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We reported GAAP earnings of $0.17 per share for the third quarter.
GAAP book value was up modestly, but economic book value was up over 10% for the quarter as our carrying value whole loans continued to retrace the writedowns that began with the onset of the pandemic.
Our leverage at September 30 was still quite low at 1.9 to 1 and two-thirds of our asset-based financing was non-mark-to-market.
We caught up on all preferred dividends in the third quarter and we paid a $0.05 common dividend on October 30.
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Our portfolio, which is also shown in the appendix on Page 20, is primarily comprised of residential whole loans, which have experienced substantial value appreciation since the liquidity-induced sell-off in March and April.
This is obviously a good trend for our credit-sensitive assets, but we've been able to take advantage of this in real time, recording over $90 million of REO sales during the third quarter, which is a record quarter for us.
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We have also taken advantage of, one, the extremely low-rate environment; two, the paucity of non-QM product available for securitization; and three, the demand for short, high-quality assets by executing two non-QM securitizations totaling approximately $960 million, one in early September and the other closing just last week.
As you can see on this page, AAA yields on bonds sold were 1.48% and 1.38%, respectively, and the blended cost of debt sold was between 165 and 180 basis points below the cost of borrowing we replaced.
Bonds sold generated cash of approximately 94% and 95% of UPB on the two transactions, which produced a little over $200 million of additional liquidity.
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We are also happy to report that we have fully paid off the $500 million 11% senior secured term note from Apollo and Athene.
The results of this paydown will be partially realized in the fourth quarter but will be fully reflected in financial results in subsequent quarters to the tune of approximately $0.03 per share per quarter.
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Similarly, we still have approximately $1.5 billion of non-QM loans that will hopefully lend themselves to similar securitization executions as we achieved on our first two deals.
And at current market levels, this would offer us additional liquidity while also lowering [Audio gap] Please turn to Page 9.
We announced today that our board has authorized a $250 million common stock repurchase program.
This authorization replaces a scale existing authorization for only about $20 million of stock.
With our stock trading around 60% of economic book value, we feel that the current market price represents a substantial disconnect versus value.
And finally, to address available liquidity to execute this stock buyback, our cash liquidity as of last Friday after paying off the balance of the Apollo-Athene loan and the October 30 dividend was approximately $641 million.
Our net income to common shareholders of $79 million or $0.17 per share primarily reflects the continued recovery in residential mortgage asset valuations, a net reduction in our CECL credit loss reserves, and lower operating and other expenses as we have put forbearance negotiations behind us.
Net interest income for the quarter was $10.1 million and reflects the following: firstly, higher net interest spreads for both our residential whole loan and securities portfolios.
The net interest spread on our loans held at carrying value rose to 1.24% for the quarter as our overall cost of funds declined post forbearance and due to the positive impact of the non-QM securitization transaction that closed in early September.
In particular, at September 30, 2020, non-QM loans with a UPB of approximately $175 million were on nonaccrual status.
Under our nonaccrual accounting policy, we stopped recognizing interest income in the period where the loans become 90 days delinquent and reversed any income recognized in the prior period.
In addition, as loans with a UPB of approximately $145 million became 90 days delinquent during the third quarter, interest income was adjusted by approximately $1.7 million to reverse income accrued on these loans in prior periods.
Secondly, interest expense for the third quarter on the $500 million loan from Apollo and Athene was approximately $14 million.
Excluding this expense and the cash borrowed that was held on our balance sheet for the entire quarter on a pro forma basis, the net spread generated by our interest-earning assets for the third quarter would have been approximately 1.15%.
As Craig has also noted, we reduced our CECL allowance on our carrying value loans to approximately $106 million, primarily reflecting adjustments to macroeconomic assumptions used for credit loss modeling purposes but also partially due to lower loan balances.
This reversal and other net adjustments to our CECL reserves positively impacted net income for the quarter by approximately $27 million.
Net gains of $76.9 million were recorded, including $58.9 million of market value increases and $18 million of cash income.
In the second and third quarters of 2020, our portfolio of loans held at fair value has recovered more than 80% of the market value declines that were recorded in the first quarter of 2020.
Finally, our operating and other expenses were $27.3 million for the quarter, down significantly from the prior quarter as we did not incur any further expenses related to exiting from our forbearance arrangement.
However, it should also be noted that expenses this quarter included a one-time severance accrual of approximately $3.6 million related to a workforce reduction.
In addition, we anticipate that all else remaining equal, our compensation expense going forward should be approximately $1 million lower each quarter as a result of actions taken to rightsize our workforce.
Going forward, we anticipate that annualized G&A expenses to equity should run at about 2% each quarter.
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We were able to purchase approximately $40 million in the third quarter and have a growing acquisition pipeline.
In total, nearly $1 billion of our non-QM portfolio has been securitized to date.
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Through our servicers, we granted almost 32% of the portfolio temporary payment relief, which we believe help put our borrowers in a better position for the long-term payment performance.
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Our RPL portfolio of $1.1 billion has been impacted by the pandemic, which continues to perform well.
80% of our portfolio remains less than 60 days delinquent.
Although the percentage of portfolio, 60 days delinquent in status, 20%, over 23% of those borrowers continue to make payments.
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35% of loans that were delinquent at purchase are now either performing or paid in full.
44% have either liquidated or REO to be liquidated.
We have significantly increased activity or activity liquidating REO properties, selling 67% more properties versus the third quarter a year ago.
21% are still in nonperforming status.
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MFA's fix-and-flip portfolio declined $164 million to $699 million in UPB at the end of the third quarter.
Principal paydowns were $175 million as project completions and the pace of home sales increased in the quarter.
The quarterly paydown is equivalent to about 59% CPR on an annualized basis.
We advanced about $18 million of rehab draws and converted $7 million to REO and made no new investments in the quarter.
The average yield on the fix-and-flip portfolio in the quarter was 5.41%.
And importantly, all of our fix-and-flip financing is non-mark-to-market debt with the remaining term of 21 months.
The total amount of seriously delinquent fix-and-flip loans declined $39 million in the quarter.
Due to lower delinquencies, lower fix-and-flip holdings in general, and improved credit conditions, loan loss reserves on the fix-and-flip portfolio declined $7 million in the quarter.
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As previously noted, seriously delinquent fix-and-flip loans declined $39 million in the quarter as we sell out $51 million of loans either pay off in full or cured to current of 30-day delinquent pay status.
While we completed foreclosure on $7 million of loans and $19 million became new 60-plus day delinquent loans.
In addition, approximately 20% of the seriously delinquent loans are already listed for sale, potentially shortening the time until resolution.
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The portfolio yields have remained relatively stable and was a healthy 5.65% in the third quarter.
After rising modestly in the second quarter, delinquencies have stabilized, and 60-plus-day delinquency declined 10 basis points to 4.9% at the end of the third quarter.
Prepayments have remained relatively muted due to strong prepayment protection, a three-month CPR of 12% in the third quarter.
Significant asset price appreciation, which drove earnings and book value, substantial progress in moving our asset-based financing from expansible, durable debt to equally durable but materially cheaper securitized debt and, most recently, the payoff of $500 million of 11% debt.

Summary:
We reported GAAP earnings of $0.17 per share for the third quarter.
We are also happy to report that we have fully paid off the $500 million 11% senior secured term note from Apollo and Athene.
We announced today that our board has authorized a $250 million common stock repurchase program.
Our net income to common shareholders of $79 million or $0.17 per share primarily reflects the continued recovery in residential mortgage asset valuations, a net reduction in our CECL credit loss reserves, and lower operating and other expenses as we have put forbearance negotiations behind us.
Net interest income for the quarter was $10.1 million and reflects the following: firstly, higher net interest spreads for both our residential whole loan and securities portfolios.
Secondly, interest expense for the third quarter on the $500 million loan from Apollo and Athene was approximately $14 million.
Significant asset price appreciation, which drove earnings and book value, substantial progress in moving our asset-based financing from expansible, durable debt to equally durable but materially cheaper securitized debt and, most recently, the payoff of $500 million of 11% debt.