MFA's tireless efforts to find new attractive investments were also rewarded in the third quarter as record asset acquisitions exceeded runoff and led the portfolio growth of $1.5 billion.
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We reported GAAP earnings of $0.28 per share for the third quarter, largely driven by gains of $43.9 million or $0.10 per share related to our acquisition of Lima One.
Our net interest income from our loan portfolio increased by 15%, over the second quarter to $55 million from $48 million.
GAAP book value was $4.82, up $0.17 or 3.7% from June 30 and economic book value was $5.27, up $0.15 or 2.9% from June 30.
5.8% GAAP and 4.9% economic book value.
Our leverage picked up slightly over the core to 2.2 to 1 versus 1.8 to 1 at June 30.
And we paid a $0.10 dividend to shareholders on October 29.
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We acquired $2 billion of loans in third quarter, the highest quarterly loan purchase volume in our history, and we grew our loan portfolio by $1.5 billion to $7 billion.
These purchases included $820 million of agency eligible investor -- sorry about that.
So these loan purchases included $820 million of agency eligible investor loans and $485 million of business purpose loans.
The business purpose loan acquisitions included approximately $170 million of loans that were on Lima One's balance sheet at July 1.
So while $1.5 billion of portfolio growth was an extraordinary quarter, we believe that we are well positioned with our originator partners to continue to grow our portfolio.
Our net interest income increased versus Q2 by 5% to $61.8 million.
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The increase of approximately $1 billion in mark-to-market financing versus last quarter is primarily related to our agency eligible investor loans, which are financed with traditional repo as a bridge to securitization.
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Despite the normal challenges associated with the corporate acquisition, Lima One did not miss a beat in the third quarter as they originated over $400 million of loans during the quarter.
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We structured $312 million bonds and we retained a 5% vertical slice of the deal.
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Firstly, earnings include gains totaling $43.9 million that relate to the Lima One purchase transaction.
This includes the following: $38.9 million gain arising from revealing our previously held investment of approximately 43% of Lima One's common equity.
We impaired the value of our prior investment by $21 million back in March of 2020, when valuations of mortgage originators were highly uncertain.
Consequently, the $38.9 million gain includes a reversal of its prior impairment charge, while the remaining $18 million represents the incremental adjustment to reflect the prior investment at the fair value implied by the current transaction.
The gain recorded reflects $5 million impairment reversal.
Secondly, under the required GAAP purchase accounting to consolidate Lima One onto MFA's balance sheet, we recorded $28 million of intangible assets and $61.6 million of residual goodwill.
These assets are amortized over their estimated useful lives with $3.3 million of amortization expense recorded this quarter.
Net interest income of $61.8 million was $2.8 million higher or 5% higher sequentially.
As Craig noted residential whole loan net interest income again increased, this quarter by 15%, primarily due to impressive portfolio growth and the ongoing impact of securitizations to lower the cost of financing.
Now, net interest spread was essentially flat to last quarter at 2.98%.
The CECL allowance in our carrying value loans decreased for the six quarter in a row, and at September 30, this $44.1 million down from $54.3 million at June 30.
This reversal to our CECL reserves positively impacted net income for the quarter by $9.7 million.
Actual charge-off experience continues to remain very modest with approximately $2.1 million of net charge-offs taken in the nine-month period ended September 30, 2021.
This primarily drove the net gains recorded of $21.8 million.
Approximately $11.3 million of this amount relates to business purpose loans originated at par by Lima One during the third quarter, because we elect the fair value option on these loans.
In addition to the fair value gains on originated loans, Lima One also contributed $9.6 million of origination, servicing and other fee income during the quarter, reflecting strong origination volumes.
Finally, our operating and other expense, excluding the amortization of Lima One intangible assets was $30.1 million for the quarter.
This includes approximately $10.3 million of expenses, primarily compensation related at Lima One.
MFA's G&A expenses this quarter were approximately $14.5 million, which is in line with our normal run rate.
Moving forward, we would expect our consolidated G&A expense to run at around $25 million per quarter, up since significant changes in Lima One origination volumes.
Other loan portfolio related costs meaning those not related to Lima One loan origination servicing are expected to run at around $5 million to $7 million a quarter, but will fluctuate based on the level of loan at acquisition activity, REO portfolio management expenses and costs incurred to the extent we continue to favor securitization over warehouse financing.
Turning to Page 11, home prices showed continued strength over the quarter.
We saw prices increased at year-over-year rate of 18%.
The unemployment rate is now down below 5% as economic activity continues to increase.
Turning to Page 12, non-QM origination volume remained elevated over the quarter and we were able to purchase almost $700 million of loans, which represents another significant quarter-over-quarter increase.
Prepayment speeds remain elevated over the quarter as the three month average CPR for the portfolio was 39%.
We executed on our fifth securitization in the third quarter, bringing the total amount of collateral securitized to over $2 billion.
Securitizations combined with non-mark-to-market term facility have resulted in approximately 50% of our non-QM portfolio funded with non-mark-to-market leverage at the end of the quarter.
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In the third quarter, we saw 60-plus-day delinquency rates improved by two anda half percent and 30 day delinquencies dropped by 0.3%.
In addition, approximately 30% of those delinquent loans made a payment in the most recent months.
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In September, the FHFA and treasury suspended the 7% cap on investor loan purchases for Fannie Mae and Freddie Mac for at least one year.
We took advantage of the opportunity over the quarter acquiring over $2 billion or acquiring over $1 billion in loans since we started purchasing these loans in the second quarter, from our existing originator relationships at attractive prices.
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Our RPL portfolio of approximately $700 million continues to perform well.
81% of our portfolio remains less than 60 days delinquent.
And although the percentage of the portfolio of 60 days delinquent in status was 19%, almost 30% of those borrowers continue to make payments.
Prepaid speeds in the third quarter continue to be elevated at a three month CPR of 17.
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38% of loans that were delinquent at purchase are not either performing or have paid in full.
48% have either liquidated or REO to be liquidated.
14% are still a non-performing status.
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Lima One originated over $400 million of business purpose loans in the third quarter, a record quarter for the company and a 34% increase over second quarter origination levels.
September origination of over $150 million was a record month for the company, but that record was short-lived as the fourth quarters off to a strong start with October volume setting a new record with origination of over $170 million.
When we announce the transaction in May, we also mentioned that we believe that Lima had the potential to grow substantially beyond the run rate at the time of $1.2 billion annual origination.
We are already seeing that play out as we now expect full 2021 origination volume of between $1.4 billion to $1.5 billion.
Lima generated $10.6 million of net income from origination servicing activities in the quarter, representing an annualized return on allocated equity of approximately 30%.
We have been very impressed by Lima's operational efficiency as they've consistently closed over 450 loan units in the last few months, up from about 300 units per month in the first quarter.
We added $600 million of BPL financing capacity in the quarter – in the third quarter, as we close on two new financing facilities.
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The portfolio grew by over $160 million or 37% in the quarter.
In total, we purchased approximately $230 million UPB with $350 million max loan amount in the quarter and have added over $95 million maximum loan amounts so far in the fourth quarter.
The flix and flip portfolio delivered strong income in the third quarter with an average portfolio yield of 7.11% in the quarter, a 67-basis-point increase from the second quarter.
The housing market remains extremely strong with record low mortgage rates and low levels of inventory supporting annual home price appreciation in excess of 15%.
60-plus-day delinquent loans continue to decline and drop $13 million or about 10% to $107 million at the end of the third quarter.
And we continue to see a solid amount of loans payoff in full out of 60 plus.
Since inception, we have collected approximately $5.6 million and these types of fees across our fix and flip portfolio.
60-plus-day delinquency as a percentage of UPB declined 10% to 18% and remain somewhat elevated.
One thing to note here is that Lima originated fix and flip loans held by MFA have approximately 5% 60 day delinquency, speaking to the quality of origination and servicing.
Due to the short term nature of fix and flip loans with expected payoff in about six to 12 months, delinquent loans can be outstanding for longer than performing loans due to the time it takes to complete foreclosure.
Keep in mind that we acquired over $2.2 billion of fix and flip loans and have had over $1.6 billion payoff in full.
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The portfolio yield has remained steady in a mid-to-high 5% range post-COVID and was 5.76% in the second quarter.
Underlying credit trends remain solid and 60-plus-day delinquency declined 140 basis points to 3.5% at the end of the third quarter.
Purchase activity more than doubled from the second quarter, as we acquired over $250 million of single family rental loans in the quarter, a record quarterly acquisition volume.
The SFR portfolio group by 39% to $717 million at the end of the third quarter.
Acquisition activities have remained robust in the fourth quarter, as we've already added over $70 million in the month of October.
Approximately, 50% of our single family rental portfolio is financed in non-mark-to-market financing and slightly over one-thirds of securitizations.

Summary:
We reported GAAP earnings of $0.28 per share for the third quarter, largely driven by gains of $43.9 million or $0.10 per share related to our acquisition of Lima One.
Our net interest income increased versus Q2 by 5% to $61.8 million.
Net interest income of $61.8 million was $2.8 million higher or 5% higher sequentially.