanding limited
      liability company membership interests, for $4.1 million.  Immediately
      following the transaction, Opteum held Class A voting Limited Liability Company
      membership interests in OITRS representing 92.5% of all of OITRS’s outstanding
      limited liability company membership interests.  In connection with
      the transaction, Opteum also granted Citigroup Realty the option, exercisable
      on
      or before December 20, 2007, to acquire additional Class B non-voting limited
      liability company membership interests in OITRS representing 7.49% of all of
      OITRS’s outstanding limited liability company membership interests.





On
      April 18, 2007, the Board of
      Managers of OITRS, at the recommendation of the Board of Directors ofOpteum,
      approved the closure of OITRS’
wholesale and conduit mortgage loan origination channels in the second quarter
      of 2007.  Also, during the second quarter of 2007, substantially all
      of the other operating assets of OITRS were sold.   Therefore,
      OITRS is accounted for as a discontinued operation,all OITRS’s assets are considered
      as
      held for sale, and OITRS is reported as a discontinued operation for all periods
      presented following applicable accounting standards.  For financial
      statement presentation purposes, and for the quarter ended September 30, 2007,
      Bimini Capital is now operating in a single business segment, as a
      REIT.





On
      September 28, 2007, Opteum changed its name to Bimini Capital Management,
      Inc.





Bimini
      Capital has elected to be taxed as a real estate investment trust (“REIT”) under
      the Internal Revenue Code of 1986, as amended (the “Code”).  As a
      REIT, Bimini Capital is generally not subject to federal income tax on its
      REIT
      taxable income provided that it distributes to its stockholders at least 90%
      of
      its REIT taxable income on an annual basis.  OITRS has elected to be
      treated as a taxable REIT subsidiary and, as such, is subject to federal, state
      and local income taxation.  In addition, the ability of OITRS to
      deduct interest paid or accrued to Bimini Capital for federal, state and local
      tax purposes is subject to certain limitations.





As
      used
      in this document, discussions related to “Bimini Capital,” the parent company,
      the registrant, and to real estate investment trust (“REIT”) qualifying
      activities or the general management of Bimini Capital’s portfolio of mortgage
      backed securities (“MBS”) refer to “Bimini Capital Management,
      Inc.”  Further, discussions related to Bimini Capital’s taxable REIT
      subsidiary or non-REIT eligible assets refer to OITRS and its consolidated
      subsidiaries. Discussions relating to the “Company” refer to the consolidated
      entity (the combination of Bimini Capital and OITRS). The assets and activities
      that are not REIT eligible, such as mortgage origination, acquisition and
      servicing activities, were formerly conducted by OITRS and are now reported
      as
      discontinued operations.





**Liquidity**





The
      Company has obtained committed funding arrangements that provide specified
      advance rates and funding levels and are available to finance the Company’s MBS
      portfolio. Should the Company’s financing be withdrawn and the Company’s
      committed funding agreements not be sufficient to finance all of the Company’s
      MBS investments, the Company may be forced to sell such assets, which may result
      in losses upon such sales.  While the financing in place for the Company’s
      retained interests, trading held by OITRS is committed through December 19,
      2007, the lender on the financing facility has and may continue to request
      additional margin be posted in connection with the facility. If the Company
      is
      unable to meet such requests in the future, the Company may be forced to sell
      the assets or seek alternative financing.  At present, such alternative
      financing arrangements for the residual interests may not be available or only
      available at substantially higher cost to OITRS.  If cash resources are, at
      any time, insufficient to satisfy the Company’s liquidity requirements, such as
      when cash flow from operations were materially negative, the Company may be
      required to pledge additional assets to meet margin calls, liquidate assets,
      sell additional debt or equity securities or pursue other financing
      alternatives. Any sale of mortgage-related securities or other assets held
      for
      sale at prices lower than the carrying value of such assets would reduce the
      Company’s income.  The Company presently believes that its equity and
      junior subordinated debt capital, combined with the cash flow from operations
      and the utilization of borrowings, will be sufficient to enable the Company
      to
      meet its anticipated liquidity requirements. Continued disruptions in market
      conditions could, however, adversely affect the Company’s liquidity, including
      the lack of available financing for the Company’s MBS assets beyond the capacity
      of the Company’s committed facilities ($0.3 billion as of September 30, 2007),
      increases in interest rates, increases in prepayment rates substantially above
      expectations and decreases in value of assets held for sale. Therefore, no
      assurances can be made regarding the Company's ability to satisfy its liquidity
      and working capital requirements.





Management
      is currently pursuing all cost saving opportunities to maximize future earnings,
      including strategic options designed to increase the efficiency with which
      the
      Company manages its operations.





**Interim
      Financial Statements**





The
      accompanying interim financial statements reflect all adjustments, consisting
      of
      normal recurring items that, in the opinion of management, are necessary for
      a
      fair presentation of the Company’s financial position, results of operations,
      statement of stockholders’ equity and cash flows for the periods presented.
      These interim financial statements have been prepared in accordance with
      disclosure requirements for interim financial information and accordingly,
      they
      may not include all of the information and footnotes required by U.S. generally
      accepted accounting principles (“GAAP”) for annual financial statements. The
      operating results for the interim period ended September 30, 2007 are not
      necessarily indicative of results that can be expected for the year ended
      December 31, 2007. The consolidated balance sheet as of December 31, 2006 was
      derived from audited financial statements included in the Company’s 2006 Annual
      Report on Form 10-K but does not include all disclosures required by accounting
      principals generally accepted in the United States.  The financial
      statements included as part of this Form 10-Q should be read in conjunction
      with
      the financial statements and notes thereto included in the Company’s Annual
      Report on Form 10-K for the year ended December 31, 2006.





**Basis
      of Presentation and Use of Estimates**





The
      accompanying consolidated financial statements are prepared on the accrual
      basis
      of accounting in accordance with GAAP. The preparation of financial statements
      in conformity with GAAP requires management 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 period.
      Significant estimates affecting the accompanying financial statements include
      the fair values of MBS, the prepayment speeds used to calculate amortization
      and
      accretion of premiums and discounts on MBS, the recording of certain balances
      related to the discontinued operation, including the realizability of the
      deferred tax assets and related valuation allowance, the valuation of mortgage
      loans held for sale, the amount of the impairment charges recorded on certain
      assets, the valuation of retained interests, trading and the fair value of
      mortgage servicing rights and estimated lease termination
      costs.





**Consolidation**





The
      accompanying consolidated financial statements include the accounts of Bimini
      Capital and its majority-owned subsidiary, OITRS, as well the wholly-owned
      and
      majority-owned subsidiaries of OITRS.  OITRS is reported as a
      discontinued operation for all periods presented.  All inter-company
      accounts and transactions have been eliminated from the consolidated financial
      statements.





Bimini
      Capital owned 100% of OITRS until December 21, 2006, when a Class B non-voting
      interest representing 7.5% of OITRS’s then outstanding limited liability company
      membership interest was sold to Citigroup Realty.  Citigroup Realty’s
      proportionate share in the after-tax results of OITRS’s operations, are included
      in the accompanying statements of operation. During the nine months ended
      September 30, 2007, the proportionate share of OITRS’s loss exceeded the net
      investment attributable to Citigroup Realty. Therefore, the portion of the
      net
      loss of OITRS that is attributable to Citigroup Realty’s interest that is in
      excess of their investment is charged against the Company.  Citigroup
      Realty’s net investment balance on December 31, 2006 was $0.8
      million**.**During the quarter ended March 31, 2007,
      Citigroup Realty’s interest in the net loss of OITRS was limited to their $0.8
      million net investment, and the remainder was charged against the Company.
      The
      entire loss for the second quarter and the quarter ended September 30, 2007
      was
      charged against the Company. The losses absorbed by the Company which are in
      excess of Citigroup Realty’s investment totaled approximately $10.8 million and
      $0.1 million for the nine and three months ended September 30, 2007,
      respectively.  In future periods, the Company will be credited first
      for these absorbed losses before Citigroup Realty’s investment is
      reinstated.





As
      further described in****Note 5, Bimini Capital has a common
      share investment in two trusts used in connection with the issuance of Bimini
      Capital’s junior subordinated notes.  Pursuant to the accounting
      guidance provided in Financial Accounting Standards Board (“FASB”)
      Interpretation (“FIN”) No. 46, *Consolidation of Variable Interest
      Entities*, Bimini Capital’s common share investments in the trusts are not
      consolidated in the financial statements of Bimini Capital, and accordingly,
      these investments are accounted for on the equity method.





**Cash
      and Cash Equivalents**





Cash
      and
      cash equivalents include cash on hand and highly liquid investments with
      original maturities of three months or less. The carrying amount of cash
      equivalents approximates its fair value as of September 30, 2007 and
      December 31, 2006.





Restricted
      cash represents cash held on deposit as collateral with certain repurchase
      agreement counterparties (i.e. lenders). Such amounts may be used to make
      principal and interest payments on the related repurchase
      agreements.





**Valuation
      of Mortgage Backed Securities**





The
      valuation of the Company's investments in MBS is governed by Statement of
      Financial Accounting Standards (“SFAS”) No. 107,*Disclosures about Fair
      Value of Financial Instruments*. SFAS No. 107 defines the fair value of a
      financial instrument as the amount at which the instrument could be exchanged
      in
      a current transaction between willing parties. All REIT securities are reflected
      in the Company's financial statements at their estimated fair value as of
      September 30, 2007 and December 31, 2006. Estimated fair values for MBS are
      based on the average of third-party broker quotes received and/or independent
      pricing sources when available.





In
      accordance with SFAS No. 115, *Accounting for Certain Investments in Debt and
      Equity Securities*, the Company classifies its investments in MBS as either
      trading investments, available-for-sale investments or held-to-maturity
      investments. Management determines the appropriate classification of the
      securities at the time they are acquired and evaluates the appropriateness
      of
      such classifications at each balance sheet date. Although the Company generally
      intends to hold its MBS until maturity, it may, from time to time, sell any
      of
      its MBS as part of the overall management of the business and/or to meet
      liquidity needs. The Company classifies all of its securities acquired prior
      to
      June 30, 2007 as available-for-sale.  All securities acquired after
      June 30, 2007 are classified as held for trading.




When
      the
      fair value of an available-for-sale security is less than amortized cost,
      management considers whether there is an other-than-temporary impairment in
      the
      value of the security. The decision is based on the credit quality of the
      issue (agency versus non-agency and for non-agency, the credit performance
      of
      the underlying collateral), the security prepayment speeds, the length of time
      the security has been in an unrealized loss position and the Company's ability
      and intent to hold securities. As of September 30, 2007, the Company did not
      hold any non-agency securities in its portfolio. If, in management's judgment,
      an other-than-temporary impairment exists, the cost basis of the security is
      written down in the period to fair value and the unrealized loss is recognized
      in current period earnings.  During the six month period ended June
      30, 2007, due to liquidity and working capital needs, the Company determined,
      at
      June 30, 2007, that it no longer had the ability to hold such assets until
      their
      amortized cost could be fully recovered.   Accordingly, the cost
      basis of all MBS classified as available-for-sale were written down to fair
      value as of June 30, 2007 and the previously unrealized loss was recognized
      in
      current period earnings. The measurement basis for other-than-temporarily
      impaired (OTTI) MBS is the lower of cost or market (LOCOM) method.  An
      impairment loss is recognized in earnings equal to the difference between the
      MBS’ cost and its fair value at the balance sheet date of the reporting period
      for which the assessment is made.  The LOCOM method generally
      recognizes the net decrease in value but not the net appreciation in the value
      of those securities.  The fair value of impaired MBS then becomes the
      new cost basis of the MBS and is not adjusted for subsequent recoveries in
      fair
      value.





**Property
      and Equipment, net**





Property
      and equipment, net, consisting primarily of computer equipment with a
      depreciable life of 3 years, office furniture with a depreciable life of 12
      years, leasehold improvements with a depreciable life of 15 years, land which
      has no depreciable life and building with a depreciable life of 30 years, is
      recorded at acquisition cost and depreciated using the straight-line method
      over
      the estimated useful lives of the assets.





Bimini
      Capital’s property and equipment as of September 30, 2007 and December 31, 2006,
      is net of accumulated depreciation of****$0.4 million and
      $0.2****million, respectively. Depreciation expense for the
      nine and three months ended September 30, 2007 was $0.2 million
      and****$0.04 million, respectively, and was $0.09 million and
      $0.03 million for the nine and three months ended September 30, 2006,
      respectively.





**Repurchase
      Agreements**





The
      Company finances the acquisition of its MBS through the use of repurchase
      agreements. Under these repurchase agreements, the Company sells securities
      to a
      repurchase counterparty and agrees to repurchase the same securities in the
      future for a price that is higher than the original sales price. The difference
      between the sales price that the Company receives and the repurchase price
      that
      the Company pays represents interest paid to the repurchase counterparty.
      Although structured as a sale and repurchase obligation, a repurchase agreement
      operates as a financing under which the Company pledges its securities as
      collateral to secure a loan which is equal in value to a specified percentage
      of
      the estimated fair value of the pledged collateral. The Company retains
      beneficial ownership of the pledged collateral. At the maturity of a repurchase
      agreement, the Company is required to repurchase the underlying MBS and
      concurrently receives back its pledged collateral from the repurchase
      counterparty or, with the consent of the repurchase counterparty, the Company
      may renew such agreement at the then prevailing rate. These repurchase
      agreements may require the Company to pledge additional assets to the repurchase
      counterparty in the event the estimated fair value of the existing pledged
      collateral declines. As of September 30, 2007 and December 31, 2006, the Company
      did not have any margin calls on its repurchase agreements that it was not
      able
      to satisfy with either cash or additional pledged collateral.





Original
      terms to maturity of the Company's repurchase agreements generally, but not
      always, range from one month to twelve months; however, the Company is not
      precluded from entering into repurchase agreements with shorter or longer
      maturities. Repurchase agreement transactions are reflected in the financial
      statements at their cost, which approximates their fair value because of the
      short-term nature of these instruments. Should a counterparty decide not to
      renew a repurchase agreement at maturity, the Company must either refinance
      elsewhere or be in a position to satisfy this obligation. If, during the term
      of
      a repurchase agreement, a counterparty files for bankruptcy, the Company could
      experience difficulty recovering its pledged assets and may have an unsecured
      claim against the counterparty's assets for the difference between the amount
      received by the Company and the estimated fair value of the collateral pledged
      to such counterparty.





**Interest
      Income Recognition on MBS**





All
      securities acquired during the three month period ended September 30, 2007
      are
      being classified as held for trading. Income on held for trading securities
      is
      based on the stated interest rate of the security. Changes in fair value during
      the period are recorded in earnings and reported as fair value adjustment-held
      for trading securities in the accompanying consolidated statement of
      operations.   Premium or discount present at the date of purchase
      is not amortized.





MBS
      are
      recorded at cost on the date the MBS are purchased or sold, which is generally
      the trade date. Realized gains or losses from MBS transactions are determined
      based on the specific identified cost of the MBS. Interest income is accrued
      based on the outstanding principal amount of the MBS and their stated
      contractual terms. With respect to securities classified as available-for-sale,
      premiums and discounts associated with the purchase of the MBS are amortized
      or
      accreted into interest income over the estimated lives of the MBS adjusted
      for
      estimated prepayments using the effective interest method. Adjustments are
      made
      using the retrospective method to the effective interest computation each
      reporting period. The adjustment is based on the actual prepayment experiences
      to date and the present expectation of future prepayments of the underlying
      mortgages and/or the current value of the indices underlying adjustable rate
      mortgage securities versus index values in effect at the time of purchase or
      the
      last adjustment period.  For securities classified as held-for-trading
      interest income is based on the stated interest rate and the outstanding
      principal balance, premium or discount associated with the purchase of the
      MBS
      are not amortized.





**Comprehensive
      Income (Loss)**




In
      accordance with SFAS No. 130,*Reporting Comprehensive Income*, the
      Company is required to separately report its comprehensive income (loss) each
      reporting period. Other comprehensive income refers to revenue, expenses, gains
      and losses that, under GAAP, are included in comprehensive income but are
      excluded from net income, as these amounts are recorded directly as an
      adjustment to stockholders' equity. Other comprehensive income (loss) arises
      from unrealized gains or losses generated from changes in market values of
      securities classified as available-for-sale, provided however that such
      securities are not other than temporarily impaired.





Comprehensive
      (loss) is as follows:


(in
      thousands)


**(Unaudited)****Nine
                Months Ended**
            
            
            **Three
                Months Ended****September
                30, 2007**
            
            
            **September
                30, 2006**
            
            
            **September
                30, 2007**
            
            
            **September
                30, 2006**Net
                (loss)
            
            $
            (245,261
            )
            
            $
            (15,623
            )
            
            $
            (4,723
            )
            
            $
            (6,256
            )Realized
                loss on MBS
            
            
            19,389
            
            
            
            -
            
            
            
            -
            
            
            
            -Other-than-temporary
                loss on MBS
            
            
            55,250
            
            
            
            -
            
            
            
            -
            
            
            
            -Unrealized
                gain (loss) on available-for-sale securities, net
            
            
            2,135
            
            
            
            (21,536
            )
            
            
            -
            
            
            
            12,360Comprehensive
                (loss)
            
            $
            (168,487
            )
            
            $
            (37,159
            )
            
            $
            (4,723
            )
            
            $
            6,104





**Stock-Based
      Compensation**





The
      Company adopted SFAS No. 123(R),*Share-Based Payment*, on January 1,
      2006, and this adoption did not have an impact on the Company, as the Company
      had previously accounted for stock-based compensation using the fair value
      based
      method prescribed by SFAS No. 123,*Accounting for Stock-Based
      Compensation*. For stock and stock-based awards issued to employees, a
      compensation charge is recorded against earnings based on the fair value of
      the
      award. For transactions with non-employees in which services are performed
      in
      exchange for the Company's common stock or other equity instruments, the
      transactions are recorded on the basis of the fair value of the service received
      or the fair value of the equity instruments issued, whichever is more readily
      measurable at the date of issuance. Bimini Capital's stock-based compensation
      transactions resulted in an aggregate of $2.3 million and $0.8 million of
      compensation expense for the nine and three months ended September 30, 2007,
      respectively, and $3.1 million and $1.5 million of compensation expense for
      the
      nine and three months ended September 30, 2006, respectively.





**Earnings
      Per Share**





The
      Company follows the provisions of SFAS No. 128,*Earnings per
      Share*, and the guidance provided in the FASB's Emerging Issues Task Force
      (“EITF”) Issue No. 03-6,*Participating Securities and the
      Two-Class Method under FASB Statement No. 128, Earnings Per Share*,
      which requires companies with complex capital structures, common stock
      equivalents or two (or more) classes of securities that participate in the
      declared dividends to present both basic and diluted earnings per share (“EPS”)
      on the face of the consolidated statement of operations. Basic EPS is calculated
      as income available to common stockholders divided by the weighted average
      number of common shares outstanding during the period. Diluted EPS is calculated
      using the “if converted” method for common stock equivalents. However, the
      common stock equivalents are not included in computing diluted EPS if the result
      is anti-dilutive.





Outstanding
      shares of Class B Common Stock, participating and convertible into Class A
      Common Stock, are entitled to receive dividends in an amount equal to the
      dividends declared on each share of Class A Common Stock if, as and when
      authorized and declared by the Board of Directors. Following the provisions
      of
      EITF 03-6, shares of the Class B Common Stock are included in the computation
      of
      basic EPS using the two-class method and, consequently, are presented separately
      from Class A Common Stock.





The
      shares of Class C Common Stock are not included in the basic EPS
      computation as these shares do not have participation rights. The outstanding
      shares of Class C Common Stock, totaling 319,388 shares, are not included
      in the computation of diluted EPS for the Class A Common Stock as the conditions
      for conversion into shares of Class A Common Stock were not
      met.





**Income
      Taxes**





Bimini
      Capital has elected to be taxed as a REIT under the Code. As further described
      in Note 11, Discontinued Operations, OITRS is a taxpaying entity for income
      tax
      purposes and is taxed separately from Bimini Capital. Bimini Capital will
      generally not be subject to federal income tax on its REIT taxable income to
      the
      extent that Bimini Capital distributes its REIT taxable income to its
      stockholders and satisfies the ongoing REIT requirements, including meeting
      certain asset, income and stock ownership tests. A REIT must generally
      distribute at least 90% of its REIT taxable income to its stockholders, of
      which
      85% generally must be distributed within the taxable year, in order to avoid
      the
      imposition of an excise tax. The remaining balance may be distributed up to
      the
      end of the following taxable year, provided the REIT elects to treat such amount
      as a prior year distribution and meets certain other requirements.





**Recent
      Accounting Pronouncements**





On
      February 15, 2007, the FASB issued statement No. 159, *The Fair
      Value Option for Financial Assets and Financial Liabilities — Including an
      Amendment of FASB Statement No. 115* (“SFAS 159”).  This standard
      permits an entity to measure financial instruments and certain other items
      at
      estimated fair value. Most of the provisions of SFAS No. 159 are elective;
      however, the amendment to SFAS No. 115, Accounting for Certain Investments
      in Debt and Equity Securities, applies to all entities that own trading and
      available-for-sale securities.  The fair value option created by SFAS 159
      permits an entity to measure eligible items at fair value as of specified
      election dates. The fair value option is generally applied instrument by
      instrument, is irrevocable unless a new election date occurs, and must be
      applied to the entire instrument and not to only a portion of the instrument.
       SFAS 159 is effective as of the beginning of the first fiscal year that
      begins after November 15, 2007.  The Company is currently
      evaluating the impact of SFAS 159, if any, on the consolidated financial
      statements.





In
      September 2006, the FASB issued SFAS No. 157, *Fair Value Measurements,*
      to eliminate the diversity in practice that exists due to the different
      definitions of fair value that are dispersed among the many accounting
      pronouncements that require fair value measurements and the limited guidance
      for
      applying those definitions.  SFAS 157 is effective for financial
      statements issued for fiscal years beginning after November 15, 2007, and
      interim periods within those fiscal years.  The Company is currently
      evaluating the impact, if any, of adopting SFAS 157 on the financial
      statements**.**





In
      June
      2006, the FASB issued FASB Interpretation No. 48*, Accounting for
      Uncertainty in Income Taxes — an interpretation of FASB Statement
      No. 109* (“FIN 48”), which clarifies the accounting for
      uncertainty in tax positions. This Interpretation requires that the Company
      recognize in its financial statements, the impact of a tax position, if that
      position is more likely than not of being sustained on audit, based on the
      technical merits of the position. The provisions of FIN 48 are effective as
      of the beginning of the 2007 fiscal year, with the cumulative effect, if
      any, of the change in accounting principle recorded as an adjustment to opening
      retained earnings. The Company adopted FIN 48 on January 1, 2007, and such
      adoption did not have a material impact on the Company’s consolidated financial
      position and results of operations.





In
      February 2006, the FASB issued SFAS No. 155, *Accounting for
      Certain Hybrid Financial Instruments — an amendment of FASB Statements
      No. 133 and 140*. SFAS 155 (i) permits an entity to measure at fair
      value any financial instrument that contains an embedded derivative that
      otherwise would require bifurcation; (ii) establishes a requirement to evaluate
      interests in securitized financial assets to identify interests that are
      freestanding derivatives or that are hybrid financial instruments that contain
      an embedded derivative requiring bifurcation; and (iii) contains other
      provisions that are not germane to the Company.  SFAS 155 is effective
      for all financial instruments acquired or issued after the beginning of an
      entity’s first fiscal year beginning after September 15, 2006.  A
      scope exception under SFAS 155 where by securitized interests that only contain
      an embedded derivative that is tied to the prepayment risk of the underlying
      prepayable financial asset, and for which the investor does not control the
      right to accelerate the settlement was adopted by the FASB.  The MBS
      securities owned in the REIT portfolio fall under this scope
      exception.  However, in the future, the Company may own securities
      that may not fall under the exception or the FASB may repeal the exception,
      in
      which case the Company would be subject to the provisions of SFAS
      155.  Should securities owned by the Company fall under the provisions
      of SFAS 155 in the future, the Company’s results of operations may exhibit
      volatility as certain of its future investments may be marked to market through
      the income statement.





**NOTE
      2.   MORTGAGE BACKED SECURITIES**





As
      of
      September 30, 2007 and December 31, 2006, all of Bimini Capital's MBS were
      classified as either held for trading or available-for-sale. The measurement
      basis for other-than-temporarily impaired available-for-sale MBS is the LOCOM
      method.  An impairment loss is recognized in earnings equal to the
      difference between the MBS’ cost and its fair value at the balance sheet date of
      the reporting period for which the assessment is made.  The LOCOM
      method recognizes the net decrease in value but not the net appreciation in
      the
      value of those securities.  The fair value of impaired MBS would then
      become the new cost basis of the MBS and should not be adjusted for subsequent
      recoveries in fair value.  Estimated fair value was determined based
      on the average of third-party broker quotes received and/or independent pricing
      sources when available.





The
      following are the carrying values of Bimini Capital's MBS portfolio as of
      September 30, 2007 and December 31, 2006:


(in
      thousands)


**September
                30, 2007**
            
            
            **December
                31, 2006**Adjustable
                Rate Mortgages
            
            $
            640,670
            
            
            $
            2,105,818Fixed
                Rate Mortgages
            
            
            252,695
            
            
            
            626,428Hybrid
                Arms
            
            
            360,529
            
            
            
            76,488Total
            
            $
            1,253,894
            
            
            $
            2,808,734





The
      following table presents the components of the carrying value of Bimini
      Capital's MBS portfolio of securities as of September 30, 2007 and December
      31,
      2006:


(in
      thousands)


**September
                30, 2007**
            
            
            **December
                31, 2006****Available-for-Sale
                Securities**Principal
                balance
            
            $
            696,892
            
            
            $
            2,779,867Unamortized
                premium
            
            
            11,448
            
            
            
            116,114Unaccreted
                discount
            
            
            (304
            )
            
            
            (502
            )Gross
                unrealized gains
            
            
            -
            
            
            
            422Other-than-temporary
                losses
            
            
            -
            
            
            
            (9,971
            )Gross
                unrealized losses
            
            
            -
            
            
            
            (77,196
            )**Held
                for Trading Securities**
            
            
            545,858
            
            
            
            -Carrying
                value/estimated fair value
            
            $
            1,253,894
            
            
            $
            2,808,734





As
      a
      result of the other-than-temporary impairment of MBS as of September 30, 2007,
      Bimini Capital’s available-for-sale MBS investments are carried on a LOCOM basis
      and therefore there are no unrealized losses.








The following table presents for Bimini Capital's MBS investments with gross
      unrealized losses, the estimated fair value and gross unrealized losses
      aggregated by investment category, as of December 31, 2006:


(in
      thousands)


**Loss
                Position More than 12 Months**
            
            
            **Loss
                Position Less than 12 Months**
            
            
            **Total****Estimated**
              **Fair
                Value**
            
            
            **Unrealized**
              **Losses**
            
            
            **Estimated**
              **Fair
                Value**
            
            
            **Unrealized**
              **Losses**
            
            
            **Estimated**
              **Fair
                Value**
            
            
            **Unrealized**
              **Losses**Hybrid
                Arms and Balloons
            
            $
            67,437
            
            
            $
            (1,858
            )
            
            $
            -
            
            
            $
            -
            
            
            $
            67,437
            
            
            $
            (1,858
            )Adjustable
                Rate Mortgages
            
            
            1,232,644
            
            
            
            (46,715
            )
            
            
            348,901
            
            
            
            (2,591
            )
            
            
            1,581,545
            
            
            
            (49,306
            )Fixed
                Rate Mortgages
            
            
            515,067
            
            
            
            (25,662
            )
            
            
            48,604
            
            
            
            (370
            )
            
            
            563,671
            
            
            
            (26,032
            )$
            1,815,148
            
            
            $
            (74,235
            )
            
            $
            397,505
            
            
            $
            (2,961
            )
            
            $
            2,212,653
            
            
            $
            (77,196
            )





As
      of
      September 30, 2007, all of Bimini Capital's MBS investments have contractual
      maturities greater than 24****months. Actual maturities of
      MBS investments are generally shorter than stated contractual maturities. Actual
      maturities of Bimini Capital's MBS investments are affected by the contractual
      lives of the underlying mortgages, periodic payments of principal, and
      prepayments of principal.





As
      stated
      in Note 1, the overall decline in fair value of MBS was other-than-temporary
      as
      of June 30, 2007.  Accordingly, the adjustment to reduce MBS to fair value
      was recorded in earnings. Generally, the factors considered in making this
      determination include: the expected cash flow from the MBS investment, the
      general quality of the MBS owned, any credit protection available, current
      market conditions, and the magnitude and duration of the historical decline
      in
      market prices as well as Bimini Capital's ability and intention to hold the
      MBS
      owned.  As of June 30, 2007, the Company no longer had the ability and
      intent to hold such securities until their value could be recovered due to
      the
      Company’s liquidity and working capital requirements caused by the turmoil in
      the mortgage market.





**NOTE
      3.   EARNINGS PER SHARE**





The
      Company has dividend eligible stock incentive plan shares that were outstanding
      during the nine and three months ended September 30, 2007 and 2006,
      respectively. These stock incentive plan shares have dividend participation
      rights, but no contractual obligation to share in losses. Since there is no
      such
      obligation, these incentive plan shares are not included, pursuant to EITF
      03-6,
      in the basic EPS computation for the Class A Common Stock in any period there
      is
      a loss from continuing operations, even though they are participating
      securities. Therefore, the computation of basic and diluted EPS for the Class
      A
      Common Stock for the nine and three months ended September 30, 2007 excludes
      259,016 incentive plan shares.





During
      the nine months ended September 30, 2006, 76,375 of Restricted Shares (See
      Note
      7) and 562,018 of incentive plan shares are included in the basic and diluted
      EPS computations because they are participating securities and there is income
      from continuing operations during this nine month period.   The
      computation of basic and diluted EPS for the three months ended September 30,
      2006 does not include these shares as there is a loss from continuing operations
      in this period.










The
      table
      below reconciles the numerators and denominators of the EPS.  See the
      consolidated statements of operations for the breakdown between continuing
      operations and discontinued operations.


(in
      thousands, except per share)


**Nine
                Months Ended**
            
            
            **Three
                Months Ended****September
                30, 2007**
            
            
            **September
                30, 2006**
            
            
            **September
                30, 2007**
            
            
            **September 30,
                2006**Basic
                and diluted EPS per Class A common share:Numerator:
                net loss allocated to the Class A common shares
            
            $
            (242,138
            )
            
            $
            (15,421
            )
            
            $
            (4,663
            )
            
            $
            (6,176
            )Denominator:
                basic and diluted:Class
                A common shares outstanding at the balance sheet date
            
            
            24,765
            
            
            
            24,473
            
            
            
            24,765
            
            
            
            24,397Dividend
                eligible equity plan shares issued as of the balance sheet
                date
            
            
            -
            
            
            
            638
            
            
            
            -
            
            
            
            -Effect
                of weighting
            
            
            (164
            )
            
            
            (467
            )
            
            
            (75
            )
            
            
            (21
            )Weighted
                average shares-basic and diluted
            
            
            24,601
            
            
            
            24,644
            
            
            
            24,690
            
            
            
            24,376Basic
                and diluted net (loss) per Class A common share
            
            $
            (9.84
            )
            
            $
            (0.63
            )
            
            $
            (0.19
            )
            
            $
            (0.25
            )Basic
                and diluted EPS per Class B common share:Numerator:
                net loss allocated to Class B common shares
            
            $
            (3,123
            )
            
            $
            (202
            )
            
            $
            (60
            )
            
            $
            (80
            )Denominator:
                basic and diluted:Class
                B common shares outstanding at the balance sheet date
            
            
            319
            
            
            
            319
            
            
            
            319
            
            
            
            319Effect
                of weighting
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Weighted
                average shares-basic and diluted
            
            
            319
            
            
            
            319
            
            
            
            319
            
            
            
            319Basic
                and diluted net (loss)  per Class B common share
            
            $
            (9.79
            )
            
            $
            (0.63
            )
            
            $
            (0.19
            )
            
            $
            (0.25
            )


**NOTE
          4.   REPURCHASE AGREEMENTS**
 Bimini
        Capital has entered into
        repurchase agreements to finance most of its MBS security purchases. The
        repurchase agreements are short-term borrowings that bear interest at rates
        that
        have historically moved in close relationship tothe forward London
        Interbank Offered
        Rate (“LIBOR”) interest rate curve. As of September 30, 2007, Bimini
        Capital had an outstanding amount of$1.2****billion
        with a net weighted average
        borrowing rate of****5.23%
        and these agreements were
        collateralized by MBS with a fair value of****$1.3billion.  As
        of
        December 31, 2006, Bimini Capital had an outstanding amount of $2.7 billion
        with a net weighted average borrowing rate of 5.31%, and these agreements
        were
        collateralized by MBS with a fair value of $2.8
        billion.





As
      of
      September 30, 2007, Bimini Capital's repurchase agreements had remaining
      maturities as summarized below:


(in
      thousands)


**OVERNIGHT**
              **(1
                DAY OR LESS)**
            
            
            **BETWEEN
                2 AND**
              **30
                DAYS**
            
            
            **BETWEEN
                31 AND**
              **90
                DAYS**
            
            
            **GREATER
                THAN**
              **90
                DAYS**
            
            
            **TOTAL**Agency-Backed
                Mortgage Backed Securities:Amortized
                cost of securities sold, including accrued interest
                receivable
            
            $
            45,003
            
            
            $
            409,417
            
            
            $
            135,716
            
            
            $
            397,313
            
            
            $
            987,449Fair
                market value of securities sold, including accrued interest
                receivable
            
            $
            45,003
            
            
            $
            409,417
            
            
            $
            135,716
            
            
            $
            397,313
            
            
            $
            987,449Repurchase
                agreement liabilities associated with these securities
            
            $
            43,501
            
            
            $
            553,955
            
            
            $
            138,875
            
            
            $
            475,156
            
            
            $
            1,211,487Net
                weighted average borrowing rate
            
            
            5.15
            %
            
            
            5.42
            %
            
            
            5.25
            %
            
            
            5.02
            %
            
            
            5.23
            %





As
      ofDecember 31,
      2006, Bimini Capital's repurchase agreements had remaining maturities as
      summarized below:





(in
      thousands)





**OVERNIGHT**
              **(1
                DAY OR LESS)**
            
            
            **BETWEEN
                2 AND**
              **30
                DAYS**
            
            
            **BETWEEN
                31 AND**
              **90
                DAYS**
            
            
            **GREATER
                THAN**
              **90
                DAYS**
            
            
            **TOTAL**Agency-Backed
                Mortgage Backed Securities:Amortized
                cost of securities sold, including accrued interest
                receivable
            
            $
            —
            
            
            $
            859,344
            
            
            $
            807,488
            
            
            $
            1,149,309
            
            
            $
            2,816,141Fair
                market value of securities sold, including accrued interest
                receivable
            
            $
            —
            
            
            $
            833,436
            
            
            $
            793,702
            
            
            $
            1,106,228
            
            
            $
            2,733,366Repurchase
                agreement liabilities associated with these securities
            
            $
            —
            
            
            $
            842,094
            
            
            $
            805,595
            
            
            $
            1,093,991
            
            
            $
            2,741,680Net
                weighted average borrowing rate
            
            
            —
            
            
            
            5.31
            %
            
            
            5.33
            %
            
            
            5.29
            %
            
            
            5.31
            %










As
      of
      September 30, 2007, Bimini Capital's repurchase agreements had the following
      counterparties, amounts at risk and weighted average remaining
      maturities:





(in
      thousands)





**Repurchase
                Agreement Counterparties**
            
            **Amount**
              **Outstanding**
            
            
            **Amount**
              **at
                Risk(1)**
            
            
            **Weighted
                Average**
              **Maturity
                of**
              **Repurchase**
              **Agreements**
              **in
                Days**
            
            
            **Percent**
              **of
                Total**
              **Amount**
              **Outstanding**JP
                Morgan Securities Inc.
            
            $
            432,173
            
            
            $
            (45,594
            )
            
            
            169
            
            
            
            35.67
            %Deutsche
                Bank Securities, Inc.
            
            
            357,227
            
            
            
            (130,272
            )
            
            
            204
            
            
            
            29.49UBS
                Securities LLC
            
            
            151,797
            
            
            
            (4,339
            )
            
            
            23
            
            
            
            12.53Morgan
                Stanley
            
            
            94,221
            
            
            
            1,488
            
            
            
            34
            
            
            
            7.78BNP
                Paribas Securities Corp.
            
            
            55,959
            
            
            
            (22,424
            )
            
            
            10
            
            
            
            4.62Lehman
                Brothers Inc
            
            
            36,703
            
            
            
            801
            
            
            
            174
            
            
            
            3.03ING
                Financial Markets,LLC
            
            
            34,440
            
            
            
            715
            
            
            
            75
            
            
            
            2.84Cantor
                Fitzgerald
            
            
            31,942
            
            
            
            189
            
            
            
            78
            
            
            
            2.64Countrywide
                Securities Corporation
            
            
            9,004
            
            
            
            569
            
            
            
            3
            
            
            
            0.74Goldman
                Sachs & Co.
            
            
            8,021
            
            
            
            262
            
            
            
            28
            
            
            
            0.66Total
            
            $
            1,211,487
            
            
            $
            (198,605
            )
            
            
            
            
            
            
            100.00
            %





(1)
            Equal
                to the fair value of securities sold, plus accrued interest income,
                minus
                the sum of repurchase agreement liabilities, plus accrued interest
                expense.





The
      amount at risk as of September 30, 2007 would be $19.4 million versus ($198.6)
      million had the Company not executed the sale late in the period of certain
      MBS
      pledged to counterparties.  The sale of such securities settled on October
      2, 2007 and the fulfillment of the associated repurchase obligation was
      accelerated.  However, as of September 30, 2007 such repurchase obligation
      still existed and is reflected in the table above.





As
      of
      December 31, 2006, Bimini Capital's repurchase agreements had the following
      counterparties, amounts at risk and weighted average remaining
      maturities:





(in
      thousands)





**Repurchase
                Agreement Counterparties**
            
            **Amount**
              **Outstanding**
            
            
            **Amount**
              **at
                Risk(1)**
            
            
            **Weighted
                Average**
              **Maturity
                of**
              **Repurchase**
              **Agreements**
              **in
                Days**
            
            
            **Percent**
              **of
                Total**
              **Amount**
              **Outstanding**Deutsche
                Bank Securities, Inc.
            
            $
            834,940
            
            
            $
            10,189
            
            
            
            28
            
            
            
            30.45
            %JP
                Morgan Securities Inc.
            
            
            652,936
            
            
            
            13,195
            
            
            
            98
            
            
            
            23.82Nomura
                Securities International, Inc.
            
            
            463,410
            
            
            
            13,405
            
            
            
            94
            
            
            
            16.90WAMU
                Capital Corp.
            
            
            333,587
            
            
            
            12,476
            
            
            
            24
            
            
            
            12.17Countrywide
                Securities Corporation
            
            
            206,220
            
            
            
            4,401
            
            
            
            79
            
            
            
            7.52BNP
                Paribas Securities Corp.
            
            
            92,155
            
            
            
            2,666
            
            
            
            18
            
            
            
            3.36Goldman
                Sachs & Co.
            
            
            70,068
            
            
            
            1,278
            
            
            
            122
            
            
            
            2.56Bank
                of America Securities, LLC
            
            
            54,120
            
            
            
            1,742
            
            
            
            136
            
            
            
            1.97UBS
                Securities LLC
            
            
            21,515
            
            
            
            231
            
            
            
            17
            
            
            
            0.78Greenwich
                Capital Markets, Inc.
            
            
            12,729
            
            
            
            44
            
            
            
            7
            
            
            
            0.47Total
            
            $
            2,741,680
            
            
            $
            59,627
            
            
            
            
            
            
            
            100.00
            %





(1)
            Equal
                to the fair value of securities sold, plus accrued interest income,
                minus
                the sum of repurchase agreement liabilities, plus accrued interest
                expense.











**NOTE
      5.  TRUST PREFERRED SECURITIES**





On
      May 17, 2005, Bimini Capital completed a private offering of $50.0 million
      of trust preferred securities of Bimini Capital Trust I (“BCTI”), a Delaware
      statutory business trust sponsored by Bimini Capital. BCTI used the proceeds
      of
      the private offering, together with Bimini Capital's investment of $1.6 million
      in BCTI common equity securities, to purchase $51.6 million aggregate principal
      amount of Bimini Capital's BCTI Junior Subordinated Notes with terms that
      parallel the terms of the BCTI trust preferred securities.





The
      BCTI
      trust preferred securities and Bimini Capital's BCTI Junior Subordinated Notes
      have a fixed rate of interest until March 30, 2010, of 7.61% and
      thereafter, through maturity in 2035, the rate will float at a spread of 3.30%
      over the prevailing three-month LIBOR rate.  The BCTI trust preferred
      securities and Bimini Capital's BCTI Junior Subordinated Notes require quarterly
      interest distributions and are redeemable at Bimini Capital's option, in whole
      or in part and without penalty, beginning March 30, 2010 and at any date
      thereafter.  Bimini Capital's BCTI Junior Subordinated Notes are
      subordinate and junior in right of payment of all present and future senior
      indebtedness. The proceeds from the private offering net of costs were
      approximately $48.5 million.




On
      October 5, 2005, Bimini Capital completed a private offering of $50.0 million
      of
      trust preferred securities of Bimini Capital Trust II (“BCTII”), a Delaware
      statutory business trust sponsored by Bimini Capital. BCTII used the proceeds
      of
      the private offering, together with Bimini Capital's investment of $1.5 million
      in BCTII common equity securities, to purchase $51.5 million aggregate principal
      amount of Bimini Capital's BCTII Junior Subordinated Notes with terms that
      parallel the terms of the BCTII trust preferred securities.





The
      BCTII
      trust preferred securities and Bimini Capital's BCTII Junior Subordinated Notes
      have a fixed rate of interest until December 15, 2010, of 7.8575% and
      thereafter, through maturity in 2035, the rate will float at a spread of 3.50%
      over the prevailing three-month LIBOR rate. The BCTII trust preferred securities
      and Bimini Capital's BCTII Junior Subordinated Notes require quarterly interest
      distributions and are redeemable at Bimini Capital's option, in whole or in
      part
      and without penalty, beginning December 15, 2010, and at any date thereafter.
      Bimini Capital's BCTII Junior Subordinated Notes are subordinate and junior
      in
      right of payment of all present and future senior indebtedness. The proceeds
      from the private offering net of costs were approximately $48.5
      million.





Each
      trust is a variable interest entity pursuant to FIN No. 46 because the
      holders of the equity investment at risk do not have adequate decision making
      ability over the trust's activities. Since Bimini Capital's investment in each
      trust's common equity securities was financed directly by the applicable trust
      as a result of its loan of the proceeds to Bimini Capital, that investment
      is
      not considered to be an equity investment at risk pursuant to FIN No. 46. Since
      Bimini Capital's common share investments in BCTI and BCTII are not a variable
      interest, Bimini Capital is not the primary beneficiary of the trusts.
      Therefore, Bimini Capital has not consolidated the financial statements of
      BCTI
      and BCTII into its financial statements.  Based on the aforementioned
      accounting guidance, the accompanying consolidated financial statements present
      Bimini Capital's BCTI and BCTII Junior Subordinated Notes issued to the trusts
      as liabilities and Bimini Capital's investments in the common equity securities
      of BCTI and BCTII as assets. For financial statement purposes, Bimini Capital
      records payments of interest on the Junior Subordinated Notes issued to BCTI
      and
      BCTII as interest expense.





**NOTE
      6.  CAPITAL STOCK**





**Issuances
      of Class A Common Stock**





During
      the nine and three months ended September 30, 2007, the Company issued a total
      of 74,960 and 63,918 shares, respectively, of Class A Common Stock to its
      independent directors for the payment of director fees for services
      rendered.





During
      the nine and three months ended September 30, 2007, the Company issued 173,868
      and****97,067 shares, respectively, of its Class A Common
      Stock to employees pursuant to the terms of the stock incentive plan phantom
      share grants (see Note 7).





**Dividends
      Declared and Paid in 2007**





On
      March
      9, 2007, the Company's Board of Directors declared a $0.05 per share cash
      dividend to the holders of its dividend eligible securities on the record date
      of March 26, 2007. The distribution totaling $1.3 million was paid on April
      13,
      2007.








**Other
      Classes of Common and Preferred Stock**





There
      was
      no change in the issued and outstanding shares of the Company’s Class B and
      Class C Common Stock or its Class A and Class B Redeemable Preferred Stock
      during the nine and three months ended September 30, 2007.





**NOTE
      7.    STOCK INCENTIVE PLANS**




On
      December 1, 2003, Bimini Capital adopted the 2003 Long Term Incentive
      Compensation Plan (the “2003 Plan”) to provide Bimini Capital with the
      flexibility to use stock options and other awards as part of an overall
      compensation package to provide a means of performance-based compensation to
      attract and retain qualified personnel. The 2003 Plan was amended and restated
      in March 2004. Key employees, directors and consultants are eligible to be
      granted stock options, restricted stock, phantom shares, dividend equivalent
      rights and other stock-based awards under the 2003 Plan. Subject to adjustment
      upon certain corporate transactions or events, a maximum of 4,000,000 shares
      of
      the Class A Common Stock (but not more than 10% of the Class A Common Stock
      outstanding on the date of grant) may be subject to stock options, shares of
      restricted stock, phantom shares and dividend equivalent rights under the 2003
      Plan.





During
      the nine months ended September 30, 2007, Bimini Capital granted 25,607 phantom
      shares to employees with an aggregate fair value of $0.2 million.  For
      the three months ended September 30, 2007, Bimini Capital granted no phantom
      shares to employees. Each phantom share represents a right to receive a share
      of
      Bimini Capital's Class A Common Stock. Dividend equivalent rights were also
      granted on these phantom shares.





Phantom
      share awards are valued at the fair value of Bimini Capital’s Class A
      Common Stock at the date of the grant. The total grant date value of all awards
      since the inception of the 2003 Plan is $10.0 million.  The phantom
      share awards do not have an exercise price. The grant date value is being
      amortized to compensation expense on a straight-line basis over the vesting
      period of the respective award.  The phantom shares vest, based on the
      employees’ continuing employment, following a schedule as provided in the
      grant agreements, for periods through December 15, 2009.





As
      of
      September 30, 2007, a total of 759,457 phantom share awards have been granted
      since the inception of the 2003 Plan, however 21,421 phantom shares have been
      forfeited due to the termination of the grantee’s employment. The future
      compensation charge that was eliminated by the forfeitures totaled $195,587.
      Of
      the phantom shares not forfeited, 553,846 phantom shares have fully vested
      since
      inception of the 2003 Plan and 184,190 phantom shares remain unvested as of
      September 30, 2007.  Of the 553,846 phantom shares that have fully vested,
      478,520 phantom shares have been settled as of September 30, 2007 and an
      equivalent number of shares of the Company’s Class A Common Stock have been
      issued to grantees or surrendered by grantees to pay income taxes.  As of
      September 30, 2007, there were 75,326 phantom shares that, although fully vested
      as of such date, had not been settled.  No phantom share awards have
      expired.





For
      the nine and three months ended
      September 30, 2007, 254,185****and****141,000
      phantom shares, respectively,
      were settled and an equivalent number of shares of the Company’s Class A Common
      Stock were issued to grantees or surrendered by grantees to pay income taxes.
       For the nine and three months ended September 30, 2006, 153,657
      and****50,250
      phantom shares were settled and
      an equivalent number of shares of the Company’s Class A Common Stock were issued
      to grantees or surrendered by grantees to pay income taxes.  As of
      September 30, 2007, there were 259,516****phantom
      shares outstanding that had not
      been settled as of such date,****184,190
      of which were unvested and
      75,326 of which were vested.  Total compensation cost recognized for the
      nine and three months ended September 30, 2007 was $2.2million
      and $0.8****million,
      respectively. Total
      compensation cost recognized for the nine and three months ended September
      30,
      2006 was $2.2 million and $0.7 million, respectively. Dividends paid on
      unsettled phantom shares are charged to retained earnings when
      declared.





Bimini
      Capital also has adopted the 2004 Performance Bonus Plan (the “Performance Bonus
      Plan”).  The Performance Bonus Plan is an annual bonus plan that
      permits the issuance of the Company’s Class A Common Stock in payment of
      stock-based awards made under the plan.  No stock-based awards have been
      made under and no shares of the Company’s stock have been issued under the
      Performance Bonus Plan.





On
      July
      17, 2006, the Company granted 79,725 restricted shares of its Class A Common
      Stock to certain key employees of the Company's subsidiary pursuant to the
      terms
      of the 2003 Plan. Such share grants were initially recorded by OITRS prior
      to
      the merger with the Company. However, during the three month period ended June
      30, 2006, these awards were cancelled when the Company and the subject employees
      agreed to forego the award in contemplation of a new grant under the Company's
      2003 Plan.****The restricted shares are valued at the fair
      value of Opteum's Class A Common Stock at the date of grant, which totaled
      $693,608 for the July 2006 awards, and this amount was amortized to compensation
      over the vesting period of the award, net of any forfeitures. The restricted
      shares do not have an exercise price. Dividends that were paid on the restricted
      shares are charged to retained earnings when declared. The shares were subject
      to forfeiture prior to the November 3, 2006, vesting date.  During the
      three months ended September 30, 2006, 3,350 shares were forfeited and for
      the
      period from October 1, 2006 through November 2, 2006, an additional 1,300 shares
      were forfeited. A total of 75,075 restricted shares remained on the November
      3,
      2006 vesting date.





**NOTE
      8.  COMMITMENTS AND CONTINGENCIES**





**Outstanding
      Litigation.**The Company is involved in various lawsuits and claims, both
      actual and potential, including some that it has asserted against others, in
      which monetary and other damages are sought. Except as described below, these
      lawsuits and claims relate primarily to contractual disputes arising out of
      the
      ordinary course of the Company’s business. The outcome of such lawsuits and
      claims is inherently unpredictable. However, management believes that, in the
      aggregate, the outcome of all lawsuits and claims involving the Company will
      not
      have a material effect on the Company’s consolidated financial position or
      liquidity; however, any such outcome may be material to the results of
      operations of any particular period in which costs, if any, are recognized.
      (see
      Note 11(n))





On
      September 17, 2007, a complaint was filed in the U.S. District Court for the
      Southern District of Florida by William Kornfeld against the Company, certain
      of
      the Company’s current and former officers and directors, Flagstone Securities,
      LLC and BB&T Capital Markets alleging various violations of the federal
      securities laws and seeking class action certification.  On October 9,
      2007, a complaint was filed in the U.S. District Court for the Southern District
      of Florida by Richard and Linda Coy against the Company, certain of the
      Company’s current and former officers and directors, Flagstone Securities, LLC
      and BB&T Capital Markets alleging various violations of the federal
      securities laws and seeking class action certification.  The Company
      believes the plaintiffs’ claims in these actions are without merit, has filed a
      motion to consolidate these actions and intends to vigorously defend the
      cases.





No
      accrual for any losses that may result from the Company’s outstanding litigation
      have been recorded on the Company’s financial statements.





**Guarantees**.  Bimini
      Capital has guaranteed the obligations of OITRS and OITRS’s wholly-owned
      subsidiary, HS Special Purpose, LLC, under their respective financing facilities
      with Citigroup described in Note****11(o). These guarantees
      will remain in effect so long as the applicable financing facilities remain
      in
      effect.  If an Event of Default occurs under these financing
      facilities that are not cured or waived, Bimini Capital may be required to
      perform under its guarantees.  There is no specific limitation on the
      maximum potential future payments under these guarantees.  However,
      Bimini Capital’s liability under these guarantees would be reduced in an amount
      equal to the amount by which the collateral securing such obligations exceeds
      the amounts outstanding under the applicable facilities.





**NOTE
      9.  INCOME TAXES**





Taxable
      income, as generated by Bimini Capital’s qualifying REIT activities, is computed
      differently from Bimini Capital’s financial statement net income as computed in
      accordance with GAAP. Depending on the number and size of the various items
      or
      transactions being accounted for differently, the differences between Bimini
      Capital’s REIT taxable income (loss) and Bimini Capital’s financial statement
      net income (loss) can be substantial and each item can affect several years.
      Since inception through September 30, 2007, Bimini Capital's REIT taxable income
      is approximately $92.9 million greater than Bimini Capital's financial statement
      net income as reported in its financial statements.





For
      the
      nine months ended September 30, 2007, Bimini Capital's REIT taxable loss was
      approximately $78.0 million less than Bimini Capital's financial statement
      net
      loss from REIT activities. During 2007, Bimini Capital's most significant book
      to tax differences include the $55.3 million other-than-temporary loss on MBS
      recorded at June 30, 2007, interest on inter-company loans with OITRS, equity
      plan stock awards, depreciation of property and equipment, the accounting for
      debt issuance costs and $20.5 million of losses realized on certain MBS sales.
      The debt issuance costs are being amortized, and property and equipment are
      being depreciated, over different useful lives for tax purposes.  The
      future deduction of equity plan stock compensation against REIT taxable income
      is uncertain as to the amount, because the tax impact is measured at the fair
      value of the shares as of a future date, and this amount may be greater than
      or
      less than the financial statement expense already recognized by Bimini
      Capital.





The
      $55.3
      million other-than-temporary loss on MBS is not recognized for tax purposes,
      as
      it does not represent an actual sale of any MBS securities by Bimini
      Capital.**** For tax purposes, the gain or loss on MBS sales
      are recognized only when the actual sale transaction is
      completed.  During the nine months ended September 30, 2007, book
      losses of approximately $20.5 million on MBS sales were realized; the tax
      capital losses for these MBS sales are only available to the REIT to offset
      future capital gains, and therefore they do not reduce REIT taxable
      income.





**NOTE
      10.  SUBSEQUENT EVENTS**





On
      October 29, 2007, NYSE Regulation, Inc. notified the Company that the Company’s
      average global market capitalization over a consecutive thirty trading day
      period has fallen below the NYSE’s minimum quantitative continued listing
      criteria for REITs of $25.0 million.   As a result, trading in
      the Company’s Class A common stock on the NYSE was suspended prior to the market
      opening on November 5, 2007.  The Company has applied to list its
      Class A common stock on another national securities market, however, no
      assurance can be given that the Company’s Class A common stock will be approved
      for listing on such national securities market.   Until such time
      that the Company’s Class A common stock is approved for listing on another
      national securities market, the Company’s Class A common stock will trade over
      the counter.





**NOTE
      11.   DISCONTINUED OPERATIONS-OITRS**





**(a)
      - Background and activities as of March 31, 2007**





Beginning
      in April 2007, the Board of Managers of OITRS, at the recommendation of and
      with
      the approval of the Board of Directors of Bimini Capital, began a process that
      would eventually result in the sale or closure of all business operations within
      OITRS.  The decision to sell and/or close OITRS was made after
      evaluation of, among other things, short and long-term business prospects for
      OITRS, and its ability to recover from recent large operating losses. Due to
      this decision, all OITRS assets are considered as held for sale, and have been
      accounted for as discontinued operations under applicable accounting standards
      for all periods presented.





The
      impact of these decisions included OITRS recording impairment charges on
      goodwill and other intangible assets and on certain fixed assets.  In
      accordance with SFAS No. 144, the closure and/or sale of mortgage loan
      origination channels resulted in an impairment charge of $6.0 million during
      the
      three months ended March 31, 2007. In addition, accordance with SFAS No.
      142, OITRS recorded impairment charges for both goodwill and other
      intangible assets not subject to amortization of approximately $2.8 million
      as
      of March 31, 2007.





**(b)
      - Activities during the three months ended June 30, 2007**





On
      April
      18, 2007, the Board of Managers of OITRS approved the closure of OITRS’s
      wholesale and conduit mortgage origination channels. On April 20, 2007, the
      wholesale and conduit mortgage loan origination channels ceased accepting
      applications for new mortgages from borrowers.





On
      April
      26, 2007, OITRS entered into a binding agreement to sell a majority of its
      private-label and agency mortgage servicing portfolio, which had an aggregate
      unpaid principal balance of approximately $5.9 billion as of March 31, 2007.
      The
      aggregate sales proceeds were used to repay debt that was secured by OITRS’s
      mortgage servicing portfolio. All servicing was transferred to the buyer on
      or
      before July 2, 2007. The transaction resulted in a loss of $2.8
      million.





On
      May 7,
      2007, OITRS signed a binding agreement to sell its retail mortgage loan
      origination channel to a third party.  On June 30, 2007, OITRS entered
      into an amendment to this agreement. The sales price was $1.5 million plus
      the
      assumption of certain liabilities, including the assumption of certain future
      operating lease obligations of OITRS.





The
      closure of the wholesale and conduit mortgage loan origination channels, coupled
      with sale of the retail channel, resulted in charges totaling $7.6 million
      associated with severance payments to employees and operating lease termination
      costs, among other less significant costs.





**(c)
      – Activities during the three months ended September 30,
      2007**





On
      July
      25, 2007, OITRS entered into a binding agreement to sell a majority of its
      remaining private-label and agency mortgage servicing portfolio, which had
      an
      aggregate unpaid principal balance of approximately $3.0 billion as of June
      30,
      2007.   The aggregate sales proceeds were used to repay the debt
      that secured OITRS’s mortgage servicing portfolio.   The
      transaction, which was subject to various closing conditions, was completed
      on
      September 4, 2007.   The transaction resulted in a loss of $0.1
      million.

















The
      following table summarizes the OITRS assets held for sale and liabilities
      related to the assets held for sale, as of September 30, 2007 and December
      31,
      2006:





(in
      thousands)





**September
                30, 2007**
            
            
            **December
                31, 2006**Cash
                and cash equivalents
            
            $
            1,466
            
            
            $
            9,754Mortgage
                loans held for sale
            
            
            1,907
            
            
            
            749,834Retained
                interests, trading
            
            
            71,593
            
            
            
            104,199Securities
                held for sale
            
            
            318
            
            
            
            858Originated
                mortgage servicing rights
            
            
            2,640
            
            
            
            98,859Receivables
            
            
            11,972
            
            
            
            5,958Property
                and equipment, net
            
            
            342
            
            
            
            11,415Prepaids
                and other assets
            
            
            10,243
            
            
            
            28,447Assets
                held for sale
            
            $
            100,481
            
            
            $
            1,009,324Warehouse
                lines of credit and drafts payable
            
            $
            -
            
            
            $
            734,879Other
                secured borrowings
            
            
            37,298
            
            
            
            121,977Accounts
                payable, accrued expenses and other
            
            
            13,593
            
            
            
            23,060Liabilities
                related to assets held for sale
            
            $
            50,891
            
            
            $
            879,916





The
      following table summarizes the results of operations of OITRS for the nine
      month
      periods ended September 30, 2007 and 2006:





(in
      thousands)





**Nine
                Months Ended****September
                30, 2007**
            
            
            **September
                30, 2006**Interest
                income, net
            
            $
            22,543
            
            
            $
            66,379Interest
                expense
            
            
            (17,521
            )
            
            
            (56,189
            )Net
                interest income
            
            
            5,022
            
            
            
            10,190Gain
                (Loss) on mortgage banking activities
            
            
            (68,920
            )
            
            
            17,430Other
                income and expenses, net and non-recurring items
            
            
            (15,412
            )
            
            
            5,237Net
                servicing income (loss)
            
            
            (13,868
            )
            
            
            (8,133
            )Other
                interest expense and loss reserves
            
            
            (23,617
            )
            
            
            (5,624
            )Total
                net revenues (deficiency of revenues)
            
            
            (116,795
            )
            
            
            19,100General
                and administrative expenses
            
            
            (30,833
            )
            
            
            (52,816
            )Loss
                before benefit (provision) for income taxes
            
            
            (147,628
            )
            
            
            (33,716
            )Benefit
                (provision) for income taxes and valuation allowance
            
            
            (7,181
            )
            
            
            15,713Total
                loss from discontinued operations, net of taxes
            
            $
            (154,809
            )
            
            $
            (18,003
            )





Intercompany
      interest expense of $8.1 million and $6.8 million for the nine months ended
      September 30, 2007 and 2006, respectively, has been eliminated in
      consolidation.













The
      following table summarizes the results of operations of OITRS for the three
      month periods ended September 30, 2007 and 2006:





(in
      thousands)





**Three
                Months Ended****September
                30, 2007**
            
            
            **September
                30, 2006**Interest
                income, net
            
            $
            515
            
            
            $
            25,330Interest
                expense
            
            
            (472
            )
            
            
            (22,184
            )Net
                interest income
            
            
            43
            
            
            
            3,146Gain
                (Loss) on mortgage banking activities
            
            
            (7,105
            )
            
            
            20,136Other
                income and expenses, net and non-recurring items
            
            
            4,364
            
            
            
            2,206Net
                servicing income (loss)
            
            
            (1,241
            )
            
            
            (8,112
            )Other
                interest expense and loss reserves
            
            
            1,077
            
            
            
            (5,129
            )Total
                net revenues (deficiency of revenues)
            
            
            (2,862
            )
            
            
            12,247General
                and administrative expenses
            
            
            (2,918
            )
            
            
            (17,459
            )Loss
                before benefit (provision) for income taxes
            
            
            (5,780
            )
            
            
            (5,212
            )Benefit
                (provision) for income taxes and valuation allowance
            
            
            4,282
            
            
            
            3,063Total
                loss from discontinued operations, net of taxes
            
            $
            (1,498
            )
            
            $
            (2,149
            )





Intercompany
      interest expense of $2.8 million  for the three months ended September 30,
      2007 and 2006 has been eliminated in consolidation.




For
        the
        three month period ended September 30, 2007, OITRS accrued $0.2 million in
        expected retention bonus payments for employees related to the wind down
        of the
        mortgage origination operations.  For the period $0.1 million of such
        payments were disbursed to employees.   Liabilities recorded at
        June 30, 2007 associated with the wind down of the mortgage origination business
        were $6.6 million.   The liability was comprised of the
        following:
 
 (in
        thousands)
 
 Severance
                  payments
              
              $
              91Retention
                  bonuses
              
              
              103Property
                  lease rents
              
              
              6,054Equipment
                  lease rents
              
              
              400Total
              
              $
              6,648
 
 Changes
        in the liability for the three months ended September 30, 2007 were as
        follows:
 
 (in
        thousands)
 
 Liability
                  recorded June 30, 2007
              
              $
              6,648Less
                  severance payments made
              
              
              (91
              )Plus
                  additional retention bonuses accrued
              
              
              130Less
                  property lease rents made
              
              
              (670
              )Less
                  adjustments to anticipated property lease settlements
              
              
              (3,989
              )Less
                  adjustments to anticipated equipment lease settlements
              
              
              (350
              )Liability
                  balance at September 30, 2007
              
              $
              1,678
  Adjustments
        to anticipated lease and equipment lease rents to be paid were based on actual
        settlements obtained and revised estimates of the settlement of the remaining
        obligations.
   **(d)
      - Significant accounting policies of OITRS**





The
      following accounting policies were applicable prior to the discontinuation
      of
      the residential mortgage origination operations.  Going forward such
      policies generally will not be applicable to OITRS as it no longer originates
      residential mortgage loans. OITRS will continue to actively market for sale
      originated mortgage servicing rights and retained interests in securitizations,
      but will not generate any such assets in the future.





**Mortgage
      Loans Held for Sale.**Mortgage loans held for sale represent
      mortgage loans originated and held by the Company pending sale to investors.
      The
      mortgages are carried at the lower of cost or market as determined by
      outstanding commitments from investors or current investor yield requirements
      calculated on the aggregate loan basis. Deferred net fees or costs are not
      amortized during the period the loans are held for sale, but are recorded when
      the loan is sold. These transfers of financial assets are accounted for as
      sales
      for financial reporting purposes when control over the assets has been
      surrendered. Control over transferred assets is surrendered when (i) the assets
      have been isolated from the Company; (ii) the purchaser obtains the right,
      free
      of conditions that constrain such purchaser from taking advantage of that right,
      to pledge or exchange the transferred assets and (iii) the Company does not
      maintain effective control over the transferred assets through an agreement
      to
      repurchase them before their maturity. These transactions are treated as sales
      in accordance with SFAS No. 140,*Accounting for Transfers and Servicing of
      Financial Assets and Extinguishment of Liabilities*. Gains or losses on such
      sales are recognized at the time legal title transfers to the purchaser and
      are
      based upon the difference between the sales proceeds from the purchaser and
      the
      allocated basis of the loan sold, adjusted for net deferred loan fees and
      certain direct costs and selling costs. A valuation allowance is recorded to
      adjust mortgage loans held for sale to the lower of cost or market.




**Retained
      Interest, Trading.**The Company uses warehouse loan
      arrangements to finance the origination and purchase of pools of fixed and
      adjustable-rate residential mortgage loans (the “Mortgage Loans”). Subsequent to
      their origination or purchase, OITRS either sells these Mortgage Loans to
      third-party institutional investors through bulk sale arrangements or through
      securitization transactions. The Company generally makes several representations
      and warranties regarding the performance of the Mortgage Loans in connection
      with each sale or securitization.





In
      a
      securitization, the Company accumulates the desired amount of Mortgage Loans
      and
      securitizes them in order to create marketable securities. First, pursuant
      to a
      Mortgage Loan Purchase Agreement (“MLPA”), the Company sells Mortgage Loans to
      Opteum Mortgage Acceptance Corporation (“OMAC”), the Company's wholly-owned
      special purpose entity created for the execution of these securitizations.
      Under
      this MLPA, the Company makes general representations and warranties for the
      Mortgage Loans sold by the Company to OMAC.





OMAC
      then
      deposits the Mortgage Loans purchased from the Company into a Real Estate
      Mortgage Investment Conduit (“REMIC”) trust where, pursuant to a Pooling and
      Servicing Agreement (“P&S Agreement”), the rights to the cash flows
      associated with such Mortgage Loans are sold to investors in the form of
      marketable debt securities. These securities, issued by the REMIC trust, are
      divided into different classes of certificates (the “Certificates”) with varying
      claims to payments received on the Mortgage Loans.





Certain
      of these Certificates are offered to the public (the “Public Certificates”)
      pursuant to a prospectus. These Public Certificates are sold to underwriters
      on
      the closing date pursuant to an underwriting agreement. The proceeds from the
      sale of the Public Certificates to the underwriters (less an underwriting
      discount) are ultimately transferred to the Company as partial consideration
      for
      the Mortgage Loans sold to OMAC pursuant to the MLPA.





Finally,
      subsequent to a securitization transaction as described above, the Company
      typically executes an additional net interest margin (“NIM”) securitization, or
“resecuritization” of the non-publicly offered Certificates, representing
      prepayment penalties and over-collateralization fundings (the “Underlying
      Certificates”). This NIM securitization is typically transacted as
      follows:





OMAC
      first deposits the Underlying Certificates into a trust (the “NIM Trust”)
      pursuant to a deposit trust agreement. The NIM Trust, pursuant to an indenture,
      then issues (i) notes (the “NIM Notes”) representing interests in the Underlying
      Certificates and (ii) an owner trust certificate (the “Owner Trust Certificate”)
      representing the residual interest in the NIM Trust. The NIM Notes are sold
      to
      third parties via private placement transactions. The net proceeds from the
      sale
      of the NIM Notes and the Owner Trust Certificate are then transferred from
      OMAC
      to the Company. The Owner Trust Certificates from the Company's various
      securitizations represent retained interests, trading which are included in
      discontinued operations on the accompanying consolidated balance
      sheet.





**Mortgage
      Servicing Rights.**The estimated fair value of MSRs is
      determined by obtaining a market valuation from a specialist who brokers
      MSRs.  The broker, Interactive Mortgage Advisors, LLC, is 50% owned by
      OITRS.  To determine the market valuation, the broker uses a valuation
      model that incorporates assumptions relating to the estimate of the cost of
      servicing the loan, a discount rate, a float value, an inflation rate, ancillary
      income of the loan, prepayment speeds and default rates that market
      participant’s use for acquiring similar servicing rights. Gains or losses on the
      sale of MSRs are recognized when title and all risks and rewards have
      irrevocably passed to the purchaser of such MSRs and there are no significant
      unresolved contingencies.




In
      March
      2006, the FASB issued SFAS No. 156,*Accounting for Servicing of Financial
      Assets*. SFAS 156 amends SFAS 140 with respect to the accounting for
      separately-recognized servicing assets and liabilities. SFAS 156 requires all
      separately-recognized servicing assets and liabilities to be initially measured
      at fair value and permits companies to elect, on a class-by-class basis, to
      account for servicing assets and liabilities on either a lower of cost or market
      value basis or a fair value measurement basis. OITRS elected to early adopt
      SFAS
      156 as of January 1, 2006, and to measure all mortgage servicing assets at
      fair
      value (and as one class).  As a result of adopting SFAS 156, OITRS
      recognized a $2.6 million after-tax ($4.3 million pre-tax) increase in retained
      earnings as of January 1, 2006, representing the cumulative effect adjustment
      of
      re-measuring all servicing assets and liabilities that existed as of December
      31, 2005, from a lower of amortized cost or market basis to a fair value
      basis.





**Gain
      (Loss) on Sale of Loans.**Gains or losses on the sale of
      mortgage loans are recognized at the time legal title transfers to the purchaser
      of such loans based upon the difference between the sales proceeds from the
      purchaser and the allocated basis of the loan sold, adjusted for net deferred
      loan fees and certain direct costs and selling costs. The Company defers net
      loan origination costs and fees as a component of the loan balance on the
      balance sheet. Such costs are not amortized and are recognized into income
      as a
      component of the gain or loss upon sale. Accordingly, salaries, commissions,
      benefits and other operating expenses of $22.2 million and $0.0 million, for
      the
      nine and three months ended September 30, 2007 and $45.1 million and $14.9
      million, respectively, for the nine and three months ended September 30, 2006
      were capitalized as direct loan origination costs and reflected in the basis
      of
      loans sold for gain on sale recognition purposes.  The net gain/(loss)
      on mortgage loans for the nine and three months ended September 30, 2007 was
      ($65.3) million and ($12.8) million and for the nine and three months ended
      September 30, 2006 was ($18.7) million and ($20.7) million,
      respectively.




**Servicing
      Fee Income.**Servicing fee income is generally a fee based on
      a percentage of the outstanding principal balances of the mortgage loans
      serviced by the Company (or by a subservicer where the Company is the master
      servicer) and is recorded as income as the installment payments on the mortgages
      are received by the Company or the subservicer.





**Income
      taxes.**OITRS and its activities are subject to corporate
      income taxes and the applicable provisions of SFAS No. 109,*Accounting for
      Income Taxes*. Deferred tax assets and liabilities are recognized for the
      future tax consequences attributable to differences between the financial
      statement carrying amounts of existing assets and liabilities and their
      respective tax basis. Deferred tax assets and liabilities are measured using
      enacted tax rates expected to apply to taxable income in the years in which
      those temporary differences are expected to be recovered or settled. The effect
      on deferred tax assets and liabilities of a change in tax rates is recognized
      in
      income in the period that includes the enactment date.  In assessing
      the realizability of deferred tax assets, management considers whether it is
      more likely than not that some portion or all of the deferred tax assets will
      not be realized.  To the extent management believes deferred tax
      assets will not be fully realized in future periods, a provision is recorded
      so
      as to reflect the net portion, if any, of the deferred tax asset management
      expects to realize.





**(e)
      - Mortgage Loans Held for Sale**





Prior
      to
      ceasing operations, upon the closing of a residential mortgage loan or shortly
      thereafter, OITRS would sell or securitize the majority of its mortgage loan
      originations. OITRS also sold mortgage loans insured or guaranteed by various
      government-sponsored entities and private insurance agencies. The insurance
      or
      guaranty is provided primarily on a nonrecourse basis to OITRS, except where
      limited by the Federal Housing Administration and Veterans Administration and
      their respective loan programs.  Mortgage loans held for sale consist
      of the following as of September 30, 2007 and December 31, 2006:




(in
      thousands)




**September
                30, 2007**
            
            
            **December
                31, 2006**Mortgage
                loans held for sale, and other, net
            
            $
            6,203
            
            
            $
            741,545Deferred
                loan origination costs and other-net
            
            
            -
            
            
            
            9,188Lower
                of cost or market and  valuation allowance
            
            
            (4,296
            )
            
            
            (899
            )$
            1,907
            
            
            $
            749,834





Included
      in mortgage loans held for sale (as of December 31, 2006 only) above are
      IRLCs.  Fluctuations in the fair market value of IRLCs and other
      derivatives employed for hedging are reflected in the consolidated statement
      of
      operations under discontinued operations.





**(f)
      -   Retained Interest, Trading**





Retained
      interest, trading is the subordinated interests retained by OITRS resulting
      from
      securitizations and includes the over-collateralization and residual net
      interest spread remaining after payments to the Public Certificates and NIM
      Notes. Retained interest, trading represents the present value of estimated
      cash
      flows to be received from these subordinated interests in the future. The
      subordinated interests retained are classified as “trading securities” and are
      reported at fair value with unrealized gains or losses reported in
      earnings.




All
      of
      OITRS’s securitizations were structured and are accounted for as sales in
      accordance with SFAS No. 140,*Accounting for Transfers and Servicing of
      Financial Assets and Extinguishments of Liabilities*. Generally, to meet the
      sale treatment requirements of SFAS No. 140, the REMIC trust is structured
      as a
“qualifying special purpose entity” or QSPE, which specifically limits the REMIC
      trust's activities, and OITRS surrenders control over the mortgage loans upon
      their transfer to the REMIC trust.




**Valuation
      of Investments.**OITRS classifies its retained interests as trading
      securities and therefore records these securities at their estimated fair value.
      In order to value the unrated, unquoted, investments, OITRS will record these
      assets at their estimated fair value utilizing pricing information available
      directly from dealers and the present value calculated by projecting the future
      cash flows of an investment on a publicly available analytical system. When
      a
      publicly available analytical system is utilized, OITRS will input the following
      variable factors which will have an impact on determining the market
      value:




*Interest
      Rate Forecast*. LIBOR interest rate curve.




*Discount
      Rate*. The present value of all future cash flows utilizing a discount rate
      assumption established at the discretion of OITRS to represent market conditions
      and value of similar instruments with similar risks.  Discount rates
      used will vary over time.  Management observes discount rates used for
      assets with similar risk profiles.  In selecting which assets to
      monitor for variations in discount rates, management seeks to identify assets
      that share most, if not all of the risk attributes of the Company’s retained
      interests, trading.  Such assets are typically traded between market
      participants whereby the discount rate is the primary variable.




*Prepayment
      Forecast*. The prepayment forecast may be expressed by OITRS in accordance
      with one of the following standard market conventions: 1) Constant Prepayment
      Rate (CPR) or 2) Percentage of a Prepayment Vector (PPV). Prepayment forecasts
      may be changed as OITRS observes trends in the underlying collateral as
      delineated in the Statement to Certificate Holders generated by the REMIC
      trust’s Trustee for each underlying security.  Prepayment forecast
      will also vary over time as the level of interest rates change, the difference
      between rates available to borrowers on adjustable rate versus fixed rate
      mortgages change and non-interest rate related variables fluctuate such as
      home
      price appreciation, among others.




*Credit
      Performance Forecast.*A forecast of future credit performance of the
      underlying collateral pool will include an assumption of default frequency,
      loss
      severity, and a recovery lag. In general, OITRS will utilize the combination
      of
      default frequency and loss severity in conjunction with a collateral prepayment
      assumption to arrive at a target cumulative loss to the collateral pool over
      the
      life of the pool based on historical performance of similar collateral by the
      originator. The target cumulative loss forecast will be developed and noted
      at
      the pricing date of the individual security but may be updated by OITRS
      consistent with observations of the actual collateral pool
      performance.  The Company utilizes a third party source to forecast
      credit performance.




Default
      Frequency may be expressed by OITRS in accordance with any of three standard
      market conventions: 1) Constant Default Rate (CDR) 2) Percentage of a Standard
      Default Assumption (SDA) curve, or 3) a vector or curve established to meet
      forecasted performance for specific collateral pools.




Loss
      Severity will be expressed by OITRS in accordance with historical performance
      of
      similar collateral and the standard market conventions of a percentage of the
      unpaid principal balance of the forecasted defaults lost during the foreclosure
      and liquidation process.




During
      the first year of a new issue OITRS may balance positive or adverse effects
      of
      the prepayment forecast and the credit performance forecast allowing for
      deviation between actual and forecasted performance of the collateral pool.
      After the first year OITRS will generally adjust the Prepayment and Credit
      Performance Forecasts to replicate actual performance trends without balancing
      adverse and positive effects.




The
      following table summarizes OITRS’s residual interests in securitizations as of
      September 30, 2007 and December 31, 2006:




(in
      thousands)





**Series**
            
            **Issue
                Date**
            
            **September
                30, 2007**
            
            **December
                31, 2006**HMAC
                2004-1
            
            March
                4, 2004
            $
            2,248
            $
            2,948HMAC
                2004-2
            
            May
                10, 2004
            
            707
            
            1,939HMAC
                2004-3
            
            June
                30, 2004
            
            175
            
            362HMAC
                2004-4
            
            August
                16, 2004
            
            1,033
            
            1,544HMAC
                2004-5
            
            September
                28, 2004
            
            3,261
            
            4,545HMAC
                2004-6
            
            November
                17, 2004
            
            4,179
            
            9,723OMAC
                2005-1
            
            January
                31, 2005
            
            6,704
            
            13,331OMAC
                2005-2
            
            April
                5, 2005
            
            8,399
            
            14,259OMAC
                2005-3
            
            June
                17, 2005
            
            10,070
            
            16,091OMAC
                2005-4
            
            August
                25, 2005
            
            10,611
            
            12,491OMAC
                2005-5
            
            November
                23, 2005
            
            9,217
            
            8,916OMAC
                2006-1
            
            March
                23, 2006
            
            11,057
            
            13,219OMAC
                2006-2
            
            June
                26, 2006
            
            3,932
            
            4,831Total
            
            
            $
            71,593
            $
            104,199











Key economic assumptions used in measuring the fair value of retained interests
      at the date of securitization resulting from securitizations completed in 2006
      were as follows:





**December
                31, 2006**Prepayment
                speeds (CPR)
            
            
            36.25
            %Weighted-average-life
                (in years)
            
            
            4.18Expected
                credit losses
            
            
            0.74
            %Discount
                rates
            
            
            16.81
            %Interest
                rates
            
            Forward
                LIBOR Yield curve





As
      of
      September 30, 2007 and December 31, 2006, key economic assumptions and the
      sensitivity of the current fair value of residual cash flows to the immediate
      10% and 20% adverse change in those assumptions are as follows:





(in
      thousands)





**September
                30, 2007**
            
            
            **December
                31, 2006**Carrying
                value of retained interests – fair value
            
            $
            71,593
            
            
            $
            104,199Weighted
                average life (in years)
            
            
            4.57
            
            
            
            4.26Prepayment
                assumption (annual rate)
            
            
            30.46
            %
            
            
            37.88
            %Impact
                on fair value of 10% adverse change
            
            $
            (5,394
            )
            
            $
            (8,235
            )Impact
                on fair value of 20% adverse change
            
            $
            (10,095
            )
            
            $
            (14,939
            )Expected
                credit losses (% of original unpaid principal balance)
            
            
            0.83
            %
            
            
            0.56
            %Impact
                on fair value of 10% adverse change
            
            $
            (4,474
            )
            
            $
            (3,052
            )Impact
                on fair value of 20% adverse change
            
            $
            (8,899
            )
            
            $
            (6,098
            )Residual
                cash-flow discount rate
            
            
            20.00
            %
            
            
            16.03
            %Impact
                on fair value of 10% adverse change
            
            $
            (4,090
            )
            
            $
            (4,575
            )Impact
                on fair value of 20% adverse change
            
            $
            (7,808
            )
            
            $
            (8,771
            )Interest
                rates on variable and adjustable loans and bonds
            
            Forward
                LIBOR Yield Curve
            
            
            Forward
                LIBOR Yield CurveImpact
                on fair value of 10% adverse change
            
            $
            (20,473
            )
            
            $
            (18,554
            )Impact
                on fair value of 20% adverse change
            
            $
            (38,997
            )
            
            $
            (39,292
            )





These
      sensitivities are hypothetical and should be used with caution. As the figures
      indicate, changes in fair value based upon a 10% variation in assumptions
      generally cannot be extrapolated because the relationship of the change in
      assumption to the change in fair value may not be linear. Also, in this table,
      the effect of the variation in a particular assumption on the fair value of
      the
      retained interest is calculated without changing any other assumption, in
      reality, changes in one factor may result in changes in another which may
      magnify or counteract the sensitivities. To estimate the impact of a 10% and
      20%
      adverse change of the Forward LIBOR curve, a parallel shift in the forward
      LIBOR
      curve was assumed based on the Forward LIBOR curve as of September 30, 2007
      and
      December 31, 2006.













Static
      pool loss percentages are calculated by using the original unpaid principal
      balance of each pool of assets as the denominator. The following static pool
      loss percentages are calculated based upon all OITRS securitizations that have
      been completed to date:





(in
      thousands)





**Series**
            **Issue
                Date**
            
            **Original
                Unpaid Principal Balance**
            
            
            **Actual
                Losses Through September 30, 2007**
            
            
            **Projected
                Future Credit Losses as of September 30, 2007**
            
            
            **Projected
                Total Credit Losses as of September 30, 2007**HMAC
                2004-1
            March
                4, 2004
            
            $
            309,710
            
            
            
            0.25
            %
            
            
            0.16
            %
            
            
            0.41
            %HMAC
                2004-2
            May
                10, 2004
            
            
            388,737
            
            
            
            0.59
            %
            
            
            0.17
            %
            
            
            0.76
            %HMAC
                2004-3
            June
                30, 2004
            
            
            417,055
            
            
            
            0.29
            %
            
            
            0.22
            %
            
            
            0.51
            %HMAC
                2004-4
            August
                16, 2004
            
            
            410,123
            
            
            
            0.24
            %
            
            
            0.22
            %
            
            
            0.46
            %HMAC
                2004-5
            September
                28, 2004
            
            
            413,875
            
            
            
            0.25
            %
            
            
            0.29
            %
            
            
            0.54
            %HMAC
                2004-6
            November
                17, 2004
            
            
            761,027
            
            
            
            0.57
            %
            
            
            0.42
            %
            
            
            0.99
            %OMAC
                2005-1
            January
                31, 2005
            
            
            802,625
            
            
            
            0.22
            %
            
            
            0.50
            %
            
            
            0.72
            %OMAC
                2005-2
            April
                5, 2005
            
            
            883,987
            
            
            
            0.17
            %
            
            
            0.48
            %
            
            
            0.65
            %OMAC
                2005-3
            June
                17, 2005
            
            
            937,117
            
            
            
            0.18
            %
            
            
            0.50
            %
            
            
            0.68
            %OMAC
                2005-4
            August
                25, 2005
            
            
            1,321,739
            
            
            
            0.10
            %
            
            
            0.78
            %
            
            
            0.88
            %OMAC
                2005-5
            November
                23, 2005
            
            
            986,277
            
            
            
            0.05
            %
            
            
            0.94
            %
            
            
            0.99
            %OMAC
                2006-1
            March
                23, 2006
            
            
            934,441
            
            
            
            0.05
            %
            
            
            0.96
            %
            
            
            1.01
            %OMAC
                2006-2
            June
                26, 2006
            
            
            491,572
            
            
            
            0.03
            %
            
            
            1.77
            %
            
            
            1.80
            %Total
            
            
            $
            9,058,285








The
      table
      below summarizes certain cash flows received from and paid to securitization
      trusts:





(in
      thousands)





**Nine
                Months Ended****September
                30, 2007**
            
            
            **September
                30, 2006**Proceeds
                from securitizations
            
            $
            -
            
            
            $
            1,436,838Servicing
                fees received
            
            
            11,375
            
            
            
            13,720Servicing
                advances
            
            
            5,110
            
            
            
            547Cash
                flows received on retained interests
            
            
            4,479
            
            
            
            3,642





The
      following information presents quantitative information about delinquencies
      and
      credit losses on securitized financial assets as of September 30, 2007 and
      December 31, 2006:





(in
      thousands)





**As
                of Date**
            
            **Total
                Principal Amount of Loans**
            
            **Principal
                Amount of Loans 60 Days or more past due**
            
            **Net
                Credit Losses**September
                30, 2007
            $
            4,735,080
            $
            337,087
            $
            17,884December
                31, 2006
            
            5,849,013
            
            138,205
            
            5,210













**(g)
                – Mortgage Servicing Rights,
                Net**





Activities
      for MSRs are summarized as follows for the nine months ended September 30,
      2007
      and for the year ended December 31, 2006:





(in
      thousands)




**September
                30, 2007**
            
            
            **December
                31, 2006**Balance
                at beginning of period
            
            $
            98,859
            
            
            $
            86,082Adjustment
                to fair value upon adoption of SFAS 156 as of January 1,
                2006
            
            
            -
            
            
            
            4,298Additions
            
            
            7,727
            
            
            
            43,175Changes
                in fair value:Changes
                in fair value due to changes in market conditions and
                run-off
            
            
            (13,785
            )
            
            
            (33,551
            )Changes
                in fair value due to change in valuation assumptions
            
            
            (2,558
            )
            
            
            (1,145
            )Less
                servicing sold
            
            
            (87,603
            )
            
            
            -Balance
                at end of period
            
            $
            2,640
            
            
            $
            98,859







The
      Company has elected to account for all originated MSRs as one class and,
      therefore, all MSRs are carried at fair value. As a result of the early adoption
      of SFAS 156, the carrying value of the MSRs were increased by approximately
      $4.3
      million (pre-tax) as of January 1, 2006. As required by the provisions of SFAS
      156, the net of tax effect was recorded as a cumulative effect adjustment to
      retained earnings of OITRS as of January 1, 2006. In addition, changes in value
      due to run-offs of the portfolio are recorded as valuation adjustments instead
      of amortization.




The
      fair
      value of MSRs is determined using discounted cash flow techniques based on
      market assumptions. Changes in fair value are the result of changes in market
      conditions, changes in valuation assumptions and run-off of the underlying
      mortgage loans. Changes in fair value due to run-off of the underlying mortgage
      loans and changes in value due to changes in market conditions are grouped
      together above. When the underlying assumptions used for valuation purposes
      are
      changed, the effect on fair value is presented separately.  For the
      nine and three months ended September 30, 2007, such changes to the underlying
      assumptions resulted in changes in fair value of $2.6 million and $0.0 million.
      For the nine and three months ended September 30, 2006, such changes to the
      underlying assumptions resulted in changes in fair value of $1.1 million and
      $0.0 million, respectively.  During the nine and three months ended
      September 30, 2007, the MSR value increased/(decreased) by $96.2 million and
      $29.5 million. During the nine and three months ended September 30, 2006, the
      MSR value increased/(decreased) by and $15.2 million and
      $4.6****million, respectively. The decreases for the nine and
      three months ended September 30, 2007 include the sale of
      $87.6****and****$29.1 million,
      respectively, of MSR. Excluding the MSR sale, the decreases for the nine and
      three months ended September 30, 2007, were ($8.6) million and
      ($0.4)****million,
      respectively.  Additions/reductions to the servicing portfolio, net of
      run-off, for the nine and three months ended September 30, 2007, were
      ($1.3)****million and ($0.5)****million.
      Additions to the servicing portfolio, net of run-off, for the nine and three
      months ended September 30, 2006, were $20.3 million and $13.7 million,
      respectively. The balance of the changes in fair value for the nine and three
      months ended September 30, 2007 and 2006 were the result of changes market
      conditions. Estimates of fair value involve several assumptions, including
      the
      key valuation assumptions about market expectations of future prepayment rates,
      interest rates and discount rates. Prepayment rates are projected using a
      prepayment model. The model considers key factors, such as refinance incentive,
      housing turnover, seasonality and aging of the pool of loans. Prepayment speeds
      incorporate expectations of future rates implied by the forward LIBOR/swap
      curve, as well as collateral specific information.











As
      of
      September 30, 2007 and December 31, 2006, key economic assumptions and the
      sensitivity of the current fair value of MSR rights cash flows to the immediate
      10% and 20% adverse change in those assumptions are as
      follows:  (Note:  base case prepayment and discount rate
      assumptions are a weighted average of the values applied to the various mortgage
      loans).





(in
      thousands)





**September
                30, 2007**
            
            
            **December
                31, 2006**Prepayment
                assumption (annual rate) (PSA)
            
            
            450.9
            
            
            
            424.6Impact
                on fair value of 10% adverse change
            
            $
            (74
            )
            
            $
            (3,923
            )Impact
                on fair value of 20% adverse change
            
            $
            (144
            )
            
            $
            (7,557
            )MSR
                Cash-Flow Discount Rate
            
            
            14.16
            %
            
            
            14.50
            %Impact
                on fair value of 10% adverse change
            
            $
            (124
            )
            
            $
            (3,505
            )Impact
                on fair value of 20% adverse change
            
            $
            (236
            )
            
            $
            (6,727
            )





These
      sensitivities are entirely hypothetical and should be used with caution. As
      the
      figures indicate, changes in fair value based upon 10% and 20% variations in
      assumptions generally cannot be extrapolated to greater or lesser percentage
      variation because the relationship of the change in assumption to the change
      in
      fair value may not be linear. Also, in this table, the effect of the variation
      in a particular assumption on the fair value of the MSR is calculated without
      changing any other assumption. In reality, changes in one factor may result
      in
      changes in another which may magnify or counteract the
      sensitivities.













**(h)
      - Warehouse lines of credit and drafts payable**





OITRS
      issues drafts or wires at loan settlement in order to facilitate the closing
      of
      mortgage loans held for sale. Drafts payable represent mortgage loans on which
      a
      closing has occurred prior to quarter end but the related drafts have not
      cleared the respective bank. Upon clearing the bank, the drafts are funded
      by
      the appropriate warehouse line of credit. Warehouse and aggregate lines of
      credit and loan sale agreements accounted for as financing consisted of the
      following as of September 30, 2007 and December 31, 2006:




(in
      thousands)




**Warehouse
                and aggregation lines of credit:**
            
            **September
                30, 2007**
            
            
            **December
                31, 2006**A
                committed warehouse line of credit for $100.0 million between OITRS
                and
                Residential Funding Corporation ("RFC"). The agreement expired on
                February
                28, 2007 and was not renewed.   RFC is now a party to the
                JPM syndicated facility below.
            
            $
            -
            
            
            $
            6,172A
                syndicated committed warehouse line of credit for $850.0 million
                as of
                December 31, 2006, between OITRS and JP Morgan Chase (“JPM”). The
                agreement was scheduled to expire on May 30, 2007.  The
                agreement was extended until July 31, 2007 and the limit reduced
                in
                stages, initially to $155 million through June 30, 2007 and $50.0
                million
                through July 31, 2007.  The agreement provides for interest
                rates based upon one month LIBOR plus a margin of 0.60% to 1.50%
                depending
                on the product originated or acquired.  During the extension
                period the applicable margin was increased to 1.5% on all
                borrowings.
            
            
            -
            
            
            
            409,609An
                aggregation facility for $1.5 billion as of December 31, 2006 for
                the
                whole loan and servicing rights facility, collectively, (of which
                no more
                than $100.0 million as of December 31, 2006 may be allocated to the
                servicing rights facility) between HS Special Purpose, LLC, a wholly-owned
                subsidiary of OITRS, and Citigroup Global Markets Realty Corp.
                (“Citigroup”) to aggregate loans pending securitization. The agreement was
                scheduled to expire on December 19, 2007. The agreement provides
                for
                interest rates based upon one month LIBOR plus a margin of
                0.30%.  The facility was amended on May 25, 2007 and the limit
                was reduced to $300 million maturity date changed to September 30,
                2007.  On August 9, 2007, the facility was further amended and
                the limit was reduced to $40 million.
            
            
            -
            
            
            
            5,358A
                $750.0 million purchase and security agreement between OITRS and
                UBS
                Warburg Real Estate Securities, Inc. (“UBS Warburg”).  The
                agreement expired on February 28, 2007 and was not
                renewed.
            
            
            -
            
            
            
            3,283Drafts
                payable
            
            
            -
            
            
            
            6,542Loan
                sale agreements accounted for as financings:An
                uncommitted $700.0 million purchase agreement between OITRS and Colonial
                Bank.  The facility is due upon demand and can be cancelled by
                either party upon notification to the counterparty.  OITRS
                incurs a charge for the facility based on one month LIBOR plus 0.50%
                for
                the first $300.0 million purchased and one month LIBOR plus 0.75%
                for the
                amount used above and beyond $300.0 million.  The facility is
                secured by loans held for sale and cash generated from sales to
                investors.  The borrowing capacity of the facilities was reduced
                to $30 million effective July 1, 2007 and both parties agreed to
                cancel
                the facility effective July 31, 2007.
            
            
            -
            
            
            
            303,915Total
                warehouse lines and drafts payable
            
            $
            -
            
            
            $
            734,879





The
      facilities were secured by mortgage loans and other assets of
      OITRS.  The facilities contained various covenants pertaining to
      tangible net worth, net income, available cash and liquidity, leverage ratio,
      and servicing delinquency.  As of September 30, 2007, all such
      facilities have matured.





**(i)
      – Other Secured Borrowings**





Other
                secured borrowings consisted of the following as of September 30,
                2007 and
                December 31, 2006:




(in
                thousands)




September
                30, 2007
            
            
            December
                31, 2006A
                committed warehouse line of credit between OITRS and JP Morgan Chase,
                that
                allows for a sublimit for Originated Mortgage Servicing Rights. The
                agreement was extended until July 31, 2007 and the limit reduced
                in
                stages, initially to $75.0 million through June 30, 2007 and $20.0
                million
                through July 31, 2007.  The agreement was further extended until
                September 28, 2007. The agreement provides for interest rate based
                on
                LIBOR plus 1.50% to 1.85% depending on collateral type.
            
            $
            -
            
            
            $
            71,657Citigroup
                Global Realty Inc., line of credit for $80.0 million secured by the
                retained interests in securitizations through OMAC 2006-2. The facility
                expires on December 19, 2007. The agreement provides for interest
                rate
                based on LIBOR plus 1.00%.
            
            
            37,298
            
            
            
            50,320$
            37,298
            
            
            $
            121,977





The
      Citigroup Global Reality Inc. facility is secured by the retained interests
      in
      securitizations of OITRS.  The facility contains covenants pertaining
      to tangible net worth, available cash and liquidity and a leverage
      ratio.  As of September 30, 2007, OITRS is in compliance with all such
      covenants.





**(j)  -
      Income taxes**





As
      previously described, Bimini Capital acquired OITRS on November 3, 2005, and
      OITRS is a taxpaying entity for income tax purposes and is taxed separately
      from
      Bimini Capital.  Therefore, OITRS separately reports an income tax
      provision or benefit based on its own taxable activities.  The income tax
      provision for the nine and three months ended September 30, 2007 differs from
      the amount determined by applying the statutory Federal rate of 35% to the
      pre-tax loss due primarily to the recording of and adjustment to the deferred
      tax asset valuation allowances.  The net deferred tax assets generated by
      the net loss incurred during the nine months ended September 30, 2007 are offset
      in their entirety by a deferred tax asset valuation allowance.  The amount
      of the gross tax benefit generated by this loss is reduced by an offsetting
      valuation allowance of the same amount.





OITRS
      recorded a deferred tax asset valuation allowance of approximately $37.4 million
      during the three month period ended March 31, 2007; there was no allowance
      recorded previously.  At December 31, 2006, OITRS had recorded net deferred
      tax assets of approximately $7.1 million. The recording of the valuation
      allowance (among other items) during the three months ended March 31, 2007
      resulted in OITRS recording an income tax provision of $11.5 million, and
      reduced the December 31, 2006 net deferred tax asset to a net deferred tax
      liability at March 31, 2007 of approximately $4.3 million.   As part
      of the recording of this allowance, State tax NOLs were fully allowanced, as
      their availability to fully offset recorded deferred tax liabilities was not
      assured.  The losses incurred by OITRS post-March 31, 2007 are sufficient
      to ensure that the State NOLs will be available to offset recorded deferred
      tax
      liabilities and realized gains on sales of OITRS assets; therefore the net
      deferred tax liability of $4.3 million is now offset by the deferred tax assets
      related to the State NOLs expected to be realized, and this is achieved by
      a
      $4.3 million reduction in the deferred tax asset valuation allowance previously
      recorded against the State NOLs.  Consequently, the benefit for income
      taxes for the three months ended September 30, 2007 is $4.3 million, and the
      provision for income taxes for the nine months ended September 30, 2007 is
      $7.2
      million.





The
      ultimate realization of deferred tax assets is dependent upon the generation
      of
      future taxable income within OITRS.  Management considers the
      scheduled reversal of deferred tax liabilities, projected future taxable
      income, and tax planning strategies in making this assessment, including the
      impacts of the closing of the OITRS wholesale and conduit mortgage loan
      origination channels, the sale of the retail mortgage loan origination channel,
      and other actions related to the operations of OITRS.  At this time,
      management believes it is more likely than not that the Company will not realize
      the full benefits of all of the federal and state tax loss carryforwards, and
      that the Company will not realize any benefit of the other deferred tax
      assets.  Therefore, the Company has recorded a valuation allowance against
      the net deferred tax assets of OITRS.  As of September 30, 2007, OITRS has
      an estimated federal tax net operating loss carryforward of approximately $187
      million, which begins to expire in 2025, and is fully available to offset future
      taxable income.





The
      effective income tax benefit for the nine and three months ended September
      30,
      2006 differs from the amount determined by applying the statutory Federal rate
      of 35% to the pre-tax loss due primarily to permanent differences, the state
      tax
      benefit (net of the Federal tax effect) and valuation allowance.





**(k)
      - Transactions With a Related Party**





During
      the nine and three months ended September 30, 2007, OITRS received aggregate
      payments of $0.4 million and $0.0 million, respectively, from Southstar Funding,
      LLC (“Southstar Funding”) primarily in exchange for the performance of certain
      interim loan servicing functions.  Southstar Funding is fifty percent
      owned by Southstar Partners, LLC (“Southstar Partners”). Certain former officers
      of OITRS, one of whom is also a former director of the Company, own membership
      interests in Southstar Partners.  In addition, a former officer of
      OITRS as well as a former director of the Company serves on the Board of
      Managers of Southstar Funding.  As of September 30, 2007, there were
      no amounts due from or owed to Southstar Partners or Southstar
      Funding.****Amounts paid for interim loan servicing were
      determined on an arms-length basis and are comparable to amounts charged to
      other, non-related parties.On
      April 11, 2007, Southstar Funding filed a voluntary petition under Chapter
      7 of
      the U.S. Bankruptcy Code.





**(l)
      - Loans Sold to Investors**. Generally, OITRS is not exposed to
      significant credit risk on its loans sold to investors. In the normal course
      of
      business, OITRS provides certain representations and warranties during the
      sale
      of mortgage loans which obligate it to repurchase loans which are subsequently
      unable to be sold through the normal investor channels. The repurchased loans
      are secured by the related real estate properties, and can usually be sold
      directly to other permanent investors. There can be no assurance, however,
      that
      OITRS will be able to recover the repurchased loan value either through other
      investor channels or through the assumption of the secured real
      estate.




OITRS
      recognizes a liability for the estimated fair value of this obligation at the
      inception of each mortgage loan sale based on the anticipated repurchase levels
      and historical experience. The liability is recorded as a reduction of the
      gain
      on sale of mortgage loans and included as part of other liabilities in the
      accompanying financial statements.




Changes
      in the liability during the nine months ended September 30, 2007 and
      2006:




(in
      thousands)




**Nine
                Months Ended****September
                30, 2007**
            
            
            **September
                30, 2006****Balance—Beginning
                of period**
            
            $
            7,136
            
            
            $
            2,038**Provision**
            
            
            16,159
            
            
            
            3,803**Charge-Offs**
            
            
            (14,013
            )
            
            
            (2,456
            )**Balance—End
                of period**
            
            $
            9,282
            
            
            $
            3,385







**(m)
      - Net Worth Requirements**. OITRS is required to maintain certain
      specified levels of minimum net worth to maintain its approved status with
      Fannie Mae, HUD, and other investors. As of September 30, 2007, the highest
      minimum net worth requirement applicable to OITRS was approximately $0.3
      million. OITRS had negative net worth of approximately ($65.2) million as of
      September 30, 2007. Subject to the approval of Bimini Capital’s Board of
      Directors, Bimini Capital may forgive inter-company debt in order to restore
      the
      net worth of OITRS to an amount in excess of the required
      minimum.  ****




**(n)**
      - **Outstanding Litigation**. OITRS
      is involved in various lawsuits and claims,
      both actual and potential, including some that it has asserted against others,
      in which monetary and other damages are sought. These lawsuits and claims relate
      primarily to contractual disputes arising out of the ordinary course of OITRS’s
      business as previously conducted. The outcome of such lawsuits and claims is
      inherently unpredictable. However, management believes that, in the aggregate,
      the outcome of all lawsuits and claims involving OITRS will not have a material
      effect on the Company’s consolidated financial position or liquidity; however,
      any such outcome may be material to the results of operations of any particular
      period in which costs, if any, are recognized.





As
      part
      of the November 3, 2005 merger pursuant to which OITRS became a wholly-owned
      subsidiary of Bimini Capital, the parties to the Agreement and Plan of Merger
      and Reorganization (the “Merger Agreement”) agreed to special resolution
      procedures concerning certain litigation matters in which OITRS was a party
      and
      that was pending at the time of the merger.  Certain provisions of the
      Merger Agreement specified the manner in which four separate litigation matters
      would be treated for purposes of determining the rights and obligations of
      the
      parties to the Merger Agreement.  In two of these matters, OITRS was
      the plaintiff and was seeking money damages from third parties.  In
      the other two matters, OITRS was a defendant and was defending itself against
      claims for money damages.  The two matters in which OITRS was the
      plaintiff and one of the two matters in which OITRS was a defendant have been
      concluded.  The net proceeds received by OITRS as a result of the
      conclusion of these matters are being held in escrow and will be used to satisfy
      amounts, if any, paid in connection with the resolution of the other matter
      in
      which OITRS is a defendant.





Pursuant
      to the terms of the Merger Agreement, the former owners of OITRS must indemnify
      the Company for any liabilities arising from the two matters in which OITRS
      was
      a defendant.  In addition, the former owners of OITRS are entitled to
      receive any amounts paid to the Company upon the settlement or final resolution
      of the two matters in which OITRS was the plaintiff.





**(o)
      Guarantees**.  OITRS has guaranteed the obligations of OITRS’s
      wholly-owned subsidiary, HS Special Purpose, LLC, under its financing facility
      with Citigroup described in Note****11(i). This guaranty will
      remain in effect so long as the applicable financing facility remains in
      effect.  If an Event of Default occurs under this financing facility
      that is not cured or waived, OITRS may be required to perform under its
      guaranty.  There is no specific limitation on the maximum potential
      future payments under this guaranty.  However, OITRS’s liability under
      this guaranty would be reduced in an amount equal to the amount by which the
      collateral securing such obligations exceeds the amounts outstanding under
      the
      applicable facility.  See also Note 8.











**ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS.**





**Forward-Looking
      Statements**




When
      used
      in this Quarterly Report on Form 10-Q, in future filings with the
      Securities and Exchange Commission (the “Commission”) or in press releases or
      other written or oral communications, statements which are not historical in
      nature, including those containing words such as “anticipate,” “estimate,”
“should,” “expect,” “believe,” “intend” and similar expressions, are intended to
      identify “forward-looking statements” within the meaning of Section 27A of
      the Securities Act of 1933, as amended (the “Securities Act”), and
      Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”).




These
      forward-looking statements are
      subject to various risks and uncertainties, including, but not limited to,
      those
      described or incorporated by reference in Part II – Item 1A – Risk Factors of
      this Form 10-Q. These and other risks, uncertainties and factors, including
      those described in reports that the Company files from time to time with the
      Commission, could cause the Company’s actual results to differ materially from
      those reflected in such forward-looking statements. All forward-looking
      statements speak only as of the date they are made and the Company does not
      undertake, and specifically disclaims, any obligation to update or revise any
      forward-looking statements to reflect events or circumstances occurring after
      the date of such statements.





The
      following discussion of the
      Company’s financial condition and results of operations should be read in
      conjunction with the consolidated financial statements and related notes
      included elsewhere in this report.





**Introduction**





As
      used
      in this document, discussions related to “Bimini Capital,” the parent company,
      the registrant, and to real estate investment trust (“REIT”) qualifying
      activities or the general management of Bimini Capital’s portfolio of mortgage
      backed securities (“MBS”) refer to “Bimini Capital Management,
      Inc.”  Further, discussions related to Bimini Capital’s taxable REIT
      subsidiary or non-REIT eligible assets refer to Opteum Financial Services,
      LLC
      and its consolidated subsidiaries. This entity, which was previously referred
      to
      as “OFS,” was renamed Orchid Island TRS, LLC effective July 3, 2007.  
Hereinafter, any historical mention, discussion or references to Opteum
      Financial Services, LLC or to OFS (such as in previously filed documents or
      Exhibits) now means Orchid Island TRS, LLC or “OITRS.”  Discussions
      relating to the “Company” refer to the consolidated entity (the combination of
      Bimini Capital and OITRS). Any assets and activities that are not REIT eligible,
      such as mortgage origination, acquisition and servicing activities, are
      conducted by OITRS.





Bimini
      Capital Management, Inc., formerly Opteum Inc. and Bimini Mortgage Management,
      Inc., was formed in September 2003 to invest primarily in but not limited to,
      residential mortgage related securities issued by the Federal National Mortgage
      Association (more commonly known as Fannie Mae), the Federal Home Loan Mortgage
      Corporation (more commonly known as Freddie Mac) and the Government National
      Mortgage Association (more commonly known as Ginnie Mae). Bimini Capital
      attempts to earn a return on the spread between the yield on its assets and
      its
      costs, including the interest expense on the funds it borrows. It generally
      intends to borrow between eight and twelve times the amount of its equity
      capital in an attempt to enhance its returns to stockholders. This leverage
      may
      be adjusted above or below this range to the extent management or the Company’s
      Board of Directors deems necessary or appropriate.  For purposes of
      this calculation, Bimini Capital treats its junior subordinated notes as an
      equity capital equivalent. Bimini Capital is self-managed and self-advised
      and
      has elected to be taxed as a REIT for U.S. federal income tax
      purposes.





On
      April
      18, 2007, the Board of Managers of OITRS, at the recommendation of the Board
      of
      Directors of the Company, approved the closure of the wholesale and conduit
      mortgage loan origination channels.  Both channels ceased accepting
      new applications for mortgage loans on April 20, 2007.  On May 7,
      2007, OITRS signed a binding agreement to sell its retail mortgage loan
      origination channel to a third party as well.  On June 30, 2007, OITRS
      entered into an amendment to this agreement.  The proceeds of the
      transactions were
      approximately****$1.5****million plus the
      assumption of certain liabilities of OITRS.  The transaction, coupled
      with the disposal of the conduit and wholesale origination channels, resulted
      in
      a loss of approximately $10.5 million.  Going forward, OITRS will not
      operate a mortgage loan origination business and the results of the mortgage
      origination business are reported as discontinued operations for the nine and
      three months ended September 30, 2007.





OITRS
      was
      acquired by the Company in November 2005. As a result of the merger, OITRS
      became a wholly-owned taxable REIT subsidiary of Bimini Capital.  On
      December 21, 2006, Bimini Capital sold to Citigroup Global Markets Realty Corp.
      (“Citigroup Realty”) a Class B non-voting limited liability company membership
      interest in OITRS, representing 7.5% of all of OITRS’s outstanding limited
      liability company membership interests, for $4.1 million.  OITRS is
      subject to corporate income taxes and files separate federal and state income
      tax returns.





**Dividends
      to Stockholders**





In
      order
      to maintain its qualification as a REIT, Bimini Capital is required (among
      other
      provisions) to annually distribute dividends to its stockholders in an amount
      at
      least equal to, generally, 90% of Bimini Capital’s REIT taxable income. REIT
      taxable income is a term that describes Bimini Capital’s operating results
      calculated in accordance with rules and regulations promulgated pursuant to
      the
      Internal Revenue Code.





Bimini
      Capital’s REIT taxable income is computed differently from net income as
      computed in accordance with generally accepted accounting principles ("GAAP
      net
      income"), as reported in the Company’s accompanying consolidated financial
      statements.  Depending on the number and size of the various items or
      transactions being accounted for differently, the differences between REIT
      taxable income and GAAP net income can be substantial and each item can affect
      several reporting periods. Generally, these items are timing or temporary
      differences between years; for example, an item that may be a deduction for
      GAAP
      net income in the current year may not be a deduction for REIT taxable income
      until a later year.





As
      a
      REIT, Bimini Capital may be subject to a federal excise tax if Bimini Capital
      distributes less than 85% of its taxable income by the end of the calendar
      year.  Accordingly, Bimini Capital’s dividends are based on its
      taxable income, as determined for federal income tax purposes, as opposed to
      its
      net income computed in accordance with GAAP (as reported in the accompanying
      consolidated financial statements).





**Results
      of Operations**





*PERFORMANCE
      OVERVIEW*





Described
      below are the Company’s results of operations for the nine and three months
      ended September 30, 2007, as compared to the Company’s results of operations for
      the nine and three months ended September 30, 2006.   During the
      nine month period ended September 30, 2007, the Company ceased all mortgage
      origination business at OITRS. As stated above, results of those operations
      are
      reported in the financial statements as discontinued operations.  As a
      result of these actions, the Company’s financial statements are not comparable
      to prior reports filed since the acquisition of OITRS.





Consolidated
      net loss for the nine and three months ended September 30, 2007, was $245.3
      million and****$4.7 million,
      respectively,****compared to a consolidated net loss
      of****$15.6 million and $6.3 million, respectively, for the
      nine and three months ended September 30, 2006. Consolidated net loss per basic
      and diluted share of Class A Common Stock was $9.84 and $0.19,
      respectively, for the nine and three months ended September 30, 2007, compared
      to a consolidated net loss per basic and diluted share of Class A Common Stock
      of $0.63 and $0.25, respectively, for the comparable prior
      period.  The decline in consolidated net loss was driven primarily by
      a permanent impairment taken on MBS securities in the Company’s MBS portfolio,
      continued poor operating results of OITRS and declines in the value of the
      retained interest in securitization, also at OITRS.





At
      June
      30, 2007, the Company no longer had the ability and intent to hold until
      recovery MBS securities whose values are impaired as of June 30,
      2007.  Accordingly, due to liquidity and working capital needs brought
      about by the turmoil in the mortgage market, the Company no longer had the
      ability to hold such assets until their amortized cost could be fully
      recovered.  During the three months ended June 30, 2007, the Company
      sold securities with a market value at the time of sale of approximately $782.0
      million that were impaired at the time of sale, realizing losses on sale of
      $18.6 million. The Company recorded $55.3 million of permanent impairments
      on
      the remaining $1.3 billion of MBS securities held as available-for-sale in
      the
      second quarter of 2007.  During the three months ended September 30,
      2007, the Company sold $910.0 million of the remaining $1.3 billion securities,
      that previously been classified as impaired assets, realizing losses on sale
      of
      $1.0 million. Commencing on June 30, 2007, and for all periods thereafter,
      such
      available securities permanently impaired are valued on a lower of cost or
      market (LOCOM) basis.  When such securities are valued on a LOCOM
      basis the yield at which the Company recognized interest income is adjusted
      to
      reflect the new carrying value.  As a result of these actions the
      Company’s net interest margin (or NIM) on it’s portfolio of MBS securities
      increased to 88 basis points as of September 30, 2007. The NIM measures the
      spread, in basis points, between the weighted average yield on the MBS portfolio
      and the weighted average borrowing costs on the repo
      liabilities.  This figure does not incorporate the effect of other
      sources of interest income or expense nor overhead expenses.





For
      the
      nine and three months ended September 30, 2007, comprehensive (loss)
      was****($168.5) million and ($4.7) million, respectively,
      including the net unrealized gain/(loss) on available-for-sale securities of
      $2.1 million and****$0.0 million and the reclassification
      during the nine months ended September 30, 2007 of the other-than-temporary
      loss
      on MBS of $55.3 million. For the nine and three months ended September 30,
      2007,
      realized loss on mortgage-backed securities sales of $19.4 million and $0.0
      million were made to reflect the realized loss on sales of assets previously
      reflected in comprehensive loss as unrealized losses on available-for-sale
      securities.  For the nine and three months ended September 30, 2006,
      comprehensive income/(loss) was ($37.2) million and $6.1 million, respectively,
      including the net unrealized gain/(loss) on available-for-sale securities of
      ($21.5) million and $12.4****million, respectively. The
      factors resulting in the unrealized loss on available-for-sale securities are
      described below.





Comprehensive
      (loss) is as follows:





(in
      thousands)





**Nine
                Months Ended**
            
            
            **Three
                Months Ended****September
                30, 2007**
            
            
            **September
                30, 2006**
            
            
            **September
                30, 2007**
            
            
            **September
                30, 2006**Net
                (loss)
            
            $
            (245,261
            )
            
            $
            (15,623
            )
            
            $
            (4,723
            )
            
            $
            (6,256
            )Realized
                loss on MBS
            
            
            19,389
            
            
            
            -
            
            
            
            -
            
            
            
            -Other-than-temporary
                loss on MBS
            
            
            55,250
            
            
            
            -
            
            
            
            -
            
            
            
            -Unrealized
                gain (loss) on available-for-sale securities, net
            
            
            2,135
            
            
            
            (21,536
            )
            
            
            -
            
            
            
            12,360Comprehensive
                (loss)
            
            $
            (168,487
            )
            
            $
            (37,159
            )
            
            $
            (4,723
            )
            
            $
            6,104





Unrealized
      gains/(losses) on available-for-sale securities is a component of accumulated
      other comprehensive loss, which is included in stockholders’ equity on the
      consolidated balance sheet.  Accumulated other comprehensive loss is
      the difference between the fair market value of the portfolio of MBS securities
      and their cost basis.  The unrealized gain on available-for-sale
      securities for the nine months ended September 30, 2007 was driven by a
      combination of a decrease in short term rates for the period, which tends to
      increase the fair market value of the Company’s portfolio of MBS securities, and
      increased amortization of net premium for the period, which lowers the cost
      basis in the portfolio of MBS securities.  The increased amortization
      for the period was the result of the continued upward resetting of ARM
      securities in the portfolio, which results in higher coupons on the securities
      relative to their booked yields, and therefore greater
      amortization.





The
      Company has negative retained earnings (titled “Accumulated deficit” in the
      stockholders’ equity section of the accompanying consolidated financial
      statements) as of September 30, 2007, partially because of the consequences
      of
      Bimini Capital’s tax qualification as a REIT.  As is more fully described
      in the “Dividends to Stockholders” section above, Bimini Capital’s
      dividends are based on its REIT taxable income, as determined for federal income
      tax purposes, and not on its net income computed in accordance with GAAP (as
      reported in the accompanying consolidated financial
      statements).





For
      the
      nine months ended September 30, 2007, Bimini Capital's REIT taxable loss was
      approximately $78.0 million less than Bimini Capital's net loss from REIT
      activities computed in accordance with GAAP. The most significant difference
      was
      the impairment taken on available-for-sale securities which is reflected in
      GAAP
      earnings but is not a deduction to arrive at REIT taxable
      income.  Another contributor is attributable to interest on
      inter-company loans with OITRS as well as timing differences in the recognition
      of compensation expense attributable to phantom stock awards.  In
      April of 2007, the Board of Directors of the Company approved the forgiveness
      of
      up to $108.3 million of inter-company debt with OITRS.  Such action
      will reduce future interest income associated with the inter-company debt.
      With
      respect to the phantom stock awards, the future deduction of this temporary
      difference is uncertain as to the amount (the amount of the tax impact is
      measured at the fair value of the shares as of a future date and this amount
      may
      be greater than or less than the financial statement deduction already taken
      by
      Bimini Capital). Since inception through September 30, 2007, Bimini
      Capital's REIT taxable income is approximately****$92.9
      million greater than Bimini Capital's financial statement net income as computed
      in accordance with GAAP.  During the nine months ended September 30,
      2007, tax capital losses from the sale of MBS assets were realized; these
      capital losses are only available to the REIT to offset future capital gains
      and
      therefore they do not reduce REIT taxable income.





*PERFORMANCE
      OF BIMINI CAPITAL’S MBS PORTFOLIO*





For
      the
      nine and three months ended September 30, 2007, the REIT generated ($7.8)
      million and $1.4 million of net interest income (loss).  Included in
      these results were $90.8 million and $24.6 million of interest income,
      respectively, offset by $98.6 million and $23.2 million of interest
      expense, respectively.  Inclusive in these results is the quarterly
      retrospective adjustment of ($4.8) million and ($0.4) million for the nine
      and
      three month periods ended September 30, 2007. The retrospective adjustment
      is
      described below under Critical Accounting Policies/Income Recognition. Net
      interest income is (down)/up approximately ($18.1) million and $3.3 million,
      respectively, compared to the nine and three months ended September 30,
      2006.  The decline is mostly the result of the approximately 59.3%
      reduction in the MBS investment portfolio.





For
      the
      nine and three months ended September 30, 2007, the REIT’s general and
      administrative costs were $5.7 million and $1.9 million, respectively. For
      the
      nine and three months ended September 30, 2006, the REIT’s general and
      administrative costs were $7.0 million and $1.9 million, respectively. The
      decrease in general and administrative expenses was primarily the result of
      a
      reduction in employee bonus accruals.  Operating expenses, which
      incorporate trading costs, fees and other direct costs, were $0.6 million and
      $0.2 million, for the nine and three months ended September 30, 2007 and $0.7
      million and $0.2 million for the nine and three months ended September 30,
      2006,
      respectively.





As
      stated
      above, the REIT recorded permanent impairment charges to various MBS securities
      during the nine months ended September 30, 2007.  In addition, certain
      securities were sold that were impaired at the time of sale.  As a
      result, the REIT had $20.5 million and $1.1 million, respectively, in losses
      from the sale of securities in the MBS portfolio during the nine and three
      months ended September 30, 2007.  For the nine and three months ended
      September 30, 2006, Bimini Capital reported no gains/loss from the sale of
      MBS.





As
      of
      September 30, 2007, Bimini Capital’s MBS portfolio consisted of $1.3
      billion of agency or government MBS at fair value and had a weighted average
      yield on assets of 6.11% and a net weighted average borrowing cost of
      5.23%.  The following tables summarize Bimini Capital’s agency and
      government mortgage related securities as of September 30, 2007:





**Asset
                Category**
            
            **Market
                Value**
              **(in
                thousands)**
            
            
            **Percentage
                of Entire Portfolio**
            
            
            **Weighted
                Average Coupon**
            
            
            **Weighted
                Average Maturity in Months**
            
            **Longest**
              **Maturity**
            
            **Weighted
                Average Coupon Reset in Months**
            
            
            **Weighted
                Average Lifetime Cap**
            
            
            **Weighted
                Average Periodic Cap**Adjustable-Rate
                MBS
            
            $
            640,670
            
            
            
            51.09
            %
            
            
            5.90
            %
            
            
            342
            
            1-July-46
            
            
            2.97
            
            
            
            9.63
            %
            
            
            2.14
            %Fixed-Rate
                MBS
            
            $
            252,695
            
            
            
            20.15
            %
            
            
            7.17
            %
            
            
            295
            
            1-Sept-37
            
            
            n/a
            
            
            
            n/a
            
            
            
            n/aHybrid
                Adjustable-Rate MBS
            
            $
            360,529
            
            
            
            28.76
            %
            
            
            6.06
            %
            
            
            346
            
            1-Sept-37
            
            
            41.55
            
            
            
            11.85
            %
            
            
            3.57
            %Total
                Portfolio
            
            $
            1,253,894
            
            
            
            100.00
            %
            
            
            6.20
            %
            
            
            334
            
            1-July-46
            
            
            16.86
            
            
            
            10.43
            %
            
            
            2.94
            %





**Agency**
            
            **Market
                Value**
              **(in
                thousands)**
            
            
            **Percentage
                of**
              **Entire
                Portfolio**Fannie
                Mae
            
            $
            1,126,744
            
            
            
            89.86
            %Freddie
                Mac
            
            
            98,649
            
            
            
            7.87
            %Ginnie
                Mae
            
            
            28,501
            
            
            
            2.27
            %**Total
                Portfolio**
            
            $
            1,253,894
            
            
            
            100.00
            %








**Entire
                Portfolio**Effective
                Duration (1)
            
            
            1.33Weighted
                Average Purchase Price
            
            $
            102.65Weighted
                Average Current Price
            
            $
            101.40





(1)
            Effective
                duration of****1.33****indicates
                that an interest rate increase of 1% would be expected to cause a
                1.33%****decline in the value of the MBS in the
                Company’s investment portfolio.





In
      evaluating Bimini Capital’s MBS portfolio assets and their performance, Bimini
      Capital’s management team primarily evaluates these critical factors: asset
      performance in differing interest rate environments, duration of the security,
      yield to maturity, potential for prepayment of principal and the market price
      of
      the investment.





Bimini
      Capital’s portfolio of MBS will typically be comprised of adjustable-rate MBS,
      fixed-rate MBS, hybrid adjustable-rate MBS and balloon maturity MBS. Bimini
      Capital seeks to acquire low duration assets that offer high levels of
      protection from mortgage prepayments. Although the duration of an individual
      asset can change as a result of changes in interest rates, Bimini Capital
      strives to maintain a portfolio with an effective duration of less than 2.0.
      The
      stated contractual final maturity of the mortgage loans underlying Bimini
      Capital’s portfolio of MBS generally ranges up to 30 years. However, the
      effect of prepayments of the underlying mortgage loans tends to shorten the
      resulting cash flows from Bimini Capital’s investments substantially.
      Prepayments occur for various reasons, including refinancing of underlying
      mortgages and loan payoffs in connection with home sales.





Prepayments
      on the loans underlying Bimini Capital’s MBS can alter the timing of the cash
      flows from the underlying loans to the Company. As a result, Bimini Capital
      gauges the interest rate sensitivity of its assets by measuring their effective
      duration. While modified duration measures the price sensitivity of a bond
      to
      movements in interest rates, effective duration captures both the movement
      in
      interest rates and the fact that cash flows to a mortgage related security
      are
      altered when interest rates move. Accordingly, when the contract interest rate
      on a mortgage loan is substantially above prevailing interest rates in the
      market, the effective duration of securities collateralized by such loans can
      be
      quite low because of expected prepayments. Although some of the fixed-rate
      MBS
      in Bimini Capital’s portfolio are collateralized by loans with a lower
      propensity to prepay when the contract rate is above prevailing rates, their
      price movements track securities with like contract rates and therefore exhibit
      similar effective duration.





As
      of
      September 30, 2007, approximately****51.09% of the REIT
      portfolio is comprised of short duration ARM securities.   The
      REIT favors such securities since they offer attractive yields relative to
      alternative securities in an inverted yield curve environment such as the one
      the Company has been operating in recently.  Going forward, to the
      extent the shape of the yield curve is less or not inverted, the composition
      of
      the portfolio may be changed to better take advantage of opportunities in the
      market at that time.





The
      value
      of the REIT’s MBS portfolio changes as interest rates rise or
      fall.  Bimini Capital faces the risk that the market value of its
      assets will increase or decrease at different rates than that of its
      liabilities, including its hedging instruments.  Bimini Capital
      primarily assesses its interest rate risk by estimating the duration of its
      assets and the duration of its liabilities. Duration essentially measures the
      market price volatility of financial instruments as interest rates change.
      Bimini Capital generally calculates duration using various financial models
      and
      empirical data and different models and methodologies can produce different
      duration numbers for the same securities.
















The
      following sensitivity analysis shows the estimated impact on the fair value
      of
      Bimini Capital's interest rate-sensitive investments as of September 30, 2007,
      assuming rates instantaneously fall 100 basis points, rise 100 basis points
      and
      rise 200 basis points:





(in
      thousands)





**Interest
                Rates Fall**
              **100
                Basis Points**
            
            
            **Interest
                Rates Rise**
              **100
                Basis Points**
            
            
            **Interest
                Rates Rise**
              **200
                Basis Points****Adjustable-Rate
                MBS**(Fair
                Value $640,670)Change
                in fair value
            
            $
            4,120
            
            
            $
            (4,120
            )
            
            $
            (8,240
            )Change
                as a percent of fair value
            
            
            0.64
            %
            
            
            (0.64
            %)
            
            
            (1.29
            %)**Fixed-Rate
                MBS**(Fair
                Value $252,695)Change
                in fair value
            
            $
            7,479
            
            
            $
            (7,479
            )
            
            $
            (14,958
            )Change
                as a percent of fair value
            
            
            2.96
            %
            
            
            (2.96
            %)
            
            
            (5.92
            %)**Hybrid
                Adjustable-Rate MBS**(Fair
                Value **$**360,529)Change
                in fair value
            
            $
            5,132
            
            
            $
            (5,132
            )
            
            $
            (10,264
            )Change
                as a percent of fair value
            
            
            1.42
            %
            
            
            (1.42
            %)
            
            
            (2.85
            %)**Cash**(Fair
                Value $****24,873,520)**Portfolio
                Total**(Fair
                Value **$**1,253,894)Change
                in fair value
            
            $
            16,731
            
            
            $
            (16,731
            )
            
            $
            (33,462
            )Change
                as a percent of fair value
            
            
            1.33
            %
            
            
            (1.33
            %)
            
            
            (2.67
            %)





The
      table
      below reflects the same analysis presented above but with the figures in the
      columns that indicate the estimated impact of a 100 basis point fall or rise
      adjusted to reflect the impact of convexity.





(in
      thousands)





**Interest
                Rates Fall**
              **100
                Basis Points**
            
            
            **Interest
                Rates Rise**
              **100
                Basis Points**
            
            
            **Interest
                Rates Rise**
              **200
                Basis Points****Adjustable-Rate
                MBS**(Fair
                Value $640,670)Change
                in fair value
            
            $
            3,120
            
            
            $
            (5,217
            )
            
            $
            (13,121
            )Change
                as a percent of fair value
            
            
            0.49
            %
            
            
            (0.81
            %)
            
            
            (2.05
            %)**Fixed-Rate
                MBS**(Fair
                Value $252,695)Change
                in fair value
            
            $
            5,629
            
            
            $
            (8,907
            )
            
            $
            (19,495
            )Change
                as a percent of fair value
            
            
            2.23
            %
            
            
            (3.52
            %)
            
            
            (7.71
            %)**Hybrid
                Adjustable-Rate MBS**(Fair
                Value **$**360,529)Change
                in fair value
            
            $
            2,991
            
            
            $
            (6,982
            )
            
            $
            (16,240
            )Change
                as a percent of fair value
            
            
            0.83
            %
            
            
            (1.94
            %)
            
            
            (4.50
            %)**Cash**(Fair
                Value **$**24,873,520)**Portfolio
                Total**(Fair
                Value **$**1,253,894)Change
                in fair value
            
            $
            11,740
            
            
            $
            (21,105
            )
            
            $
            (48,855
            )Change
                as a percent of fair value
            
            
            0.94
            %
            
            
            (1.68
            %)
            
            
            (3.90
            %)





In
      addition to changes in interest rates, other factors impact the fair value
      of
      Bimini Capital's interest rate-sensitive investments and hedging instruments,
      such as the shape of the yield curve, market expectations as to future interest
      rate changes and other market conditions. Accordingly, in the event of changes
      in actual interest rates, the change in the fair value of Bimini Capital's
      assets would likely differ from that shown above and such difference might
      be
      material and adverse to Bimini Capital's stockholders.





For
      reference, the table below shows the principal balance of Bimini Capital’s
      investment securities, the net unamortized premium, amortized cost of securities
      held, average cost expressed as a price, the fair market value of investments
      and the fair market value expressed as a price for the current quarter and
      each
      of the previous nine quarters for the portfolio of MBS securities only. 
Premium or discount associated with MBS securities classified as held for
      trading is not amortized.   Approximately $0.5 billion of the
      $1.3 billion fair market value of MBS securities are classified as
      held-for-trading as of September 31, 2007.  The data in the table
      below does not include information pertaining to discontinued operations at
      OITRS.





(in
      thousands)





**Quarter
                Ended**
            
            **Principal**
              **Balance
                of**
              **Investment**
              **Securities
                Held**
            
            
            **Unamortized**
              **Premium
                (Net)**
            
            
            **Amortized
                Cost of**
              **Securities
                Held**
            
            
            **Amortized**
              **Cost/Principal**
              **Balance
                Held**
            
            
            **Fair
                Market**
              **Value
                of**
              **Investment**
              **Securities
                Held**
            
            
            **Fair
                Market**
              **Value/Principal**
              **Balance
                Held**September,
                30 2007
            
            $
            1,236,629
            
            
            $
            11,144
            
            
            $
            1,253,894
            
            
            
            101.40
            
            
            $
            1,253,894
            
            
            
            101.40June
                30, 2007
            
            
            1,801,492
            
            
            
            17,144
            
            
            
            1,818,636
            
            
            
            100.95
            
            
            
            1,818,636
            
            
            
            100.95March
                31, 2007
            
            
            2,893,761
            
            
            
            109,445
            
            
            
            3,003,206
            
            
            
            103.78
            
            
            
            2,931,796
            
            
            
            101.31December
                31, 2006
            
            
            2,779,867
            
            
            
            115,612
            
            
            
            2,895,479
            
            
            
            104.16
            
            
            
            2,808,734
            
            
            
            101.04September
                30, 2006
            
            
            3,055,791
            
            
            
            122,300
            
            
            
            3,178,091
            
            
            
            104.00
            
            
            
            3,080,060
            
            
            
            100.79June
                30, 2006
            
            
            3,396,910
            
            
            
            120,769
            
            
            
            3,517,679
            
            
            
            103.56
            
            
            
            3,407,288
            
            
            
            100.31March
                31,2006
            
            
            3,515,113
            
            
            
            111,361
            
            
            
            3,626,473
            
            
            
            103.17
            
            
            
            3,538,554
            
            
            
            100.67December
                31, 2005
            
            
            3,457,891
            
            
            
            112,636
            
            
            
            3,570,527
            
            
            
            103.26
            
            
            
            3,494,029
            
            
            
            101.05September
                30, 2005
            
            
            3,797,401
            
            
            
            113,393
            
            
            
            3,910,793
            
            
            
            102.99
            
            
            
            3,858,320
            
            
            
            101.60June 30,
                2005
            
            
            3,784,668
            
            
            
            114,673
            
            
            
            3,899,341
            
            
            
            103.03
            
            
            
            3,876,206
            
            
            
            102.42





The
      table
      below shows Bimini Capital’s average investments held, total interest income,
      yield on average earning assets, average repurchase obligations outstanding,
      interest expense, average cost of funds, net interest income and net interest
      spread for the quarter ended September 30, 2007, and the nine previous
      quarters for Bimini Capital’s portfolio of MBS securities only. The data in the
      table below does not include information pertaining to discontinued operations
      at OITRS.  Indicated in the table below, net interest spread (based on
      average investment securities held and the average balance of repurchase
      obligations outstanding for the period) increased during the third quarter
      of
      2007 to 0.55% from (1.04%) in the second quarter of 2007. The total interest
      income figures below include the retrospective adjustment recorded for the
      respective quarters.  Excluding the quarterly retrospective
      adjustment, the net interest margin increased from 0.00% in the second quarter
      of 2007 to 0.66% in the third quarter of 2007.





RATIOS
      FOR THE QUARTERS HAVE BEEN ANNUALIZED


(in
      thousands)





**Quarter
                Ended**
            
            **Average**
              **Investment**
              **Securities
                Held**
            
            
            **Total
                Interest Income**
            
            
            **Yield
                on**
              **Average
                Interest**
              **Earning
                Assets**
            
            
            **Average**
              **Balance
                of**
              **Repurchase**
              **Obligations**
              **Outstanding**
            
            
            **Interest**
              **Expense**
            
            
            **Average**
              **Cost
                of**
              **Funds**
            
            
            **Net**
              **Interest**
              **Income**
            
            
            **Net**
              **Interest**
              **Spread**September
                30, 2007
            
            $
            1,536,265
            
            
            $
            24,634
            
            
            
            6.41
            %
            
            $
            1,497,409
            
            
            $
            21,949
            
            
            
            5.86
            %
            
            $
            2,685
            
            
            
            0.55
            %June
                30, 2007
            
            
            2,375,216
            
            
            
            29,009
            
            
            
            4.89
            %
            
            
            2,322,727
            
            
            
            34,396
            
            
            
            5.92
            %
            
            
            (5,387
            )
            
            
            (1.04
            %)March
                31, 2007
            
            
            2,870,265
            
            
            
            41,856
            
            
            
            5.83
            %
            
            
            2,801,901
            
            
            
            38,357
            
            
            
            5.48
            %
            
            
            3,500
            
            
            
            0.36
            %December
                31, 2006
            
            
            2,944,397
            
            
            
            35,162
            
            
            
            4.78
            %
            
            
            2,869,210
            
            
            
            40,400
            
            
            
            5.63
            %
            
            
            (5,238
            )
            
            
            (0.86
            %)September
                30, 2006
            
            
            3,243,674
            
            
            
            45,850
            
            
            
            5.65
            %
            
            
            3,151,813
            
            
            
            42,710
            
            
            
            5.42
            %
            
            
            3,140
            
            
            
            0.23
            %June
                30, 2006
            
            
            3,472,921
            
            
            
            57,027
            
            
            
            6.57
            %
            
            
            3,360,421
            
            
            
            42,829
            
            
            
            5.10
            %
            
            
            14,198
            
            
            
            1.47
            %March
                31, 2006
            
            
            3,516,292
            
            
            
            42,345
            
            
            
            4.82
            %
            
            
            3,375,777
            
            
            
            37,661
            
            
            
            4.46
            %
            
            
            4,684
            
            
            
            0.35
            %December
                31, 2005
            
            
            3,676,175
            
            
            
            43,140
            
            
            
            4.69
            %
            
            
            3,533,486
            
            
            
            35,913
            
            
            
            4.07
            %
            
            
            7,227
            
            
            
            0.63
            %September
                30, 2005
            
            
            3,867,263
            
            
            
            43,574
            
            
            
            4.51
            %
            
            
            3,723,603
            
            
            
            33,102
            
            
            
            3.56
            %
            
            
            10,472
            
            
            
            0.95
            %June 30,
                2005
            
            
            3,587,629
            
            
            
            36,749
            
            
            
            4.10
            %
            
            
            3,449,744
            
            
            
            26,703
            
            
            
            3.10
            %
            
            
            10,045
            
            
            
            1.00
            %





For
      the
      three months ended September 30, 2007, ($0.4) million of the $24.6 million
      of
      interest income was attributable to the quarterly retrospective
      adjustment.  As a result of the retrospective adjustment, the yield on
      average interest earning assets for the period was reduced by 10.5 basis points
      to 641.4 basis points.  For the three months ended September 30, 2006,
      $3.5 million of the $45.8 million of interest income was derived from the
      quarterly retrospective adjustment.  The adjustment represented 45.0
      basis points of the 450.7 basis points of the yield on average interest earning
      assets.





*PERFORMANCE
      OF DISCONTINUED OPERATIONS OF OITRS*





As
      stated
      above, the Company has sold or discontinued all residential mortgage origination
      activities at OITRS.  Going forward, all reported financial results
      will reflect this decision.  The principal business activities of
      OITRS were the origination and sale of mortgage loans.  In addition,
      as part of the securitization of loans sold, OITRS retained an interest in
      the
      resulting residual interest cash flows more fully described
      below.  Finally, OITRS serviced the loans securitized as well as some
      loans sold on a whole loan basis.





As
      of
      September 30, 2007, OITRS owned $1.9 million of mortgage loans net of deferred
      origination costs, mark to market and other adjustments which were classified
      as
      mortgage loans held for sale.  Gains/(losses) realized on the mortgage
      banking activities for the nine and three months ended September 30, 2007,
      were
      ($68.9) million and ($7.1) million, respectively, and for the nine and three
      months ended September 30, 2006, were $17.4 million and $20.1 million,
      respectively.  These gains/(losses) reflect the effects of the mark to
      market of IRLCs and loans held for sale prior to the sale date of ($3.6) million
      and****$5.7 million, respectively,  for the nine
      and three months ended September 30, 2007, and were ($1.2) million and ($0.4)
      million, respectively, for the nine and three months ended September 30,
      2006.  OITRS’s****gains/ (losses) from mortgage
      banking activities were the result of a sharp deterioration in the secondary
      market for the loans OITRS originates and sells.  Owing to fears
      related to the credit performance of certain types of loans OITRS originated,
      namely high combined loan to value (“CLTV”) and second lien mortgages, prices
      obtained upon sale were depressed and OITRS also experienced elevated levels
      of
      early payment defaults (EPDs), resulting in OITRS recording high loan loss
      reserves.





Gains/(losses)
      from mortgage banking activities include changes in the fair value of retained
      interests in securitizations and the associated hedge gains or losses. 
Excluding changes in fair value of retained interests in securitizations net
      of
      hedge gains and losses, OITRS had gains/(losses) from sales of mortgages held
      for sale of****($36.3) million and ($6.7) million,
      respectively, for the nine and three months ended September 30, 2007, and $26.1
      million and $6.9 million, respectively, for the nine and three months ended
      September 30, 2006.





The
      retained interests in securitizations represent residual interests in loans
      originated or purchased by OITRS prior to securitization.  The total
      fair market value of these retained interests was approximately $71.6 million
      as
      of September 30, 2007. Fluctuations in value of retained interests are primarily
      driven by projections of future interest rates (the forward LIBOR curve), the
      discount rate used to determine the present value of the residual cash flows
      and
      prepayment and loss estimates on the underlying mortgage loans. Due to higher
      forward LIBOR rates and increased loss assumptions on the underlying mortgage
      loans, the market value of the retained interests (decreased) by ($28.1) million
      and ($0.6) million,****respectively, for the nine and three
      months ended September 30, 2007 and (decreased)/increased by ($1.4) million
      and
      $23.1 million,****respectively, for the nine and three months
      ended September 30, 2006.













The
      table
      below provides details of OITRS’s (loss) on mortgage banking activities for the
      nine and three months ended September 30, 2007 and 2006.  OITRS
      recognizes a gain or loss on sale of mortgages held for sale only when the
      loans
      are actually sold.





(LOSSES)
      ON MORTGAGE BANKING ACTIVITIES





(in
      thousands)





**Nine Months
                Ended**
            
            
            **Three
                Months Ended****September
                30, 2007**
            
            
            **September
                30, 2006**
            
            
            **September
                30, 2007**
            
            
            **September
                30, 2006**Fair
                Value adjustment of retained interests, trading
            
            $
            (28,126
            )
            
            $
            (1,406
            )
            
            $
            (634
            )
            
            $
            23,071Gain/
                (loss) on sales of mortgage loans
            
            
            (6,064
            )
            
            
            65,775
            
            
            
            (11,006
            )
            
            
            20,288Fees
                on brokered loans
            
            
            1,749
            
            
            
            4,485
            
            
            
            -
            
            
            
            1,350Gain/(loss)
                on derivatives
            
            
            (4,473
            )
            
            
            (7,329
            )
            
            
            246
            
            
            
            (9,851
            )Direct
                loan origination expenses, deferred
            
            
            (7,122
            )
            
            
            686
            
            
            
            (1,627
            )
            
            
            (3
            )Fees
                earned, brokering
            
            
            887
            
            
            
            2,054
            
            
            
            182
            
            
            
            748Write
                off purchased pipeline (Purchase Accounting Adjustment)
            
            
            -
            
            
            
            (534
            )
            
            
            -
            
            
            
            -$
            (43,149
            )
            
            $
            63,731
            
            
            $
            (12,839
            )
            
            $
            35,603Direct
                loan origination expenses, reclassified
            
            
            (22,181
            )
            
            
            (45,065
            )
            
            
            -
            
            
            
            (14,861
            )Net  gain/(loss)
                on sale of mortgage loans
            
            $
            (65,330
            )
            
            $
            18,666
            
            
            $
            (12,839
            )
            
            $
            20,742Change
                in market value of IRLCs
            
            $
            14
            
            
            $
            (34
            )
            
            $
            -
            
            
            $
            775Change
                in market value mortgage loans for held for sale
            
            $
            (3,604
            )
            
            $
            (1,202
            )
            
            $
            5,734
            
            
            $
            (1,201
            )Gain/(loss)
                on mortgage banking activities
            
            $
            (68,920
            )
            
            
            17,430
            
            
            $
            (7,105
            )
            
            $
            20,136





For
      the
      nine and three months ended September 30, 2007 and 2006, OITRS originated
      mortgage loans of $1.5 billion and $0.0 billion, and $4.7 billion
      and****$1.9 billion, respectively.  For the nine
      and three months ended September 30, 2007, OITRS sold $2.1 billion
      and****$0.1 billion of originated mortgage loans. For the
      nine and three months ended September 30, 2006, OITRS sold $4.5 billion and
      $1.8
      billion of originated mortgage loans. Of the originated mortgage loans sold
      during the nine and three months ended September 30, 2007, $0.8 billion of
      the
      $2.1 billion and $0.0 billion of the****$0.1 billion,
      respectively, were sold on a servicing retained basis. Of the originated
      mortgage loans sold during the nine and three months ended September 30, 2006,
      $2.9 billion of the $4.5 billion and $1.3 billion of the $1.8 billion,
      respectively, were sold on a servicing retained basis.





For
      the
      nine and three months ended September 30, 2007 and 2006, OITRS had net servicing
      income/ (loss) of ($13.9) million and ($1.2)****million, and
      ($8.1)****million and ($8.1) million,
      respectively.  The results for the nine and three month periods were
      driven primarily by negative fair value****adjustments to the
      MSRs (inclusive of run-off of the servicing portfolio) for the nine and three
      months ended September 30, 2007 and the Company’s early adoption of SFAS 156 on
      January 1, 2006 (for the nine and three months ended September 30,
      2006).





As
      of
      September 30, 2007, OITRS held originated MSRs on approximately $0.7 billion
      in
      mortgages with a fair market value of approximately $2.6 million.  For
      the nine and three months ended September 30, 2007 and 2006, additions to the
      MSRs were $7.7 million and $0.03 million, and $35.0 million
      and****$17.9 million, respectively.  In turn, the
      net fair value adjustments for the nine and three months ended September 30,
      2007, reflect declines in fair value due to run-off of
      ($9.0)****million and ($0.6) million and adjustments due to
      (decreases)/increases in fair value of ($4.8) million and $0.1 million,
      respectively.  The net fair value adjustments for the nine and three
      months ended September 30, 2006 reflect declines in fair value due to run-off
      of
      $14.7****million and****$4.2 million,
      respectively, and adjustments due to (decreases) in fair value of ($8.3)
      million and ($9.1) million, respectively. Changes in valuation assumptions
      for
      the nine and three months ended September 30, 2007 reduced the fair market
      value
      by $2.6 million and $0.0 million, respectively.  Changes in valuation
      assumptions and early adoption of SFAS 156 in January of 2006 increased fair
      market value for the nine and three months ended September 30, 2006, by
      $7.3****million and $4.1 million, respectively.





**Liquidity
      and Capital Resources**





As
      of
      September 30, 2007, Bimini Capital had master repurchase agreements in
      place with 19 counterparties and had outstanding balances under 10 of these
      agreements.  None of the counterparties to these agreements are
      affiliates of Bimini Capital. These agreements are secured by Bimini Capital’s
      MBS and bear interest rates that are based on a spread to LIBOR.





As
      of
      September 30, 2007, Bimini Capital had obligations outstanding under its
      repurchase agreements totaling $1.2 billion with a net weighted average
      borrowing cost of 5.23%.  All of Bimini Capital’s outstanding
      repurchase agreement obligations are due in less than 15 months with $0.04
      billion maturing overnight, $0.6 billion maturing between two and 30 days,
      $0.1 billion maturing between 31 and 90 days and $0.5 billion maturing in
      more than 90 days.  Securing these repurchase agreement
      obligations as of September 30, 2007, were MBS with an estimated fair value
      of
      $1.3 billion and a weighted average maturity of 334 months.





As
      of
      September 30, 2007, Bimini Capital’s repurchase agreements had the following
      counterparties, amounts outstanding, amounts-at-risk and weighted average
      remaining maturities:





(in
      thousands)





**Repurchase
                Agreement Counterparties**
            
            **Amount**
              **Outstanding**
            
            
            **Amount**
              **at
                Risk(1)**
            
            
            **Weighted
                Average**
              **Maturity
                of**
              **Repurchase**
              **Agreements**
              **in
                Days**
            
            
            **Percent**
              **of
                Total**
              **Amount**
              **Outstanding**JP
                Morgan Securities Inc.
            
            $
            432,173
            
            
            $
            (45,594
            )
            
            
            169
            
            
            
            35.67
            %Deutsche
                Bank Securities, Inc.
            
            
            357,227
            
            
            
            (130,272
            )
            
            
            204
            
            
            
            29.49UBS
                Securities LLC
            
            
            151,797
            
            
            
            (4,339
            )
            
            
            23
            
            
            
            12.53Morgan
                Stanley
            
            
            94,221
            
            
            
            1,488
            
            
            
            34
            
            
            
            7.78BNP
                Paribas Securities Corp.
            
            
            55,959
            
            
            
            (22,424
            )
            
            
            10
            
            
            
            4.62Lehman
                Brothers Inc
            
            
            36,703
            
            
            
            801
            
            
            
            174
            
            
            
            3.03ING
                Financial Markets LLC
            
            
            34,440
            
            
            
            715
            
            
            
            75
            
            
            
            2.84Cantor
                Fitzgerald
            
            
            31,942
            
            
            
            189
            
            
            
            78
            
            
            
            2.64Countrywide
                Securities Corporation
            
            
            9,004
            
            
            
            569
            
            
            
            3
            
            
            
            0.74Goldman
                Sachs & Co.
            
            
            8,021
            
            
            
            262
            
            
            
            28
            
            
            
            0.66Total
            
            $
            1,211,487
            
            
            $
            (198,605
            )
            
            
            
            
            
            
            100.00
            %





(1)
            Equal
                to the fair value of securities sold, plus accrued interest income,
                minus
                the sum of repurchase agreement liabilities, plus accrued interest
                expense.


The
        amount at risk as of September 30, 2007 would be $19.4 million versus ($198.6)
        million had the Company not executed the sale late in the period of certain
        MBS
        pledged to counterparties.  The sale of such securities settled on October
        2, 2007 and the fulfillment of the associated repurchase obligation was
        accelerated.  However, as of September 30, 2007 such repurchase obligation
        still existed and is reflected in the table above.


Bimini
      Capital’s master repurchase agreements have no stated expiration, but can be
      terminated at any time at Bimini Capital’s option or at the option of the
      counterparty. However, once a definitive repurchase agreement under a master
      repurchase agreement has been entered into, it generally may not be terminated
      by either party.  A negotiated termination can occur, but may involve
      a fee to be paid by the party seeking to terminate the repurchase agreement
      transaction.





Bimini
      Capital has entered into contracts and paid commitment fees to one counterparty
      providing for $0.3****billion in committed repurchase
      agreement facilities at pre-determined borrowing rates and haircuts for a 364
      day period following the commencement date of each contract.  The
      facility’s capacity expiration date is April 23, 2008.  Bimini Capital
      has no obligation to utilize these repurchase agreement facilities.





In
      addition, two of the agreements described above are available to provide
      financing for up to $150****million to cover margin
      requirements associated with monthly principal payments on the MBS
      portfolio.





It
      is the
      Company’s present intention to seek to renew its various committed and
      uncommitted repurchase agreements as they become due or
      expire.  However, market conditions could change making the renewal of
      these contractual arrangements more expensive or
      unattainable.  Further, as discussed above, increases in short-term
      interest rates could negatively impact the valuation of Bimini Capital’s MBS
      portfolio.  Should this occur, Bimini Capital’s ability to enter into
      new repurchase agreements or extend its existing repurchase agreements could
      be
      limited and may cause Bimini Capital’s repurchase agreement counterparties to
      initiate margin calls.  Under this scenario, Bimini Capital would
      likely seek alternative sources of financing which could include additional
      debt
      or equity financing or sales of assets.





Given
      the
      current turmoil in the mortgage market, such alternative sources of financing
      are not readily available to the Company.  Further, as a result of the
      turmoil in the mortgage market, cash needs of OITRS were
      increased.  The increased needs stemmed from margin calls on the
      financing line for the retained interest, trading.  The Company, as
      guarantor, is potentially exposed to cash needs connected to the same financing
      line and to the extent OITRS has insufficient funds to meet margin calls or
      repay borrowings. Accordingly, during the three month period ended September
      30,
      2007, the Company undertook a series of assets sales intended to raise funds
      necessary to support the operations of OITRS and maintain adequate liquidity
      during the disruptions in the mortgage market that occurred and are
      continuing.





The
      Company has obtained a committed funding arrangement that provides specified
      advance rates and funding levels and is available to finance the Company’s MBS
      portfolio.   Should the Company’s financing be withdrawn and the
      Company’s committed funding agreements not be sufficient to finance all of the
      Company’s MBS investments, the Company may be forced to sell such assets, which
      may result in losses upon such sales.  While the financing in place for the
      Company’s retained interests, trading held by OITRS is committed through
      December 19, 2007, the lender on the financing facility has and may continue
      to
      request additional margin be posted in connection with the facility. If the
      Company is unable to meet such requests in the future, the Company may be forced
      to sell the assets or seek alternative financing.  At present, such
      alternative financing arrangements for the residual interests, trading may
      not
      be available or only available at substantially higher cost to OITRS.  If
      cash resources are, at any time, insufficient to satisfy the Company’s liquidity
      requirements, such as when cash flow from operations were materially negative,
      the Company may be required to pledge additional assets to meet margin calls,
      liquidate assets, sell additional debt or equity securities or pursue other
      financing alternatives. Any sale of mortgage-related securities or other assets
      held for sale at prices lower than the carrying value of such assets would
      reduce the Company’s income.  The Company presently believes that its
      equity and junior subordinated debt capital, combined with the cash flow from
      operations and the utilization of borrowings, will be sufficient to enable
      the
      Company to meet its anticipated liquidity requirements. Continued disruptions
      in
      market conditions could, however, adversely affect the Company’s liquidity,
      including the lack of available financing for the Company’s MBS assets beyond
      the capacity of the Company’s committed facility (currently $0.3 billion),
      increases in interest rates, increases in prepayment rates substantially above
      expectations and decreases in value of assets held for sale. Therefore, no
      assurances can be made regarding the Company's ability to satisfy its liquidity
      and working capital requirements.





In
      May 2005, Bimini Capital completed a private offering of $51.6 million of
      trust preferred securities of Bimini Capital Trust I (“BCTI”) resulting in the
      issuance by Bimini Capital of $51.6 million of junior subordinated notes. The
      interest rate payable by Bimini Capital on the BCTI junior subordinated notes
      is
      fixed for the first five years at 7.61% and then floats at a spread of 3.30%
      over three-month LIBOR for the remaining 25 years. However, the BCTI junior
      subordinated notes and the corresponding BCTI trust preferred securities are
      redeemable at Bimini Capital’s option at the end of the first five year period
      and at any subsequent date that Bimini Capital chooses.





In
      addition, in October 2005, Bimini Capital completed a private offering of an
      additional $51.5 million of trust preferred securities of Bimini Capital Trust
      II (“BCTII”) resulting in the issuance by Bimini Capital of an additional $51.5
      million of junior subordinated notes. The interest rate on the BCTII junior
      subordinated notes and the corresponding BCTII trust preferred securities is
      fixed for the first five years at 7.8575% and then floats at a spread of 3.50%
      over three-month LIBOR for the remaining 25 years. However, the BCTII junior
      subordinated notes and the corresponding BCTII trust preferred securities are
      redeemable at Bimini Capital’s option at the end of the first five year period
      and at any subsequent date that Bimini Capital chooses.





Bimini
      Capital attempts to ensure that the income generated from available investment
      opportunities, when the use of leverage is employed for the purchase of assets,
      exceeds the cost of its borrowings. However, the issuance of debt at a fixed
      rate for any long-term period, considering the use of leverage, could create
      an
      interest rate mismatch if Bimini Capital is not able to invest at yields that
      exceed the interest rates of the Company’s junior subordinated notes and other
      borrowings.











*LIQUIDITY
      AND CAPITAL RESOURCES OF THE DISCONTINUED OPERATIONS OF
      OITRS*





OITRS
      has
      a $80.0 million committed line of credit secured by OITRS’s retained interests
      in securitizations.   The facility matures December 19,
      2007.  The facility contains various covenants pertaining to tangible
      net worth, available cash and liquidity and a leverage ratio.  As of
      September 30, 2007, OITRS was in compliance with respect
      to****all such covenants.   In the event OITRS
      defaulted under the terms of the agreement, the lenders could force OITRS to
      liquidate the retained interest, trading, seek payment from the Company as
      guarantor, or force OITRS into an involuntary bankruptcy.  In the
      event the Company was required to perform under its duties as guarantor, the
      Company’s liquidity would be constrained or it may not be able to satisfy such
      obligations.  In such event, this would also constitute an event of
      default under the terms of the agreement and the lenders would have the same
      remedies available to them as above.  As of September 30, 2007, OITRS
      had an outstanding balance of approximately $37.3 million outstanding on the
      line of credit with the rate based on a spread to LIBOR.





**Outlook**





As
      discussed above, the Company's results of operations for the nine and three
      months ended September 30, 2007 continue to be impacted by disruptions in the
      residential mortgage market, the mortgage backed securities market and a general
      tightening of credit conditions brought about by adverse actions taken by
      ratings agencies, liquidations of various investment funds and substantial
      losses incurred by various market participants.  As a result of these
      events, the Federal Reserve Open Market Committee has adjusted their target
      for
      overnight lending rates which has positively impacted the Company’s borrowing
      rates.





The
      funding costs of the MBS portfolio have stabilized and the yield on the MBS
      assets now exceeds the funding costs through the combination of Federal Reserve
      actions mentioned above and as a result of the impairment charge taken. The
      need
      to fund negative cash flow operations at OITRS precluded the Company from
      reinvesting monthly pay-downs and also required the Company to sell MBS assets
      to generate funds throughout much of 2006 and 2007.  Further, OITRS
      has exposure to early payment default claims that have been received from buyers
      of mortgage loans sold in the past.  The settlement of such claims
      will also need to be funded.  The Company believes that adequate
      reserves have been recorded for such exposure.





Going
      forward, the reduced cash flow needs for OITRS and resulting halt to asset
      sales
      should allow the NIM of the MBS portfolio to remain
      positive.  However, the reduced size of the portfolio in relation to
      the Company’s operating expenses will constrain the earnings potential of the
      Company in the near term.





**Critical
      Accounting Policies**





The
      Company’s financial statements are prepared in accordance with U.S. generally
      accepted accounting principles (“GAAP”).  The Company’s significant
      accounting policies are described in Note****1 to the
      Company’s accompanying Consolidated Financial Statements.





GAAP
      requires the Company’s management to make some complex and subjective decisions
      and assessments. The Company’s most critical accounting policies involve
      decisions and assessments which could significantly affect reported assets
      and
      liabilities, as well as reported revenues and expenses. The Company believes
      that all of the decisions and assessments upon which its financial statements
      are based were reasonable at the time made based upon information available
      to
      it at that time. Management has identified its most critical accounting policies
      to be the following:





*LONG-LIVED
      ASSETS*





The
      Company makes judgments and estimates about the carrying value
      of long-lived assets, comprising of property and equipment, including
      amounts to be capitalized, depreciation methods and useful lives. The Company
      also reviews these assets for impairment on a periodic basis or whenever events
      or changes in circumstances indicate that the carrying amounts may not be
      recoverable. The impairment test consists of a comparison of an asset’s fair
      value with its carrying value; if the carrying value of the asset exceeds its
      fair value, an impairment loss is recognized in the Consolidated Statement
      of
      Operations in an amount equal to that excess. When an asset’s fair value is not
      readily apparent from other sources, management’s determination of an asset’s
      fair value requires it to make long-term forecasts of future net cash flows
      related to the asset. These forecasts require assumptions about future demand,
      future market conditions and regulatory developments. Significant and
      unanticipated changes to these assumptions could require a provision for
      impairment in a future period.





In
      accordance with SFAS No. 144, *Accounting for the Impairment or Disposal of
      Long Lived Assets* (“SFAS 144”), the closure and/or sale of mortgage loan
      origination channels (discussed in Note 11) required management to test the
      associated long lived assets for recoverability.  In connection with
      the testing of recoverability of the long lived assets, OITRS recorded an
      impairment charge of $8.9 million and $0.0 million, respectively, for the nine
      and three months ended September 30, 2007.  Further, in accordance
      with SFAS 144, such long lived assets were reported by OITRS as held for use
      as
      of March 31, 2007, and have been included in discontinued operations for the
      remainder of 2007.





*GOODWILL
      AND OTHER INTANGIBLE ASSETS*





In
      accordance with SFAS No. 142, *Goodwill and Other Intangible Assets,*
      goodwill of a reporting unit (OITRS) and other intangible assets (the
*“Opteum*” trade name) not subject to amortization shall be tested for
      impairment on an annual basis and between annual tests if an event occurs or
      circumstances change that indicate the intangible asset might be impaired,
      which, in the case of goodwill of a reporting unit, is when such event or
      circumstances would more likely than not reduce the fair value of that reporting
      unit below its carrying amount.  The closure and or sale of the
      mortgage loan origination channels constituted such an event that would require
      impairment analyses on the goodwill and other intangibles not subject to
      amortization.  Accordingly, OITRS recorded impairment charges of both
      goodwill and other intangible assets not subject to amortization of
      approximately $3.4****million and
      $0.0****million, respectively, for the nine and three months
      ended September 30, 2007.





*MORTGAGE
      BACKED SECURITIES*





The
      Company’s investments in MBS are classified as available-for-sale securities or
      held for trading.  Changes in fair value of securities held for trading are
      recorded through the statement of operations. The Company’s MBS have fair values
      determined by management based on the average of third-party broker quotes
      received and/or by independent pricing sources when available. Because the
      price
      estimates may vary to some degree between sources, management must make certain
      judgments and assumptions about the appropriate price to use to calculate the
      fair values for financial reporting purposes. Alternatively, management could
      opt to have the value of all of its positions in MBS determined by either an
      independent third-party pricing source or do so internally based on managements
      own estimates. Management believes pricing on the basis of third-party broker
      quotes is the most consistent with the definition of fair value described in
      SFAS No. 107, *Disclosures about the Fair Value of Financial
      Instruments.*





When
      the
      fair value of an available-for-sale security is less than amortized cost,
      management considers whether there is an other-than-temporary impairment in
      the
      value of the security.   The decision is based on the credit quality
      of the issue (agency versus non-agency and for non-agency, the credit
      performance of the underlying collateral), the security prepayment speeds,
      the
      length of time the security has been in an unrealized loss position and the
      Company's ability and intent to hold securities. As of September 30, 2007,
      the
      Company did not hold any non-agency securities in its portfolio. If, in
      management's judgment, an other-than-temporary impairment exists, the cost
      basis
      of the security is written down in the period to fair value and the unrealized
      loss is recognized in current period earnings. ****Such an
      event occurred in the period ended June 30, 2007 and as a consequence the cost
      basis of all MBS securities was written down to fair value and the previously
      unrealized loss recognized in earnings.   As of June 30, 2007,
      all available-for-sale securities would then be valued as a lower of cost or
      market basis.





*RETAINED
      INTEREST, TRADING*





Retained
      interest, trading is the subordinated interests retained by the Company from
      the
      Company’s various securitizations and includes the over-collateralization and
      residual net interest spread remaining after payments to the Public Certificates
      and NIM Notes (see Note 11). Retained interest, trading represents the present
      value of estimated cash flows to be received from these subordinated interests
      in the future.  The subordinated interests retained are classified as
“trading securities” and are reported at fair value with unrealized gains or
      losses reported in earnings.  In order to value these unrated and
      unquoted retained interests, the Company utilizes either pricing available
      directly from dealers or calculates their present value by projecting their
      future cash flows on a publicly-available analytical system. When a
      publicly-available analytical system is employed, the Company uses the following
      variable factors in estimating the fair value of these assets:




*Interest
      Rate Forecast*. LIBOR
      interest rate curve.




*Discount
      Rate*. The present
      value of all future cash flows utilizing a discount rate assumption established
      at the discretion of the Company to represent market conditions and
      value.




*Prepayment
      Forecast*. The
      prepayment forecast may be expressed by the Company in accordance with one
      of
      the following standard market conventions: Constant Prepayment Rate (“CPR”) or
      Percentage of a Prepayment Vector. Prepayment forecasts are made utilizing
      Citigroup Global Markets Yield Book and/or management estimates based on
      historical experience. Conversely, prepayment speed forecasts could have been
      based on other market conventions or third-party analytical systems. Prepayment
      forecasts may be changed as OITRS observes trends in the underlying collateral
      as delineated in the Statement to Certificate Holders generated by the
      securitization trust’s Trustee for each underlying security.




*Credit
      Performance Forecast*. A
      forecast of future credit performance of the underlying collateral pool will
      include an assumption of default frequency, loss severity and a recovery lag.
      In
      general, the Company will utilize the combination of default frequency and
      loss
      severity in conjunction with a collateral prepayment assumption to arrive at
      a
      target cumulative loss to the collateral pool over the life of the pool based
      on
      historical performance of similar collateral by the originator. The target
      cumulative loss forecast will be developed and noted at the pricing date of
      the
      individual security but may be updated by the Company consistent with
      observations of the actual collateral pool performance.




As
      of
      September 30, 2007, and December 31, 2006, key economic assumptions and the
      sensitivity of the current fair value of retained interests to the immediate
      10%
      and 20% adverse change in those assumptions are as follows:





(in
      thousands)





**September
                30, 2007**
            
            
            **December
                31, 2006**Carrying
                value of retained interests – fair value
            
            $
            71,593
            
            
            $
            104,199Weighted
                average life (in years)
            
            
            4.57
            
            
            
            4.26Prepayment
                assumption (annual rate)
            
            
            30.46
            %
            
            
            37.88
            %Impact
                on fair value of 10% adverse change
            
            $
            (5,394
            )
            
            $
            (8,235
            )Impact
                on fair value of 20% adverse change
            
            $
            (10,095
            )
            
            $
            (14,939
            )Expected
                Credit losses (annual rate)
            
            
            0.83
            %
            
            
            0.56
            %Impact
                on fair value of 10% adverse change
            
            $
            (4,474
            )
            
            $
            (3,052
            )Impact
                on fair value of 20% adverse change
            
            $
            (8,899
            )
            
            $
            (6,098
            )Residual
                Cash-Flow Discount Rate
            
            
            20.00
            %
            
            
            16.03
            %Impact
                on fair value of 10% adverse change
            
            $
            (4,090
            )
            
            $
            (4,575
            )Impact
                on fair value of 20% adverse change
            
            $
            (7,808
            )
            
            $
            (8,771
            )Interest
                rates on variable and adjustable loans and bonds
            
            Forward
                LIBOR Yield Curve
            
            
            Forward
                LIBOR Yield CurveImpact
                on fair value of 10% adverse change
            
            $
            (20,473
            )
            
            $
            (18,554
            )Impact
                on fair value of 20% adverse change
            
            $
            (38,997
            )
            
            $
            (39,292
            )





These
      sensitivities are entirely hypothetical and should be used with caution. As
      the
      figures indicate, changes in fair value based upon 10% and 20% variations in
      assumptions generally cannot be extrapolated to greater or lesser percentage
      variations because the relationship of the change in assumption to the change
      in
      fair value may not be linear. Also, in this table, the effect of the variation
      in a particular assumption on the fair value of the subordinated interest is
      calculated without changing any other assumption.  In reality, changes
      in one factor may result in changes in another that may magnify or counteract
      the sensitivities. To estimate the impact of a 10% and 20% adverse change of
      the
      forward LIBOR curve, a parallel shift in the forward LIBOR curve was assumed
      based on the forward LIBOR curve as of September 30, 2007 and December 31,
      2006.





*MORTGAGE
      SERVICING RIGHTS*





The
      Company recognizes mortgage servicing rights (“MSRs”) as assets when separated
      from the underlying mortgage loans in connection with the sale of such loans.
      Upon sale of a loan, the Company measures the retained MSRs by allocating the
      total cost of originating a mortgage loan between the loan and the servicing
      right based on their relative fair values. Gains or losses on the sale of MSRs
      are recognized when title and all risks and rewards have irrevocably passed
      to
      the purchaser of such MSRs and there are no significant unresolved
      contingencies.




In
      March
      2006, the FASB issued SFAS No. 156, *Accounting for Servicing of Financial
      Assets*.  The Company elected to early adopt SFAS 156 as of
      January 1, 2006, and to measure all mortgage servicing assets at fair value
      (and
      as one class).




To
      facilitate hedging of the MSRs, management has elected to utilize an internal
      model for valuation purposes.  Accordingly, fair value is estimated
      based on internally generated expected cash flows considering market prepayment
      estimates, historical prepayment rates, portfolio characteristics, interest
      rates and other economic factors.




As
      of
      September 30, 2007, and December 31, 2006, key economic assumptions and the
      sensitivity of the current fair value of MSR cash flows to the immediate 10%
      and
      20% adverse change in those assumptions are as follows:




(in
      thousands)





**September
                30, 2007**
            
            
            **December
                31, 2006**Prepayment
                assumption (annual rate) (PSA)
            
            
            450.9
            
            
            
            424.6Impact
                on fair value of 10% adverse change
            
            $
            (74
            )
            
            $
            (3,923
            )Impact
                on fair value of 20% adverse change
            
            $
            (144
            )
            
            $
            (7,557
            )MSR
                Cash-Flow Discount Rate
            
            
            14.16
            %
            
            
            14.50
            %Impact
                on fair value of 10% adverse change
            
            $
            (124
            )
            
            $
            (3,505
            )Impact
                on fair value of 20% adverse change
            
            $
            (236
            )
            
            $
            (6,727
            )





These
      sensitivities are entirely hypothetical and should be used with caution. As
      the
      figures indicate, changes in fair value based upon 10% and 20% variations in
      assumptions generally cannot be extrapolated to greater or lesser percentage
      variations because the relationship of the change in assumption to the change
      in
      fair value may not be linear. Also, in this table, the effect of the variation
      in a particular assumption on the fair value of the MSRs is calculated without
      changing any other assumption.  In reality, changes in one factor may
      result in changes in another which may magnify or counteract the
      sensitivities.





*INCOME
      RECOGNITION*





Interest
      income on available-for-sale MBS is accrued based on the actual coupon rate
      and
      the outstanding principal amount of the underlying mortgages. Premiums and
      discounts are amortized or accreted into interest income over the estimated
      lives of the MBS using the effective yield method adjusted for the effects
      of
      estimated prepayments based on SFAS No. 91, *Accounting for
      Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans
      and
      Initial Direct Costs of Leases - an amendment of FASB Statements No. 13, 60
      and 65 and a rescission of FASB Statement No. 17.* Adjustments are made
      using the retrospective method to the effective interest computation each
      reporting period based on the actual prepayment experiences to date and the
      present expectation of future prepayments of the underlying mortgages. To make
      assumptions as to future estimated rates of prepayments, the Company currently
      uses actual market prepayment history for the securities it owns and for similar
      securities that the Company does not own and current market conditions. If
      the
      estimate of prepayments is incorrect, the Company is required to make an
      adjustment to the amortization or accretion of premiums and discounts that
      would
      have an impact on future income.





For
      securities classified as held for trading interest income is based on the stated
      interest rate and the outstanding principal balance, premium or discount
      associated with the purchase of the MBS are not amortized.





With
      respect to mortgage loans held for sale, interest income and interest expense
      are recognized as earned or incurred. Loans are placed on a non-accrual status
      when concern exists as to the ultimate collectability of principal or interest.
      Loans return to accrual status when principal and interest become current and
      are anticipated to be fully collectible. The Company recognizes gain (or loss)
      on the sale of these loans.  Gains or losses on such sales are recognized
      at the time legal title transfers to the purchaser of such loans based upon
      the
      difference between the sales proceeds from the purchaser and the allocated
      basis
      of the loan sold, adjusted for net deferred loan fees and certain direct costs
      and selling costs. The Company defers net loan origination costs and fees as
      a
      component of the loan balance on the balance sheet. Such costs are not amortized
      and are recognized into income as a component of the gain or loss upon sale.
      Accordingly, salaries, commissions, benefits and other operating expenses of
      $22.2 million and $0.0 million, respectively, during the nine and three months
      ended September 30, 2007 were capitalized as direct loan origination costs
      included in loss from discontinued operations.





Servicing
      fee income is generally a fee based on a percentage of the outstanding principal
      balances of the mortgage loans serviced by the Company (or by a sub-servicer
      where the Company is the master servicer) and is recorded as income as the
      installment payments on the mortgages are received by the Company or the
      sub-servicer.








*INCOME
      TAXES*





Bimini
      Capital has elected to be taxed as a REIT under the Code. As further described
      below, Bimini Capital’s subsidiary, OITRS a taxpaying entity for income tax
      purposes and is taxed separately from Bimini Capital. Bimini Capital will
      generally not be subject to federal income tax on its REIT taxable income to
      the
      extent that Bimini Capital distributes its REIT taxable income to its
      stockholders and satisfies the ongoing REIT requirements, including meeting
      certain asset, income and stock ownership tests. A REIT must generally
      distribute at least 90% of its REIT taxable income to its stockholders, of
      which
      85% generally must be distributed within the taxable year, in order to avoid
      the
      imposition of an excise tax. The remaining balance may be distributed up to
      the
      end of the following taxable year, provided the REIT elects to treat such amount
      as a prior year distribution and meets certain other requirements.





OITRS
      and
      its activities are subject to corporate income taxes and the applicable
      provisions of SFAS No. 109,*Accounting for Income Taxes*. Deferred tax
      assets and liabilities are recognized for the future tax consequences
      attributable to differences between the financial statement carrying amounts
      of
      existing assets and liabilities and their respective tax basis. Deferred tax
      assets and liabilities are measured using enacted tax rates expected to apply
      to
      taxable income in the years in which those temporary differences are expected
      to
      be recovered or settled. The effect on deferred tax assets and liabilities
      of a
      change in tax rates is recognized in income in the period that includes the
      enactment date.  In assessing the realizability of deferred tax
      assets, management considers whether it is more likely than not that some
      portion or all of the deferred tax assets will not be realized.  To
      the extent management believes deferred tax assets will not be fully realized
      in
      future periods, a provision is recorded so as to reflect the net portion, if
      any, of the deferred tax asset management expects to realize.





**Off-Balance
      Sheet Arrangements**





As
      previously discussed OITRS pools loans originated or purchased and then sells
      them or securitizes them to obtain long-term financing for its assets.
      Securitized loans are transferred to a trust where they serve as collateral
      for
      asset-backed bonds, which the trust primarily issues to the public. During
      the
      third quarter of 2007, OITRS did not execute a securitization, and is not
      expected to do so in the future. However, OITRS held approximately $71.6 million
      of retained interests from securitizations as of September 30,
      2007.





The
      cash
      flows associated with OITRS’s securitization activities over the nine and three
      months ended September 30, 2007, were as follows:





(in
      thousands)





**Nine
                Months Ended September 30, 2007**
            
            
            **Three
                Months Ended September 30, 2007**Proceeds
                from securitizations
            
            $
            -
            
            
            $
            -Servicing
                fees received
            
            
            11,375
            
            
            
            1,684Servicing
                advances net of repayments
            
            
            5,110
            
            
            
            3,678Cash
                flows received on retained interests
            
            
            4,479
            
            
            
            1,570





**ITEM
      3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK.**





There
      have been no material changes to the Company’s exposure to market risk since
      December 31, 2006. The information set forth under Item 7A – Quantitative and
      Qualitative Disclosures About Market Risk in the Company’s Annual Report on Form
      10-K for the period ended December 31, 2006, is incorporated herein by
      reference.





**ITEM
      4.  CONTROLS AND PROCEDURES.**





**Evaluation
      of Disclosure Controls and Procedures**





The
      Company maintains disclosure controls and procedures that are designed to ensure
      that information required to be disclosed in the Company’s reports under the
      Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
      and reported within the time periods specified in the Securities and Exchange
      Commission’s rules and forms and that such information is accumulated and
      communicated to the Company’s management, including its Chief Executive Officer
      and Chief Financial Officer, as appropriate, to allow timely decisions regarding
      required disclosure.  In designing and evaluating the disclosure controls
      and procedures, management recognized that any controls and procedures, no
      matter how well designed and operated, can provide only reasonable assurance
      of
      achieving the desired control objectives and management necessarily was required
      to apply its judgment in evaluating the cost-benefit relationship of possible
      controls and procedures.





As
      of the
      end of the period covered by this report, the Company’s management carried out
      an evaluation, under the supervision and with the participation of the Company’s
      Chief Executive Officer and Chief Financial Officer, of the effectiveness of
      the
      design and operation of the Company’s disclosure controls and procedures. 
Based on such evaluation, the Company’s Chief Executive Officer and Chief
      Financial Officer concluded that the Company’s disclosure controls and
      procedures were effective.





**Changes
      in Internal Controls over Financial Reporting**





There
      was
      no change in the Company’s internal control over financial reporting that
      occurred during the Company’s most recent fiscal quarter that has materially
      affected, or is reasonably likely to materially affect, the Company’s internal
      control over financial reporting.





**PART
      II. OTHER INFORMATION.**





**ITEM
      1.  LEGAL PROCEEDINGS.**





The
      Company is involved in various lawsuits and claims, both actual and potential,
      including some that it has asserted against others, in which monetary and other
      damages are sought. Except as described below, these lawsuits and claims relate
      primarily to contractual disputes arising out of the ordinary course of the
      Company’s business. The outcome of such lawsuits and claims is inherently
      unpredictable. However, management believes that, in the aggregate, the outcome
      of all lawsuits and claims involving the Company will not have a material effect
      on the Company’s consolidated financial position or liquidity; however, any such
      outcome may be material to the results of operations of any particular period
      in
      which costs, if any, are recognized. See also Notes****8 and
      11 to the Company’s accompanying consolidated financial statements.





On
      September 17, 2007, a complaint was filed in the U.S. District Court for the
      Southern District of Florida by William Kornfeld against the Company, certain
      of
      the Company’s current and former officers and directors, Flagstone Securities,
      LLC and BB&T Capital Markets alleging various violations of the federal
      securities laws and seeking class action certification.  On October 9,
      2007, a complaint was filed in the U.S. District Court for the Southern District
      of Florida by Richard and Linda Coy against the Company, certain of the
      Company’s current and former officers and directors, Flagstone Securities, LLC
      and BB&T Capital Markets alleging various violations of the federal
      securities laws and seeking class action certification.  The Company
      believes the plaintiffs’ claims in these actions are without merit, has filed a
      motion to consolidate these actions and intends to vigorously defend the
      cases.





**ITEM
      1A.  RISK FACTORS.**





**RISKS
      RELATED TO BIMINI CAPITAL’S MBS
      PORTFOLIO**





**Interest
      rate mismatches between Bimini Capital’s adjustable-rate securities and its
      borrowings used to fund purchases of the mortgage-related securities may reduce
      net income or result in a loss during periods of changing interest
      rates.**





Bimini
      Capital’s portfolio of MBS includes adjustable rate MBS and hybrid adjustable
      rate MBS, and the mix of these securities in the portfolio may be increased
      or
      decreased over time. Additionally, the interest rates of these securities may
      vary over time based on changes in a short-term interest rate index, of which
      there are many. Bimini Capital finances its acquisitions of adjustable-rate
      securities in part with borrowings that have interest rates based on indices
      and
      repricing terms similar to, but perhaps with shorter maturities than, the
      interest rate indices and repricing terms of the adjustable-rate securities.
      Short-term interest rates are ordinarily lower than longer-term interest rates.
      During periods of changing interest rates, this interest rate mismatch between
      Bimini Capital’s assets and liabilities could reduce or eliminate net income and
      dividend yield and could cause Bimini Capital to suffer a loss. In particular,
      in a period of rising interest rates, Bimini Capital could experience a decrease
      in, or elimination of, net income or a net loss because the interest rates
      on
      Bimini Capital’s borrowings adjust faster than the interest rates on the
      adjustable-rate securities.





Interest
      rate fluctuations will also cause variances in the yield curve, which may reduce
      Bimini Capital’s net income. The relationship between short-term and longer-term
      interest rates is often referred to as the "yield curve." If short-term interest
      rates rise disproportionately relative to longer-term interest rates (a
      flattening of the yield curve), Bimini Capital’s borrowing costs may increase
      more rapidly than the interest income earned on assets. Because Bimini Capital’s
      assets may bear interest based on longer-term rates than its borrowings, a
      flattening of the yield curve would tend to decrease net income and the market
      value of mortgage loan assets. Additionally, to the extent cash flows from
      investments that return scheduled and unscheduled principal are reinvested
      in
      mortgage loans, the spread between the yields of the new investments and
      available borrowing rates may decline, which would likely decrease Bimini
      Capital’s net income. It is also possible that short-term interest rates may
      exceed longer-term interest rates (a yield curve inversion), in which event
      Bimini Capital’s borrowing costs may exceed its interest income and it could
      incur operating losses.





**A
      significant portion of Bimini Capital’s portfolio consists of fixed-rate MBS,
      which may cause Bimini Capital to experience reduced net income or a loss during
      periods of rising interest rates.**





Bimini
      Capital’s portfolio includes or may include fixed-rate and balloon maturity MBS.
      Because the interest rate on a fixed-rate mortgage never changes, over time
      there can be a divergence between the interest rate on the loan and the current
      market interest rates. Bimini Capital funds its acquisition of fixed-rate MBS
      with short-term repurchase agreements and term loans. During periods of rising
      interest rates, Bimini Capital’s costs associated with borrowings used to fund
      the acquisition of fixed-rate assets are subject to increases while the income
      it earns from these assets remains substantially fixed. This would reduce and
      could eliminate the net interest spread between the fixed-rate MBS that Bimini
      Capital purchases and the borrowings used to purchase them, which would reduce
      net interest income and could cause Bimini Capital to suffer a
      loss.





**Increased
      levels of prepayments on the mortgages underlying Bimini Capital’s
      mortgage-related securities might decrease net interest income or result in
      a
      net loss.**





Pools
      of
      mortgage loans underlie the mortgage-related securities that Bimini Capital
      acquires. Bimini Capital generally receives payments that are made on these
      underlying mortgage loans. When Bimini Capital acquires mortgage-related
      securities, it anticipates that the underlying mortgages will prepay at a
      projected rate generating an expected yield. When borrowers prepay their
      mortgage loans faster than expected it results in corresponding prepayments
      on
      the mortgage-related securities that are faster than expected.
      Faster-than-expected prepayments could potentially harm the results of Bimini
      Capital’s operations in various ways, including the following:





•
            Bimini
                Capital seeks to purchase some mortgage-related securities that have
                a
                higher interest rate than the market interest rate at the time. In
                exchange for this higher interest rate, Bimini Capital will be required
                to
                pay a premium over the market value to acquire the security. In accordance
                with applicable accounting rules, Bimini Capital will be required
                to
                amortize this premium over the term of the mortgage-related security.
                If
                the mortgage-related security is prepaid in whole or in part prior
                to its
                maturity date, however, Bimini Capital must expense any unamortized
                premium that remained at the time of the
                prepayment.





•
            A
                portion of Bimini Capital’s adjustable-rate MBS may bear interest at rates
                that are lower than their fully indexed rates, which are equivalent
                to the
                applicable index rate plus a margin. If an adjustable-rate mortgage-backed
                security is prepaid prior to or soon after the time of adjustment
                to a
                fully-indexed rate, Bimini Capital will have held that mortgage-related
                security while it was less profitable and lost the opportunity to
                receive
                interest at the fully indexed rate over the remainder of its expected
                life.





•
            If
                Bimini Capital is unable to acquire new mortgage-related securities
                to
                replace the prepaid mortgage-related securities, Bimini Capital’s
                financial condition, results of operations and cash flow may suffer
                and it
                could incur losses.





Prepayment
      rates generally increase when interest rates fall and decrease when interest
      rates rise, but changes in prepayment rates are difficult to predict. Prepayment
      rates also may be affected by other factors, including, without limitation,
      conditions in the housing and financial markets, general economic conditions
      and
      the relative interest rates on adjustable-rate and fixed-rate mortgage loans.
      While Bimini Capital seeks to minimize prepayment risk, it must balance
      prepayment risk against other risks and the potential returns of each investment
      when selecting investments. No strategy can completely insulate the Company
      from
      prepayment or other such risks.





**Bimini
      Capital may incur increased borrowing costs related to repurchase agreements
      that would harm Bimini Capital’s results of operations.**





Bimini
      Capital’s borrowing costs under repurchase agreements are generally adjustable
      and correspond to short-term interest rates, such as LIBOR or a short-term
      Treasury index, plus or minus a margin. The margins on these borrowings over
      or
      under short-term interest rates may vary depending upon a number of factors,
      including, without limitation:





•
            the
                movement of interest rates;





•
            the
                availability of financing in the market;
                and





•
            the
                value and liquidity of Bimini Capital’s mortgage-related
                securities.





Most
      of
      the Bimini Capital’s borrowings are collateralized borrowings in the form of
      repurchase agreements. If the interest rates on these repurchase agreements
      increase, Bimini Capital’s results of operations will be harmed and it may incur
      losses.





**Interest
      rate caps on Bimini Capital’s adjustable-rate MBS may reduce its income or cause
      it to suffer a loss during periods of rising interest
      rates.**





Adjustable-rate
      MBS are typically subject to periodic and lifetime interest rate caps. Periodic
      interest rate caps limit the amount an interest rate can increase during any
      given period. Lifetime interest rate caps limit the amount an interest rate
      can
      increase through the maturity of a mortgage-backed security. Bimini Capital’s
      borrowings typically are not subject to similar restrictions. Accordingly,
      in a
      period of rapidly increasing interest rates, the interest rates paid on Bimini
      Capital’s borrowings could increase without limitation while caps could limit
      the interest rates on its adjustable-rate MBS. This problem is magnified for
      adjustable-rate MBS that are not fully indexed. Further, some adjustable-rate
      MBS may be subject to periodic payment caps that result in a portion of the
      interest being deferred and added to the principal outstanding. As a result,
      the
      Company may receive less cash income on adjustable-rate MBS than it needs to
      pay
      interest on its related borrowings.  Interest rate caps on Bimini
      Capital’s MBS could reduce its net interest income or cause it to suffer a net
      loss if interest rates were to increase beyond the level of the
      caps.





**Bimini
      Capital may not be able to purchase interest rate caps at favorable prices,
      which could cause the Company to suffer a loss in the event of significant
      changes in interest rates.**





Bimini
      Capital’s policies permit it to purchase interest rate caps to help it reduce
      Bimini Capital’s interest rate and prepayment risks associated with investments
      in mortgage-related securities. This strategy potentially helps the Company
      reduce Bimini Capital’s exposure to significant changes in interest rates. A cap
      contract is ultimately no benefit to Bimini Capital unless interest rates exceed
      the target rate. If Bimini Capital purchases interest rate caps but does not
      experience a corresponding increase in interest rates, the costs of buying
      the
      caps would reduce Bimini Capital’s earnings. Alternatively, Bimini Capital may
      decide not to enter into a cap transaction due to its expense, and it would
      suffer losses if interest rates later rise substantially. Bimini Capital’s
      ability to engage in interest rate hedging transactions is limited by the REIT
      gross income requirements. See "Legal and Tax Risks" below.





**Bimini
      Capital’s leverage strategy increases the risks of Bimini Capital’s operations,
      which could reduce net income and the amount available for distributions to
      stockholders or cause Bimini Capital to suffer a loss.**





Bimini
      Capital generally seeks to borrow between eight and twelve times the amount
      of
      Bimini Capital’s equity, although at times its borrowings may be above or below
      this amount. For purposes of this calculation, Bimini Capital treats trust
      preferred securities as an equity capital equivalent. The Company incurs this
      indebtedness by borrowing against a substantial portion of the market value
      of
      its mortgage-related securities. The Company’s total indebtedness, however, is
      not expressly limited by its policies and will depend on its and its prospective
      lender's estimate of the stability of its portfolio's cash flow. As a result,
      there is no limit on the amount of leverage that Bimini Capital may incur.
      Bimini Capital faces the risk that it might not be able to meet its debt service
      obligations or a lender's margin requirements from its income and, to the extent
      Bimini Capital cannot, it might be forced to liquidate some of its assets at
      unfavorable prices. Bimini Capital’s use of leverage amplifies the risks
      associated with other risk factors, which could reduce its net income and the
      amount available for distributions to stockholders or cause it to suffer a
      loss.
      For example:





•
            A
                majority of Bimini Capital’s borrowings are secured by its
                mortgage-related securities, generally under repurchase agreements.
                A
                decline in the market value of the mortgage-related securities used
                to
                secure these debt obligations could limit Bimini Capital’s ability to
                borrow or result in lenders requiring it to pledge additional collateral
                to secure its borrowings. In that situation, Bimini Capital could
                be
                required to sell mortgage-related securities under adverse market
                conditions in order to obtain the additional collateral required
                by the
                lender. If these sales are made at prices lower than the carrying
                value of
                the mortgage-related securities, Bimini Capital would experience
                losses.





•
            A
                default under a mortgage-related security that constitutes collateral
                for
                a loan could also result in an involuntary liquidation of the
                mortgage-related security, including any cross-collateralized
                mortgage-related securities. This would result in a loss to Bimini
                Capital
                of the difference between the value of the mortgage-related security
                upon
                liquidation and the amount borrowed against the mortgage-related
                security.





•
            To
                the extent Bimini Capital is compelled to liquidate qualified REIT
                assets
                to repay debts, Bimini Capital’s compliance with the REIT rules regarding
                its assets and its sources of income could be negatively affected,
                which
                would jeopardize its qualification as a REIT. Losing Bimini Capital’s REIT
                qualification would cause it to lose tax advantages applicable to
                REITs
                and would decrease profitability and distributions to
                stockholders.





•
            If
                Bimini Capital experiences losses as a result of its leverage policy,
                such
                losses would reduce the amounts available for distribution to
                stockholders.





**An
      increase in interest rates may adversely affect the Company’s stockholder’s
      equity, which may harm the value of its Class A Common
      Stock.**





Increases
      in interest rates may negatively affect the fair market value of the Company’s
      mortgage-related securities. The Company’s fixed-rate MBS will generally be more
      negatively affected by such increases. In accordance with GAAP, the Company
      will
      be required to reduce the carrying value of the Company’s mortgage-related
      securities by the amount of any decrease in the fair value of mortgage-related
      securities compared to amortized cost. If unrealized losses in fair value occur,
      the Company will have to either reduce current earnings or reduce stockholders'
      equity without immediately affecting current earnings, depending on how it
      classifies the mortgage-related securities under GAAP. In either case, the
      Company’s stockholder’s equity will decrease to the extent of any realized or
      unrealized losses in fair value.





**Bimini
      Capital depends on borrowings to purchase mortgage-related securities and reach
      Bimini Capital’s desired amount of leverage. If Bimini Capital fails to obtain
      or renew sufficient funding on favorable terms or at all, it will be limited
      in
      its ability to acquire mortgage-related securities, which will harm its results
      of operations.**





Bimini
      Capital depends on borrowings to fund acquisitions of mortgage-related
      securities and reach Bimini Capital’s desired amount of leverage. Accordingly,
      Bimini Capital’s ability to achieve its investment and leverage objectives
      depends on its ability to borrow money in sufficient amounts and on favorable
      terms. In addition, Bimini Capital must be able to renew or replace Bimini
      Capital’s maturing borrowings on a continuous basis. Bimini Capital depends on
      many lenders to provide the primary credit facilities for Bimini Capital’s
      purchases of mortgage-related securities. If Bimini Capital cannot renew or
      replace maturing borrowings on favorable terms or at all, it may have to sell
      its mortgage-related securities under adverse market conditions, which would
      harm its results of operations and may result in permanent losses.





**Possible
      market developments could cause Bimini Capital’s lenders to require it to pledge
      additional assets as collateral. If Bimini Capital’s assets were insufficient to
      meet the collateral requirements, it might be compelled to liquidate particular
      assets at inopportune times and at unfavorable prices.**





Possible
      market developments, including a sharp or prolonged rise in interest rates,
      a
      change in prepayment rates or increasing market concern about the value or
      liquidity of one or more types of mortgage-related securities in which Bimini
      Capital’s portfolio is concentrated, might reduce the market value of its
      portfolio, which might cause its lenders to require additional collateral.
      Any
      requirement for additional collateral might compel Bimini Capital to liquidate
      its assets at inopportune times and at unfavorable prices, thereby harming
      its
      operating results. If Bimini Capital sells mortgage-related securities at prices
      lower than the carrying value of the mortgage-related securities, it would
      experience losses.





**Bimini
      Capital’s use of repurchase agreements to borrow funds may give Bimini Capital’s
      lenders greater rights in the event that either Bimini Capital or any of its
      lenders file for bankruptcy, which may make it difficult for it to recover
      its
      collateral in the event of a bankruptcy filing.**





Bimini
      Capital’s borrowings under repurchase agreements may qualify for special
      treatment under the bankruptcy code, giving its lenders the ability to avoid
      the
      automatic stay provisions of the bankruptcy code and to take possession of
      and
      liquidate its collateral under the repurchase agreements without delay if Bimini
      Capital files for bankruptcy. Furthermore, the special treatment of repurchase
      agreements under the bankruptcy code may make it difficult for Bimini Capital
      to
      recover its pledged assets in the event that its lender files for bankruptcy.
      Thus, the use of repurchase agreements exposes Bimini Capital’s pledged assets
      to risk in the event of a bankruptcy filing by either Bimini Capital’s lenders
      or Bimini Capital.








**Because
      the assets that Bimini Capital acquires might experience periods of illiquidity,
      Bimini Capital might be prevented from selling its mortgage-related securities
      at favorable times and prices, which could cause it to suffer a loss and/or
      reduce distributions to stockholders.**





Although
      Bimini Capital plans to hold its mortgage-related securities until maturity,
      there may be circumstances in which Bimini Capital sells certain of these
      securities. Mortgage-related securities generally experience periods of
      illiquidity. As a result, Bimini Capital may be unable to dispose of its
      mortgage-related securities at advantageous times and prices or in a timely
      manner. The lack of liquidity might result from the absence of a willing buyer
      or an established market for these assets, as well as legal or contractual
      restrictions on resale. The illiquidity of mortgage-related securities may
      harm
      Bimini Capital’s results of operations and could cause it to suffer a loss
      and/or reduce distributions to stockholders.





**Competition
      might prevent Bimini Capital from acquiring mortgage-related securities at
      favorable yields, which could harm its results of
      operations.**





Bimini
      Capital’s net income largely depends on its ability to acquire mortgage-related
      securities at favorable spreads over its borrowing costs. In acquiring
      mortgage-related securities, Bimini Capital competes with other REITs,
      investment banking firms, savings and loan associations, banks, insurance
      companies, mutual funds, other lenders and other entities that purchase
      mortgage-related securities, many of which have greater financial resources
      than
      Bimini Capital does. Additionally, many of Bimini Capital’s competitors are not
      subject to REIT tax compliance or required to maintain an exemption from the
      Investment Company Act. As a result, Bimini Capital may not be able to acquire
      sufficient mortgage-related securities at favorable spreads over its borrowing
      costs, which would harm its results of operations.





**Bimini
      Capital’s investment strategy involves risk of default and delays in payments,
      which could harm its results of operations.**





Bimini
      Capital may incur losses if there are payment defaults under its
      mortgage-related securities. Bimini Capital’s mortgage-related securities will
      be government or agency certificates. Agency certificates are mortgage-related
      securities issued by Fannie Mae, Freddie Mac and Ginnie Mae. Payment of
      principal and interest underlying securities issued by Ginnie Mae are guaranteed
      by the U.S. Government. Fannie Mae and Freddie Mac mortgage-related securities
      are guaranteed as to payment of principal and interest by the respective agency
      issuing the security. It is possible that guarantees made by Freddie Mac or
      Fannie Mae would not be honored in the event of default on the underlying
      securities. Legislation may be proposed to change the relationship between
      certain agencies, such as Fannie Mae or Freddie Mac, and the federal government.
      This may have the effect of reducing the actual or perceived credit quality
      of
      mortgage-related securities issued by these agencies. As a result, such
      legislation could increase the risk of loss on investments in Fannie Mae and/or
      Freddie Mac mortgage-related securities. Bimini Capital currently intends to
      continue to invest in such securities, even if such agencies' relationships
      with
      the federal government changes.





**If
      Bimini Capital fails to maintain relationships with AVM, L.P. and its affiliate
      III Associates, or if it does not establish relationships with other repurchase
      agreement trading, clearing and administrative service providers, it may have
      to
      reduce or delay its operations and/or increase its
      expenditures.**





Bimini
      Capital has engaged AVM, L.P. and its affiliate III Associates, to provide
      it
      with certain repurchase agreement trading, clearing and administrative services.
      If Bimini Capital is unable to maintain relationships with AVM and III
      Associates or is unable to establish successful relationships with other
      repurchase agreement trading, clearing and administrative service providers,
      it
      may have to reduce or delay Bimini Capital’s operations and/or increase its
      expenditures and undertake the repurchase agreement trading, clearing and
      administrative services on its own.





**LEGAL
      AND TAX RISKS**





**If
      Bimini Capital fails to qualify as a REIT, it will be subject to federal income
      tax as a regular corporation and may face a substantial tax
      liability.**





Bimini
      Capital intends to operate in a manner that allows it to qualify as a REIT
      for
      federal income tax purposes. However, REIT qualification involves the
      satisfaction of numerous requirements (some on an annual or quarterly basis)
      established under technical and complex provisions of the Code, as amended,
      or
      the Code, for which only a limited number of judicial or administrative
      interpretations exist. The determination that Bimini Capital qualifies as a
      REIT
      requires an analysis of various factual matters and circumstances that may
      not
      be totally within its control. Accordingly, it is not certain Bimini Capital
      will be able to qualify and remain qualified as a REIT for federal income tax
      purposes. Even a technical or inadvertent violation of the REIT requirements
      could jeopardize Bimini Capital’s REIT qualification. Furthermore, Congress or
      the Internal Revenue Service, or IRS, might change the tax laws or regulations
      and the courts might issue new rulings, in each case potentially having a
      retroactive effect that could make it more difficult or impossible for Bimini
      Capital to qualify as a REIT. If Bimini Capital fails to qualify as a REIT
      in
      any tax year, then:





•
            it
                would be taxed as a regular domestic corporation, which, among other
                things, means that it would be unable to deduct distributions to
                stockholders in computing taxable income and would be subject to
                federal
                income tax on its taxable income at regular corporate
                rates;





•
            any
                resulting tax liability could be substantial and would reduce the
                amount
                of cash available for distribution to stockholders, and could force
                Bimini
                Capital to liquidate assets at inopportune times, causing lower income
                or
                higher losses than would result if these assets were not liquidated;
                and





•
            unless
                Bimini Capital was entitled to relief under applicable statutory
                provisions, it would be disqualified from treatment as a REIT for
                the
                subsequent four taxable years following the year during which it
                lost its
                qualification, and its cash available for distribution to its stockholders
                therefore would be reduced for each of the years in which it does
                not
                qualify as a REIT.





Even
      if
      Bimini Capital remains qualified as a REIT, it may face other tax liabilities
      that reduce its cash flow. Bimini Capital may also be subject to certain
      federal, state and local taxes on its income and property, and its OITRS
      subsidiary is treated as a "taxable REIT subsidiary," which is a fully taxable
      corporation for federal income tax purposes. Any of these taxes would decrease
      cash available for distribution to the Company’s stockholders.





**Complying
      with REIT requirements may cause Bimini Capital to forego otherwise attractive
      opportunities.**





To
      qualify as a REIT for federal income tax purposes, Bimini Capital must
      continually satisfy tests concerning, among other things, its sources of income,
      the nature and diversification of its assets, the amounts it distributes to
      its
      stockholders and the ownership of its stock. Bimini Capital may also be required
      to make distributions to its stockholders at unfavorable times or when it does
      not have funds readily available for distribution. Thus, compliance with REIT
      requirements may hinder Bimini Capital’s ability to operate solely with the goal
      of maximizing profits.





In
      addition, the REIT provisions of the Code impose a 100% tax on income from
      "prohibited transactions." Prohibited transactions generally include sales
      of
      assets that constitute inventory or other property held for sale to customers
      in
      the ordinary course of business, other than foreclosure property. This 100%
      tax
      could impact Bimini Capital’s ability to sell mortgage-related securities at
      otherwise opportune times if it believes such sales could result in Bimini
      Capital being treated as engaging in prohibited transactions. However, Bimini
      Capital would not be subject to this tax if it were to sell assets through
      a
      taxable REIT subsidiary. Bimini Capital will also be subject to a 100% tax
      on
      certain amounts if the economic arrangements between it and its taxable REIT
      subsidiary are not comparable to similar arrangements among unrelated
      parties.





**Complying
      with REIT requirements may limit Bimini Capital’s ability to hedge effectively,
      which could in turn leave it more exposed to the effects of adverse changes
      in
      interest rates.**





The
      REIT
      provisions of the Code may substantially limit Bimini Capital’s ability to hedge
      mortgage-related securities and related borrowings by generally requiring it
      to
      limit its income in each year from qualified hedges, together with any other
      income not generated from qualified REIT real estate assets, to less than 25%
      of
      its gross income. In addition, Bimini Capital must limit its aggregate gross
      income from non-qualified hedges, fees, and certain other non-qualifying
      sources, to less than 5% of its annual gross income. As a result, Bimini Capital
      may in the future have to limit the use of hedges or implement hedges through
      a
      taxable REIT subsidiary. This could result in greater risks associated with
      changes in interest rates than Bimini Capital would otherwise want to incur.
      If
      Bimini Capital fails to satisfy the 25% or 5% limitations, unless its failure
      was due to reasonable cause and not due to willful neglect and it meets certain
      other technical requirements, it could lose its REIT qualification. Even if
      Bimini Capital’s failure was due to reasonable cause, it may have to pay a
      penalty tax equal to the amount of income in excess of certain thresholds,
      multiplied by a fraction intended to reflect its profitability.





**Dividends
      paid by REITs generally do not qualify for reduced tax
      rates.**





In
      general, the maximum federal income tax rate for dividends paid to individual
      U.S. stockholders is 15% (through 2008). Dividends paid by REITs, however,
      are
      generally not eligible for the reduced rates. The more favorable rates
      applicable to regular corporate dividends could cause stockholders who are
      individuals to perceive investments in REITs to be relatively less attractive
      than investments in the stock of non-REIT corporations that pay dividends,
      which
      could adversely affect the value of the stock of REITs, including the Company’s
      Class A Common Stock.





**To
      maintain Bimini Capital’s REIT qualification, Bimini Capital may be forced to
      borrow funds on unfavorable terms or sell its securities at unfavorable prices
      to make distributions to stockholders.**





As
      a
      REIT, Bimini Capital must distribute at least 90% of its annual net taxable
      income (excluding net capital gains) to stockholders. To the extent that Bimini
      Capital satisfies this distribution requirement, but distributes less than
      100%
      of its net taxable income, it will be subject to federal corporate income tax.
      In addition, Bimini Capital will be subject to a 4% nondeductible excise tax
      if
      the actual amount that it pays to its stockholders in a calendar year is less
      than a minimum amount specified under the Code. From time to time, Bimini
      Capital may generate taxable income greater than its income for financial
      reporting purposes from, among other things, amortization of capitalized
      purchase premiums, or its net taxable income may be greater than its cash flow
      available for distribution to its stockholders. If Bimini Capital does not
      have
      other funds available in these situations, it could be required to borrow funds,
      sell a portion of its mortgage-related securities at unfavorable prices or
      find
      other sources of funds in order to meet the REIT distribution requirements
      and
      to avoid corporate income tax and the 4% excise tax. These other sources could
      increase Bimini Capital’s costs or reduce equity and reduce amounts available to
      invest in mortgage-related securities.





**Reliance
      on legal opinions or statements by issuers of mortgage-related securities could
      result in a failure to comply with REIT gross income or asset
      tests.**





When
      purchasing mortgage-related securities, Bimini Capital may rely on opinions
      of
      counsel for the issuer or sponsor of such securities, or statements made in
      related offering documents, for purposes of determining whether and to what
      extent those securities constitute REIT real estate assets for purposes of
      the
      REIT asset tests and produce income which qualifies under the REIT gross income
      tests. The inaccuracy of any such opinions or statements may adversely affect
      Bimini Capital’s REIT qualification and result in significant corporate-level
      tax.





**Possible
      legislative or other actions affecting REITs could adversely affect the Company
      and its stockholders.**





The
      rules
      dealing with federal income taxation are constantly under review by persons
      involved in the legislative process and by the IRS and the U.S. Treasury
      Department. The Company’s business may be harmed by changes to the laws and
      regulations affecting it, including changes to securities laws and changes
      to
      the Code provisions applicable to the taxation of REITs. New legislation may
      be
      enacted into law, or new interpretations, rulings or regulations could be
      adopted, any of which could adversely affect the Company and the Company’s
      stockholders, potentially with retroactive effect.





**Bimini
      Capital may recognize excess inclusion income that would increase the tax
      liability of our stockholders.**





If
      Bimini
      Capital recognizes excess inclusion income and allocates it to stockholders,
      this income cannot be offset by net operating losses of the stockholders. If
      the
      stockholder is a tax-exempt entity, then this income would be fully taxable
      as
      unrelated business taxable income under Section 512 of the Code. If the
      stockholder is a foreign person, such income would be subject to federal income
      tax withholding without reduction or exemption pursuant to any otherwise
      applicable income tax treaty. In addition, to the extent the Company’s stock is
      owned by tax-exempt "disqualified organizations," such as government-related
      entities that are not subject to tax on unrelated business taxable income,
      although Treasury regulations have not yet been drafted to clarify the law,
      it
      may incur a corporate level tax at the highest applicable corporate tax rate
      on
      the portion of Bimini Capital’s excess inclusion income that is allocable to
      such disqualified organizations.





Excess
      inclusion income could result if Bimini Capital holds a residual interest in
      a
      real estate mortgage investment conduit, or REMIC. Excess inclusion income
      also
      could be generated if Bimini Capital were to issue debt obligations with two
      or
      more maturities and the terms of the payments on these obligations bore a
      relationship to the payments received on the Company’s mortgage-related
      securities securing those debt obligations (i.e., if Bimini Capital was to
      own
      an interest in a taxable mortgage pool). However, Treasury regulations have
      not
      been issued regarding the allocation of excess inclusion income to stockholders
      of a REIT that owns an interest in a taxable mortgage pool. Bimini Capital
      does
      not expect to acquire significant amounts of residual interests in REMICs,
      other
      than interests owned by OITRS, which is treated as a separate taxable entity
      for
      these purposes. Bimini Capital intends to structure borrowing arrangements
      in a
      manner designed to avoid generating significant amounts of excess inclusion
      income. Bimini Capital does, however, expect to enter into various repurchase
      agreements that have differing maturity dates and afford the lender the right
      to
      sell any pledged mortgaged securities if Bimini Capital should default on its
      obligations.








**A
      portion of the Company’s distributions may be deemed a return of capital for
      U.S. federal income tax purposes.**





The
      amount of the Company’s distributions to the holders of Class A Common Stock in
      a given quarter may not correspond to the taxable income for such quarter.
      To
      the extent the Company’s distributions exceed the Company’s net taxable income,
      the distribution will be treated as a return of capital for federal income
      tax
      purposes. A return of capital distribution will not be taxable to the extent
      of
      a stockholder's tax basis in its shares but will reduce a stockholder's basis
      in
      its shares of Class A Common Stock.





**The
      Company’s reported GAAP financial results differ from the taxable income results
      that drive its dividend distributions, and its consolidated balance sheet,
      income statement, and statement of cash flows as reported for GAAP purposes
      may
      be difficult to interpret.**





The
      Company’s dividend distributions are driven by its dividend distribution
      requirements under the REIT tax laws and its profits as calculated for tax
      purposes pursuant to the Code. The Company’s reported results for GAAP purposes
      differ materially, however, from both its cash flows and its taxable income.
      OITRS previously transferred mortgage loans or mortgage securities held as
      available-for-sale into securitization trusts to obtain long-term non-recourse
      funding for these assets. When OITRS surrendered control over the transferred
      mortgage loans or mortgage securities held as available-for-sale, the
      transaction was accounted for as a sale. If OITRS retained control over the
      transferred mortgage loans or mortgage securities available-for-sale, the
      transaction would have been accounted for as a secured borrowing. These
      securitization transactions do not differ materially in their structure or
      cash
      flow generation characteristics, yet under GAAP accounting such transactions
      are
      recorded differently. In securitization transactions that OITRS accounted for
      as
      sales, OITRS typically recorded a gain or loss on the assets transferred in
      its
      income statement and recorded the retained interests at fair value on its
      balance sheet. In securitization transactions accounted for as secured
      borrowings, all the assets and liabilities of the securitization trust would
      be
      consolidated on the financial statements of the sponsor. As a result of this
      and
      other accounting issues, stockholders and analysts must undertake a complex
      analysis to understand the Company’s economic cash flows, actual financial
      leverage, and dividend distribution requirements. This complexity may hinder
      the
      trading of the Company’s stock or may lead observers to misinterpret its
      results.





**Recent
      legislation related to corporate governance may increase the Company’s costs of
      compliance and its liability.**





Recently
      enacted and proposed laws, regulations and standards relating to corporate
      governance and disclosure requirements applicable to public companies, including
      the Sarbanes-Oxley Act of 2002, have increased the costs of corporate
      governance, reporting and disclosure practices. These costs may increase in
      the
      future due to the Company’s continuing implementation of compliance programs
      mandated by these requirements. In addition, these new laws, rules and
      regulations create new legal bases for administrative enforcement, civil and
      criminal proceedings against the Company in case of non-compliance, thereby
      increasing the Company’s risks of liability and potential
      sanctions.





**Failure
      to maintain an exemption from the Investment Company Act would harm the
      Company’s results of operations.**





The
      Company intends to conduct its business so as not to become regulated as an
      investment company under the Investment Company Act. If the Company fails to
      qualify for this exemption, its ability to use leverage would be substantially
      reduced and it would be unable to conduct its business. The Investment Company
      Act exempts entities that are primarily engaged in the business of purchasing
      or
      otherwise acquiring mortgages and other liens on, and interests in, real estate.
      Under the current interpretation of the SEC staff, in order to qualify for
      this
      exemption, the Company must maintain at least 55% of its assets directly in
      these qualifying real estate interests, with at least 25% of remaining assets
      invested in real estate-related securities. Mortgage-related securities that
      do
      not represent all of the certificates issued with respect to an underlying
      pool
      of mortgages may be treated as separate from the underlying mortgage loans
      and,
      thus, may not qualify for purposes of the 55% requirement. Therefore, the
      Company’s ownership of these mortgage-related securities is limited by the
      provisions of the Investment Company Act.





In
      satisfying the 55% requirement under the Investment Company Act, the Company
      treats as qualifying interests mortgage-related securities issued with respect
      to an underlying pool as to which it holds all issued certificates. If the
      SEC
      or its staff adopts a contrary interpretation of such treatment, the Company
      could be required to sell a substantial amount of its mortgage-related
      securities under potentially adverse market conditions. Further, in order to
      ensure that the Company at all times qualify for the exemption under the
      Investment Company Act, it may be precluded from acquiring mortgage-related
      securities whose yield is higher than the yield on mortgage-related securities
      that could be purchased in a manner consistent with the exemption. These factors
      may lower or eliminate the Company’s net income.





**OTHER
      RISKS**





**Hedging
      transactions may adversely affect the Company’s earnings, which could adversely
      affect cash available for distribution to its
      stockholders.**





The
      Company may enter into interest rate cap or swap agreements or pursue other
      hedging strategies, including the purchase of puts, calls or other options
      and
      futures contracts. The Company’s hedging activity will vary in scope based on
      the level and volatility of interest rates and principal prepayments, the type
      of MBS it holds, and other changing market conditions. Hedging may fail to
      protect or could adversely affect the Company because, among other
      things:





•
            hedging
                can be expensive, particularly during periods of rising and volatile
                interest rates;





•
            available
                interest rate hedging may not correspond directly with the interest
                rate
                risk for which protection is
                sought;





•
            the
                duration of the hedge may not match the duration of the related
                liability;





•
            certain
                types of hedges may expose the Company to risk of loss beyond the
                fee paid
                to initiate the hedge;





•
            the
                amount of income that a REIT may earn from hedging transactions is
                limited
                by federal income tax provisions governing
                REITs;





•
            the
                credit quality of the party owing money on the hedge may be downgraded
                to
                such an extent that it impairs the Company’s ability to sell or assign its
                side of the hedging transaction;
                and





•
            the
                party owing money in the hedging transaction may default on its obligation
                to pay.





The
      Company’s hedging activity may adversely affect the Company’s earnings, which
      could adversely affect cash available for distribution to
      stockholders.





**Terrorist
      attacks and other acts of violence or war may affect any market for the
      Company’s Class A Common Stock, the industry in which the Company conducts its
      operations, and its profitability.**





Terrorist
      attacks may harm the Company’s results of operations and the investments of
      stockholders. The Company cannot assure you that there will not be further
      terrorist attacks against the United States or U.S. businesses. These attacks
      or
      armed conflicts may directly impact the property underlying the Company’s
      mortgage-related securities or the securities markets in general. Losses
      resulting from these types of events are uninsurable. More generally, any of
      these events could cause consumer confidence and spending to decrease or result
      in increased volatility in the United States and worldwide financial markets
      and
      economies. They also could result in economic uncertainty in the United States
      or abroad. Adverse economic conditions could harm the value of the property
      underlying the Company’s mortgage-related securities or the securities markets
      in general, which could harm its operating results and revenues and may result
      in the volatility of the market value of its Class A Common Stock.





**Current
      loan performance data may not be indicative of future
      results.**





When
      making capital budgeting and other decisions, the Company uses projections,
      estimates and assumptions based on the Company’s experience with mortgage loans.
      Actual results and the timing of certain events could differ materially in
      adverse ways from those projected, due to factors including changes in general
      economic conditions, fluctuations in interest rates, fluctuations in mortgage
      loan prepayment rates and fluctuations in losses due to defaults on mortgage
      loans. These differences and fluctuations could rise to levels that may
      adversely affect the Company’s profitability.





**Changes
      in interest rates may reduce the Company’s liquidity, financial condition and
      results of operations resulting in a decline in the value of the Company’s Class
      A Common Stock.**





The
      Company’s results of operations will be derived in part from the spread between
      the yield on Bimini Capital’s MBS assets and the cost of Bimini Capital’s
      borrowings. There is no assurance that there will be a positive spread in either
      high interest rate environments or low interest rate environments, or that
      the
      spread will not be negative as has recently been in the case. Changes in
      interest rates may reduce the Company’s liquidity, financial condition and
      results of operations and may cause the Company’s funding costs, both at Bimini
      Capital and OITRS, to exceed income.  In addition, during periods of
      high interest rates, the Company’s dividend yield on its Class A Common Stock
      may be less attractive compared to alternative investments of equal or lower
      risk. Each of these factors could negatively affect the market value of the
      Company’s Class A Common Stock.





**The
      Company’s financial position has deteriorated during 2007.  Continued
      deterioration may negatively affect the Company’s liquidity, results of
      operations and the value of the Company’s Class A Common
      Stock.**





The
      Company’s financial position deteriorated during 2007 due in part to competitive
      conditions in the mortgage origination market.  Although the Company
      has taken actions and is evaluating other actions intended to improve the
      Company’s financial position and liquidity, there can be no assurance that the
      Company’s efforts will be successful.  Continued deterioration may
      negatively affect liquidity, results of operations and the value of the
      Company’s Class A Common Stock.





**Bimini
      Capital has guaranteed certain obligations of OITRS.  If OITRS fails
      to meet its financial obligations, Bimini Capital may be forced to liquidate
      certain of Bimini Capital’s MBS assets to satisfy these guarantees which could
      negatively affect the Bimini Capital’s liquidity, results of operations and the
      value of the Company’s Class A Common Stock and may result in margin calls from
      Bimini Capital’s lenders.**





Bimini
      Capital has guaranteed certain obligations of OITRS, including obligations
      under
      OITRS’s funding facilities.  Although certain of OITRS’s funding
      facilities are secured by collateral, if OITRS is unable to fulfill its
      obligations under such facilities and the value of the collateral is
      insufficient to repay OITRS’s obligations, Bimini Capital may be required to pay
      such deficiency under its guarantees of OITRS’s obligations.  To pay
      such deficiency, Bimini Capital may be required to sell MBS portfolio assets
      to
      generate the cash necessary to pay OITRS’s creditors and such sales may
      negatively affect the Company’s liquidity, results of operations and the value
      of the Company’s Class A Common Stock.  These sales may also result in
      margin calls from Bimini Capital’s lenders and transaction
      counterparties.





**Bimini
      Capital is currently a defendant in securities class action lawsuits and may
      incur expenses that are not covered by insurance in the defense of these
      lawsuits.  Any expenses incurred that are not reimbursed by insurance
      could negatively and materially impact the Company’s financial position,
      liquidity and results of operations.**





As
      described in Part II - Item 1. Legal Proceedings above, Bimini Capital has
      been
      named as a defendant in two lawsuits alleging various violations of the federal
      securities laws and seeking class action certification. These cases involve
      complex legal proceedings, the outcome of which are difficult to predict. 
An unfavorable outcome or settlement of these lawsuits that is not covered
      by
      insurance could have a material adverse effect on the Company’s financial
      position, liquidity or results of operations.





**There
      may be a limited market for Bimini Capital’s Class A common stock in the
      future.**





On
      October 29, 2007, NYSE Regulation, Inc. notified the Company that the Company's
      average global market capitalization over a consecutive thirty trading day
      period has fallen below the NYSE's minimum quantitative continued listing
      criteria for REITs of $25 million.  As a result, trading in the
      Company’s Class A common stock on the NYSE was suspended prior to the market
      opening on November 5, 2007.  The Company has applied to list its Class A
      common stock on another national securities market, however, no assurance can
      be
      given that the Company's Class A common stock will be approved for listing
      on
      such national securities market.  Until such time that the Company's Class
      A common stock is approved for listing on another national securities market,
      the ability to buy and sell the Company's Class A common stock may be limited
      and this could result in a decline in the market price of the Company’s Class A
      common stock.  Additionally, until such time that the Company's Class
      A common stock is approved for listing on another national securities market,
      the Company’s ability to raise capital through the sale of additional securities
      may be limited.





**RISKS
      RELATED TO DISCONTINUED OPERATIONS OF OITRS**





**OITRS’s
      failure to comply with federal, state or local regulation of, or licensing
      requirements with respect to, mortgage lending, loan servicing, broker
      compensation programs, local branch operations or other aspects of OITRS’s
      business could harm OITRS’s operations and profitability.**





As
      a
      former mortgage lender and broker and as a loan servicer, OITRS is subject
      to an
      extensive body of both state and federal law. The volume of new or modified
      laws
      and regulations has increased in recent years and, in addition, some individual
      municipalities have begun to enact laws that restrict loan origination and
      servicing activities. As a result, it may be more difficult to comprehensively
      identify and accurately interpret all of these laws and regulations, thereby
      potentially increasing OITRS’s exposure to the risks of noncompliance with these
      laws and regulations. OITRS’s failure to comply with these laws can lead
      to:





•
            civil
                and criminal liability;





•
            loss
                of licensure;





•
            damage
                to OITRS’s reputation in the
                industry;





•
            inability
                to sell or securitize OITRS’s
                loans;





•
            demands
                for indemnification or loan repurchases from purchasers of OITRS’s
                loans;





•
            fines
                and penalties and litigation, including class action lawsuits;
                or





•
            administrative
                enforcement actions.





Any
      of
      these results could harm OITRS’s retained residual interests in securitizations
      and thus OITRS’s results of operations, financial condition and business
      prospects.





**OITRS
      is subject to the risk that provisions of its loan agreements may be
      unenforceable.**





OITRS’s
      rights and obligations with respect to its loans are governed by written loan
      agreements and related documentation. It is possible that a court could
      determine that one or more provisions of a loan agreement are unenforceable,
      such as a loan prepayment provision or the provisions governing OITRS’s security
      interest in the underlying collateral. If this were to happen with respect
      to a
      material asset or group of assets, OITRS could be required to repurchase these
      loans and may not be able to sell or liquidate the loans.





**An
      increase in interest rates could reduce the value of OITRS’s remaining loan
      inventory and may lead to losses.**





The
      value
      of OITRS’s loan inventory is based, in part, on market interest rates.
      Accordingly, OITRS may experience losses on loan sales if interest rates change
      rapidly or unexpectedly. If interest rates rise before OITRS sells its loans,
      the value of the loans will decrease. If the amount OITRS receives from selling
      the loans is less than its cost of originating the loans, OITRS may incur net
      losses, and its business and operating results could be harmed.





**A
      disruption in market conditions could reduce the prices at which OITRS is able
      to sell its remaining loan inventory and therefore negatively impact its results
      of operations.**





The
      profitability of OITRS is based, in part, on its ability to sell its remaining
      inventory of mortgage loans at a profit either through the securitization market
      or whole loan market. Disruptions in the whole loan or securitization market
      brought about by deteriorating credit performance of recent mortgage
      originations and liquidity concerns with respect to originators or other market
      participants, among other factors, may affect prices buyers are willing to
      pay
      to acquire mortgage loans.  To the extent such prices do not exceed
      OITRS’s cost to originate or acquire such loans, OITRS may incur losses upon
      sales of such loans.





**OITRS
      may have to repurchase loans it has sold to the whole loan market due to early
      payment defaults.**





When
      OITRS sells loans to the whole loan market it may be required to repurchase
      loans upon which the underlying borrowers default in the payment of principal
      or
      interest. When such borrowers fail to make their initial payments (referred
      to
      as Early Payment Defaults or EPDs) the contractual arrangements under which
      the
      sale was executed may require OITRS to repurchase the loan from the
      buyer.  In these cases, OITRS may be obligated to repurchase such
      loans at prices greater than their then fair market value, which could have
      a
      material and adverse affect on OITRS’s results of operations. When OITRS
      purchases loans from a third-party seller that it then sells into the whole
      loan
      market, OITRS obtains representations and warranties from the third-party seller
      that sold the loans to it that generally parallel the representations and
      warranties it provided to its purchasers of such loans. As a result, the Company
      believes that OITRS has the potential for recourse against the third-party
      seller of the loans. However, if OITRS does not have recourse against the
      third-party seller, or if the original third-party seller is not in a financial
      position to be able to repurchase the loan, OITRS may not be able to recoup
      the
      cash resources used to repurchase such loans and therefore may be required
      to
      sell such loans at prices less than their repurchase price, thus incurring
      a
      loss upon resale.  Further, if OITRS is unable to obtain recourse from
      such third-party sellers, such inability could materially negatively affect
      OITRS’s liquidity, financial position and results of operations, which in turn
      could negatively affect the Company’s liquidity, financial position and results
      of operations.





**Retaining
      subordinated interests in securitizations exposes OITRS to increased credit
      risk.**





OITRS
      has
      maintained and may continue to maintain an interest in loans that it originates
      and securitizes by retaining subordinated interests in MBS that evidence
      interests in such loans. Subordinated interests are classes of MBS that may
      incur losses experienced on the related loans prior to the more senior MBS
      issued in the related transaction. If the actual rate and severity of losses
      on
      the related loans are higher than those assumed by OITRS, the actual return
      on
      OITRS’s investment in those subordinated interests may be lower than
      anticipated.





**OITRS
      may be subject to losses due to misrepresented or falsified information or
      if
      OITRS obtains less than full documentation with respect to its mortgage
      loans.**





When
      OITRS originates mortgage loans, it relies upon information supplied by
      borrowers and other third parties, including information contained in the
      applicant's loan application, property appraisal reports, title information
      and
      employment and income documentation. If any of this information is
      misrepresented or falsified and if OITRS does not discover it before funding
      a
      loan, the actual value of the loan may be significantly lower than anticipated.
      As a practical matter, OITRS generally would bear the risk of loss associated
      with a misrepresentation, whether made by the loan applicant, the mortgage
      broker, another third party or one of OITRS’s employees. A loan subject to a
      material misrepresentation typically cannot be sold or is subject to repurchase
      or substitution if it is sold or securitized prior to detection of the
      misrepresentation. Although OITRS may have rights against persons and entities
      who made or knew about the misrepresentation, those persons and entities may
      be
      difficult to locate, and it is often difficult to collect from them any monetary
      losses that OITRS may have suffered.





In
      the
      case of certain loan products, OITRS does not receive full documentation of
      the
      borrower's income and/or assets. Instead, OITRS bases its credit decision on
      the
      borrower's credit score and credit history, the value of the property securing
      the loan and the effect of the loan on the borrower's debt service
      requirements.  The Company believes that there is a higher risk of
      default on loans where there is less than full documentation of the borrower's
      income and/or assets.





**Some
      of the loans that OITRS originated were subprime, rather than prime, and
      generally have delinquency and default rates higher than prime loans, which
      could result in higher loan losses.**





OITRS
      previously originated subprime loans. Subprime mortgage loans generally have
      higher delinquency and default rates than prime mortgage loans. Delinquency
      interrupts the flow of projected interest income from a mortgage loan, and
      default can ultimately lead to a loss if the net realizable value of the real
      property securing the mortgage loan is insufficient to cover the principal
      and
      interest due on the loan. In whole loan sales, OITRS’s risk of delinquency
      typically only extends to the first payment. OITRS also assumes the risks of
      delinquency and default for loans that it is obligated to repurchase. OITRS
      previously attempted to manage these risks with risk-based loan pricing and
      appropriate underwriting policies. However, the Company cannot assure that
      such
      management policies will prevent delinquencies or defaults and, if such policies
      and methods are insufficient to control OITRS’s delinquency and default risks
      and do not result in appropriate loan pricing, its business, financial
      condition, liquidity and results of operations could be harmed.





**Geographic
      concentration of mortgage loans that OITRS previously originated or purchased
      increases OITRS’s exposure to risks in those areas.**





Concentration
      of mortgage loans that OITRS previously originated or purchased in any one
      geographic area increases OITRS’s exposure to the economic and natural hazard
      risks associated with that area. Declines in the residential real estate markets
      in which OITRS’s loans were concentrated may reduce the values of the properties
      collateralizing mortgages which in turn may increase the risk of delinquency,
      foreclosure, bankruptcy, or losses from those loans. To the extent that a large
      number of loans are impaired, OITRS’s financial condition and results of
      operations may be adversely affected, which in turn may adversely affect the
      Company’s financial condition and results of operations.





**To
      the extent that OITRS has a large number of loans in an area affected by a
      natural disaster, OITRS may suffer losses.**





Standard
      homeowner insurance policies generally do not provide coverage for natural
      disasters, such as hurricane Katrina and the ensuing flooding. Furthermore,
      nonconforming borrowers are not likely to have special hazard insurance. To
      the
      extent that borrowers do not have insurance coverage for natural disasters,
      they
      may not be able to repair the property or may stop paying their mortgages if
      the
      property is damaged. A natural disaster that results in a significant number
      of
      delinquencies could cause increased foreclosures and decrease OITRS’s ability to
      recover losses on properties affected by such disasters and could harm OITRS’s
      retained residual interests in securitizations and thus OITRS’s financial
      condition and results of operations, which could in turn harm the Company’s
      financial condition and results of operations.





**Differences
      in OITRS’s actual experience compared to the assumptions that OITRS uses to
      determine the value of its mortgage securities held as available-for-sale could
      adversely affect OITRS’s financial position.**





Currently,
      OITRS’s securitization of mortgage loans are structured to be treated as sales
      for financial reporting purposes and, therefore, result in gain recognition
      at
      closing. Delinquency, loss, prepayment and discount rate assumptions have a
      material impact on the amount of gain recognized and on the carrying value
      of
      the retained mortgage securities held as available-for-sale (where applicable).
      The gain on sale method of accounting may create volatile earnings in certain
      environments. If OITRS’s actual experience differs materially from the
      assumptions that it uses to determine the value of its mortgage securities
      held
      as available-for-sale, future cash flows, and results of operations could be
      negatively affected.





**OITRS’s
      results of operations and liquidity would suffer if it was unable to sell the
      mortgage loans that it previously originated.**





OITRS
      attempts to sell all of the mortgage loans that it previously originated and
      that are not securitized in the secondary market. OITRS’s ability to sell
      mortgage loans depends on the availability of an active secondary market for
      residential mortgage loans. Additionally, OITRS attempts to sell substantially
      all of the mortgages to institutional buyers. If these financial institutions
      cease to buy its loans and equivalent purchasers cannot be found on a timely
      basis, then OITRS’s results of operations and liquidity could be harmed. OITRS’s
      results of operations and liquidity could also be harmed if these financial
      institutions or other purchasers lower the price they pay to OITRS or adversely
      change the material terms of their loan purchases from OITRS. The prices at
      which OITRS sells its loans vary over time. A number of factors determine the
      price OITRS receives for its loans. These factors include:





•      the
      number of institutions that are willing to buy OITRS’s loans;





•      the
      amount of comparable loans available-for-sale;





•      the
      levels of prepayments of, or defaults on, loans;





•      the
      types and volume of loans OITRS sells;





•      the
      level and volatility of interest rates; and





•      the
      quality of OITRS’s loans.





Changes
      in laws in the states where OITRS operates could also adversely affect its
      ability to sell its remaining inventory of mortgage loans.





**OITRS
      may have to repurchase loans it has sold to the whole loan market and loans
      it
      has sold via securitizations.**





OITRS
      may
      be required to repurchase loans that are the subject of fraud, irregularities
      in
      its loan files or process, or that result in OITRS breaching the representations
      and warranties in the contract of sale. In addition, when OITRS sells loans
      to
      the whole loan market it may be required to repurchase loans upon which the
      underlying borrowers default in the payment of principal or interest. In these
      cases, OITRS may be obligated to repurchase loans at prices greater than their
      then fair market value, which could have a material and adverse affect on
      OITRS’s liquidity, financial position and results of operations. When OITRS
      purchases loans from a third-party seller that it then sells into the whole
      loan
      market or to a securitization trust, OITRS obtains representations and
      warranties from the third-party seller that sold the loans to it that generally
      parallel the representations and warranties it provided to its purchasers of
      such loans. As a result, the Company believes that OITRS has the potential
      for
      recourse against the third-party seller of the loans. However, if OITRS does
      not
      have recourse against the third-party seller, or if the original third-party
      seller is not in a financial position to be able to repurchase the loan, OITRS
      may have to use cash resources to repurchase such loans at prices greater than
      their then fair market value, which could materially and adversely affect
      OITRS’s liquidity, financial position and results of operations.





**Failure
      to timely renew or obtain adequate financing under OITRS’s funding facilities
      may harm OITRS’s liquidity, financial condition and results of
      operations.**





OITRS
      is
      substantially dependent upon funding facilities entered into in the ordinary
      course of OITRS’s business.  One of these funding facilities is
      scheduled to expire on December 19, 2007. Any failure to timely renew or obtain
      adequate financing under a new funding facility for any reason, could harm
      OITRS’s liquidity, financial condition and results of operations, which in turn
      could harm the Company’s liquidity, financial condition and results of
      operations and the Company’s ability to make distributions to its stockholders.
      Further, any increase in the cost of OITRS’s financing in excess of any increase
      in the income derived from OITRS’s assets could harm OITRS’s results of
      operations, which in turn could harm the Company’s results of operations and the
      Company’s ability to make distributions to its stockholders.





**The
      terms of OITRS’s financing facilities contain restrictive financial and other
      covenants.  The failure to satisfy any of these covenants may restrict
      OITRS’s ability to pay dividends to the Company and could result in the
      termination of OITRS’s funding facilities.**





The
      terms
      of OITRS’s funding facilities contain restrictive financial and other covenants
      that, among other things, will require the Company to maintain a minimum level
      of tangible net worth.  If the Company is not in compliance with these
      financial and other covenants in the funding facilities, OITRS’s ability to pay
      dividends to Bimini Capital may be restricted, which could reduce the earnings
      available for distribution to the Company’s stockholders.  In
      addition, the failure to satisfy any of these covenants is generally deemed
      a
      default that gives OITRS’s lenders the right to terminate OITRS’s funding
      facilities absent the ability of OITRS to cure such default or the waiver of
      such default by OITRS’s lenders.  If OITRS is unable to cure a default
      or obtain a waiver of a default from its lenders, OITRS’s existing funding
      facilities could be terminated and OITRS would then need to obtain alternative
      financing.





**Possible
      market developments could cause OITRS’s lenders to require OITRS to pledge
      additional assets as collateral; if OITRS’s assets are insufficient to meet such
      collateral requirements, then OITRS may be compelled to liquidate particular
      assets at an inopportune time, which may cause OITRS to incur
      losses.**





Possible
      market developments, including a sharp rise in interest rates, a change in
      prepayment rates or increasing market concern about the value or liquidity
      of
      the types of mortgage assets in OITRS’s portfolio, may reduce the market value
      of OITRS’s portfolio, which may cause OITRS’s lenders to require additional
      collateral or otherwise limit its ability to borrow. This requirement for
      additional collateral may compel OITRS to liquidate its assets at a
      disadvantageous time. If the sales are made at prices lower than the amortized
      cost of such investments, OITRS would incur losses.













**ITEM
      6.                      EXHIBITS.**





Exhibit
      No.


2.1
            Agreement
                and Plan of Merger, incorporated by reference to Exhibit 2.1 to the
                Company’s Current Report on Form 8-K, dated September 29, 2005, filed with
                the SEC on September 30, 20053.1
            Articles
                of Amendment and Restatement, incorporated by reference to Exhibit
                3.1 to
                the Company’s Form S-11/A, filed with the SEC on April 29,
                20043.2
            Articles
                Supplementary, incorporated by reference to Exhibit 3.1 to the Company’s
                Current Report on Form 8-K, dated November 3, 2005, filed with the
                SEC on
                November 8, 20053.3
            Articles
                of Amendment, incorporated by reference to Exhibit 3.1 to the Company’s
                Current Report on Form 8-K, dated February 10, 2006, filed with the
                SEC on
                February 15, 20063.4
            Articles
                of Amendment, incorporated by reference to Exhibit 3.1 to the Company’s
                Current Report on Form 8-K, dated September 24, 2007, filed with
                the SEC
                on September 24, 20073.5
            Amended
                and Restated Bylaws, incorporated by reference to Exhibit 3.2 to
                the
                Company’s Current Report on Form 8-K, dated September 24, 2007, filed with
                the SEC on September 24, 2007†10.1
            Employment
                Agreement between Bimini Mortgage Management, Inc. and Jeffrey J.
                Zimmer, incorporated by reference to Exhibit 10.3 to the Company’s Form
                S-11/A, dated April 12, 2004, filed with the SEC on April 29,
                2004†10.2
            Employment
                Agreement between Bimini Mortgage Management, Inc. and Robert E.
                Cauley, incorporated by reference to Exhibit 10.4 to the Company’s Form
                S-11/A, dated April 12, 2004, filed with the SEC on April 29,
                2004*†10.3
            Bimini
                Capital Management, Inc. 2003 Long Term Incentive Compensation Plan,
                as
                amended September 28, 2007*†10.4
            Bimini
                Capital Management, Inc. 2004 Performance Bonus Plan, as amended
                September
                28, 2007*†10.5
            Form
                of Phantom Share Award Agreement*†10.6
            Form
                of Restricted Stock Award Agreement†10.7
            Separation
                Agreement and General Release, dated as of June 29, 2007, by and
                among
                Opteum Inc., Opteum Financial Services, LLC and Peter R. Norden,
                incorporated by reference to Exhibit 10.2 to the Company’s Current Report
                on Form 8-K, dated June 30, 2007, filed with the SEC on July 5,
                200710.8
            Voting
                Agreement, among certain stockholders of Bimini Mortgage Management,
                Inc.,
                Jeffrey J. Zimmer, Robert E. Cauley, Amber K. Luedke, George H. Haas,
                IV,
                Kevin L. Bespolka, Maureen A. Hendricks, W. Christopher Mortenson,
                Buford
                H. Ortale, Peter Norden, certain of Mr. Norden’s affiliates, Jason Kaplan,
                certain of Mr. Kaplan’s affiliates and other former owners of Opteum
                Financial Services, LLC, incorporated by reference to Exhibit 99(D)
                to the
                Schedule 13D, dated November 3, 2005, filed with the SEC on November
                14,
                200510.9
            Membership
                Interest Purchase, Option and Investor Rights Agreement among Opteum
                Inc.,
                Opteum Financial Services, LLC and Citigroup Global Markets Realty
                Corp.
                dated as of December 21, 2006, incorporated by reference to Exhibit
                10.1
                to the Company’s Current Report on Form 8-K, dated December 21, 2006,
                filed with the SEC on December 21, 200610.10
            Seventh
                Amended and Restated Limited Liability Company Agreement of Orchid
                Island
                TRS, LLC, dated as of July 20, 2007, made and entered into by Opteum
                Inc.
                and Citigroup Global Markets Realty Corp., incorporated by reference
                to
                Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q for the
                period ended June 30, 2007, filed with the SEC on August 14,
                200710.11
            Asset
                Purchase Agreement, dated May 7, 2007, by and among Opteum Financial
                Services, LLC, Opteum Inc. and Prospect Mortgage Company, LLC,
                incorporated by reference to Exhibit 10.1 to the Company’s Current Report
                on Form 8-K, dated May 7, 2007, filed with the SEC on May 7,
                200710.12
            First
                Amendment to Purchase Agreement, dated June 30, 2007, by and among
                Metrocities Mortgage, LLC – Opteum Division, Opteum Financial Services,
                LLC and Opteum Inc., incorporated by reference to Exhibit 10.1 to
                the
                Company’s Current Report on Form 8-K, dated June 30, 2007, filed with the
                SEC on July 5, 2007*31.1
            Certification
                of the Principal Executive Officer, pursuant to Rule 13a-14(a) or
                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 the Principal Financial Officer, pursuant to Rule 13a-14(a) or
                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 the 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 the 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.
              †
                Management compensatory plan or arrangement required to be filed
                by Item
                601 of Regulation S-K.


Signatures





Pursuant
      to the requirements of Section
      13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant
      has duly caused this report to be signed on its behalf by the undersigned,
      thereunto duly authorized.





BIMINI
      CAPITAL MANAGEMENT,
      INC.





Date:  November
      8,
      2007                                                                                     By: /s/
      Robert E.
      Cauley


Robert
      E. Cauley


Vice
      Chairman, Senior Executive Vice
      President,


Chief
      Financial Officer, Chief
      Investment Officer and


Treasurer





**EXHIBIT
      INDEX**





Exhibit
      No.


2.1
            Agreement
                and Plan of Merger, incorporated by reference to Exhibit 2.1 to the
                Company’s Current Report on Form 8-K, dated September 29, 2005, filed with
                the SEC on September 30, 20053.1
            Articles
                of Amendment and Restatement, incorporated by reference to Exhibit
                3.1 to
                the Company’s Form S-11/A, filed with the SEC on April 29,
                20043.2
            Articles
                Supplementary, incorporated by reference to Exhibit 3.1 to the Company’s
                Current Report on Form 8-K, dated November 3, 2005, filed with the
                SEC on
                November 8, 20053.3
            Articles
                of Amendment, incorporated by reference to Exhibit 3.1 to the Company’s
                Current Report on Form 8-K, dated February 10, 2006, filed with the
                SEC on
                February 15, 20063.4
            Articles
                of Amendment, incorporated by reference to Exhibit 3.1 to the Company’s
                Current Report on Form 8-K, dated September 24, 2007, filed with
                the SEC
                on September 24, 20073.5
            Amended
                and Restated Bylaws, incorporated by reference to Exhibit 3.2 to
                the
                Company’s Current Report on Form 8-K, dated September 24, 2007, filed with
                the SEC on September 24, 2007†10.1
            Employment
                Agreement between Bimini Mortgage Management, Inc. and Jeffrey J.
                Zimmer, incorporated by reference to Exhibit 10.3 to the Company’s Form
                S-11/A, dated April 12, 2004, filed with the SEC on April 29,
                2004†10.2
            Employment
                Agreement between Bimini Mortgage Management, Inc. and Robert E.
                Cauley, incorporated by reference to Exhibit 10.4 to the Company’s Form
                S-11/A, dated April 12, 2004, filed with the SEC on April 29,
                2004*†10.3
            Bimini
                Capital Management, Inc. 2003 Long Term Incentive Compensation Plan,
                as
                amended September 28, 2007*†10.4
            Bimini
                Capital Management, Inc. 2004 Performance Bonus Plan, as amended
                September
                28, 2007*†10.5
            Form
                of Phantom Share Award Agreement*†10.6
            Form
                of Restricted Stock Award Agreement†10.7
            Separation
                Agreement and General Release, dated as of June 29, 2007, by and
                among
                Opteum Inc., Opteum Financial Services, LLC and Peter R. Norden,
                incorporated by reference to Exhibit 10.2 to the Company’s Current Report
                on Form 8-K, dated June 30, 2007, filed with the SEC on July 5,
                200710.8
            Voting
                Agreement, among certain stockholders of Bimini Mortgage Management,
                Inc.,
                Jeffrey J. Zimmer, Robert E. Cauley, Amber K. Luedke, George H. Haas,
                IV,
                Kevin L. Bespolka, Maureen A. Hendricks, W. Christopher Mortenson,
                Buford
                H. Ortale, Peter Norden, certain of Mr. Norden’s affiliates, Jason Kaplan,
                certain of Mr. Kaplan’s affiliates and other former owners of Opteum
                Financial Services, LLC, incorporated by reference to Exhibit 99(D)
                to the
                Schedule 13D, dated November 3, 2005, filed with the SEC on November
                14,
                200510.9
            Membership
                Interest Purchase, Option and Investor Rights Agreement among Opteum
                Inc.,
                Opteum Financial Services, LLC and Citigroup Global Markets Realty
                Corp.
                dated as of December 21, 2006, incorporated by reference to Exhibit
                10.1
                to the Company’s Current Report on Form 8-K, dated December 21, 2006,
                filed with the SEC on December 21, 200610.10
            Seventh
                Amended and Restated Limited Liability Company Agreement of Orchid
                Island
                TRS, LLC, dated as of July 20, 2007, made and entered into by Opteum
                Inc.
                and Citigroup Global Markets Realty Corp., incorporated by reference
                to
                Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q for the
                period ended June 30, 2007, filed with the SEC on August 14,
                200710.11
            Asset
                Purchase Agreement, dated May 7, 2007, by and among Opteum Financial
                Services, LLC, Opteum Inc. and Prospect Mortgage Company, LLC,
                incorporated by reference to Exhibit 10.1 to the Company’s Current Report
                on Form 8-K, dated May 7, 2007, filed with the SEC on May 7,
                200710.12
            First
                Amendment to Purchase Agreement, dated June 30, 2007, by and among
                Metrocities Mortgage, LLC – Opteum Division, Opteum Financial Services,
                LLC and Opteum Inc., incorporated by reference to Exhibit 10.1 to
                the
                Company’s Current Report on Form 8-K, dated June 30, 2007, filed with the
                SEC on July 5, 2007*31.1
            Certification
                of the Principal Executive Officer, pursuant to Rule 13a-14(a) or
                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 the Principal Financial Officer, pursuant to Rule 13a-14(a) or
                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 the 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 the 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.
              †
                Management compensatory plan or arrangement required to be filed
                by Item
                601 of Regulation S-K.