10-year treasuries backed up 83 basis points to 1.74 at the end of Q1, which by the way, is where they were in late January of 2020, and the curve steepened with two 10s widening by about 80 basis points to 158 basis points at March 31.
Short rates remain firmly anchored at very low levels, with twos only 4 basis points wider during the quarter.
Interestingly, although 10-year rates at 170 are back to levels seen in late 2019 and early 2020, two-year rates in the low to mid-teens have barely changed in the last year.
But twos were at 160 back in late 2019.
Please turn to Page 4.
We reported GAAP earnings of $0.17 per share in the first quarter.
GAAP book value was $4.63, up 2% from December 31s, and economic book value was $5.09, up 3.5% from December 31st.
GAAP economic return for the quarter was 3.6%, but economic book value economic return was up 5% for the quarter.
We repurchased 10.8 million common shares at an average purchase price of $4.14 or 80% of economic book value from March 1st through April 30th.
Our leverage declined slightly over the quarter to 1.6:1, and we paid a $0.075 dividend to shareholders on April 30.
Please turn to Page 5.
Our efforts to lower interest expenses through securitizations had visible impact on our first-quarter earnings as interest expense declined by 27% from the fourth quarter of 2020.
Net interest income for the first quarter increased by $4 million versus the previous quarter and by $13 million versus Q3 of 2020 after adjusting for a large interest income contribution of $8 million from the payoff of a single non-agency bond with a very low amortized cost during the first quarter.
Please turn to Page 6.
Again, continuing the theme of aggressively taking advantage of available market opportunities, we have executed three additional securitizations on nearly $1 billion of UPB at attractive levels.
As you can see on this page, AAA yields on bonds sold on the INB-1 deal was 83 basis points and 112 basis points on the non-QM One deal with the blended cost of debt for both deals in the low 1s.
The NPL deal that closed in March replaces securitizations sold in 2018 at a blended cost of debt that's over 150 basis points cheaper than that -- they replaced.
Please turn to Page 7.
Home price increases in the last year are the largest, in some cases, in 20 years, and housing supply is at extremely low levels.
We liquidated 177 OREO properties in the first quarter, generating $50 million in proceeds and $2.2 million in gains.
Please turn to Page 8.
Under our share repurchase program, we instituted a 10b5-1 plan in March that permits share repurchases at any time.
Previous to instituting a 10b5-1 plan, we were permitted to purchase shares only during open window periods.
And again, from early March through April 30th, we repurchased 10.8 million shares at an average price of $4.14.
Please turn to Page 9.
We did purchase $253 million of loans in the first quarter.
On the financing side, you can see that 68% of our asset-based financing is non mark-to-market with the Non-QM securitization that we closed in April, it's now over 70%.
Please turn to Page 10.
We expect that this transaction will be accretive to MFA's earnings by $0.08 to $0.12 per year.
MFA currently owns a 43% equity stake in Lima One, and we have purchased over $1 billion of business purpose loans from Lima One since 2017.
This acquisition includes the Lima One operating platform as well as their $1 billion servicing book.
Net income to common shareholders was $77.3 million or $0.17 per share.
The key items impacting our results are as follows: net interest income of $31.8 million was $12.4 million higher sequentially.
This included approximately $8 million of accretion on a non-agency bond that we hold a significant discount par that was redeemed during the quarter.
As Craig noted, interest expense this quarter fell 27% sequentially and our overall cost of funds fell to 2.92% from 3.63% in Q4 2020.
We reduced our overall CECL allowance on our carrying value loans to $63.2 million, reflecting lower estimates of future unemployment and higher home price appreciation in our credit loss modeling as well as lower loan balances.
This reversal and other net adjustments to our CECL reserves positively impacted net income for the quarter by $22.8 million.
After the initial significant increase in CECL reserves taken in Q1 2020, when uncertainty related to COVID-19 economic impacts were at their highest, we have reduced our CECL reserves by more than $80 million in the subsequent four quarters.
Actual charge-off experience continues to remain very modest, with approximately $1.2 million of net charge-offs taken in the first quarter.
Net gains of $49.8 million were recorded.
And its components, which include $32.1 million of market value increases and $17.7 million of interest payments, liquidation gains and other cash income were also essentially unchanged quarter over quarter.
Finally, our operating and other expenses were $22.5 million for the quarter.
Turning to Page 12.
The Zillow median home value was up 10.6% in March from a year ago.
The unemployment rate continues to recover from a peak of almost 15% down to 6% as the economy reopens.
Turning to Page 13.
We purchased over $200 million over the first quarter, which is more than double our acquisitions from the prior quarter.
The three-month average CPR for the portfolio remains around 30%.
We executed on an additional securitization at the beginning of April, bringing a total amount of collateral securitized to approximately $1.75 billion.
Securitization, combined with non mark-to-market term facility has resulted in over 80% of our non-QM portfolio financed with non mark-to-market leverage.
Turning to Page 14.
Through our servicers, we granted almost 32% of the portfolio of temporary payment relief, which we believe helped put our borrowers in a better position for long-term payment performance.
Over the first quarter, we saw a stable 60-plus delinquency rate as compared to the fourth quarter of 7.9%.
In addition, over 25% of those delinquent loans made a payment in March.
Many delinquent borrowers are in repayment plans, which will cause them to cure their delinquency status over the next six to 12 months.
Turning to Page 15.
Our RPL portfolio of $1 billion has been impacted by the pandemic but continues to perform well.
80% of our portfolio remains less than 60 days delinquent.
And although the percentage of the portfolio is 60 days delinquent and status is 20%, a quarter of those borrowers continue to make payments.
Prepaid fees in the first quarter continued to rise to a one-month CPR of 20 as mortgage rates continue to be historically low and more borrowers gain equity with the increase in home prices.
And while 30% of our RPL borrowers were impacted by COVID, we have worked with our servicers to provide assistance to borrowers and have seen improvement in delinquency levels over the quarter.
Turning to Page 16.
37% of loans that were delinquent at purchase are now either performing or paid in full.
46% are either liquidated or REO to be liquidated.
Our REO sale -- our REO properties have continued at an accelerated pace at advantageous prices, selling 52% more properties over the last 12 months as compared to the year prior, and 17% are still on nonperforming status.
Turning to Page 17.
Lima One is a leading nation and originator of business purpose loans with a strong brand recognition in the BPL borrower community with over 50% of loan origination coming from repeat borrowers.
Lima has originated over $3 billion since inception and has shown that they can reliably originate over $1 billion annually.
We believe that by combining MFA's firm capital and capital markets expertise with Lima's capabilities, we can create a differentiated platform capable of providing best-in-class financing options to investors with a clear path to grow well beyond $1 billion in annual volume.
The strong housing market with home prices rising more than 10% annually has allowed many of our borrowers to successfully complete their projects and sell quickly into a strong market.
This combined with the seasoned nature of our portfolio, currently at a weighted average loan rates of 20 months, led to us receiving $144 million of principal payments in the quarter.
MFA's fix and flip portfolio declined $117 million to $464 million UPB at the end of the first quarter.
Principal paydowns were $144 million, which is equivalent to a quarterly pay down rate of 69 CPR on an annualized basis.
We advanced about $12 million of rehab draws and converted $5 million to REO.
We purchased $20 million UPB of fix and flip loans in the first quarter.
Purchase activity has picked up in the second quarter as we have committed to acquire over $30 million so far in the second quarter and expect purchase volume to pick up meaningfully with the acquisition of Lima One.
The average yield on the portfolio was 4.93%, and all of our fix and flip financing is non mark-to-market debt with the remaining term of 15 months.
60-plus day delinquency declined $13 million to $149 million at the end of the first quarter.
Fix and flip loan loss reserves continued to trend down in the first quarter, declining by $4.7 million, primarily due to improved economic expectations and the strong housing market.
Turning to Page 18.
Seriously delinquent fix and flip loans decreased $13 million in the quarter to $149 million at the end of the first quarter.
In the quarter, we saw $18 million of loans payoff in full, $5 million cured to current or 30-day delinquent pay status, $5 million converted to REO while $15 million became new 60-plus delinquent.
In addition, approximately 13% of the seriously delinquent loans are already listed for sale, potentially shortening with time until resolution.
Since inception, we've collected approximately $3.7 million in these types of fees across our fix and flip portfolio.
The housing market continues to be extremely strong with record low mortgage rates and low levels of inventories supporting annual home price appreciation in excess of 10%.
Turning to Page 19.
Due to strong prepayment section and solid credit profile, the portfolio yield has remained steady in the mid-5% range post COVID and was 5.61% in the first quarter.
And including those, the single-family rental portfolio yield was 6.33% in the first quarter.
After temporarily increasing the fourth-quarter prepayments trended back down to the historical low mid teens range with the first quarter three-month prepayment rate at 12 CPR.
60-plus day delinquencies were relatively unchanged in the quarter in the mid- to high 5% area.
We acquired $20 million of rental loans in the first quarter.
Second quarter is off to a strong start with us committing to purchase over $35 million so far in the second quarter.
Approximately $218 million for loans were securitized.
We sold approximately 91% of the bonds at a weighted average coupon of 106 basis points.
This transaction lowered the funding rate of the underlying assets by over 150 basis points and increased the percentage of SFR financing that's non mark-to-market to 75% at the end of the first quarter.
We have repurchased nearly 25 million shares of our common stock at levels that are accretive to book value and earnings.

Summary:
We reported GAAP earnings of $0.17 per share in the first quarter.
GAAP book value was $4.63, up 2% from December 31s, and economic book value was $5.09, up 3.5% from December 31st.
Net income to common shareholders was $77.3 million or $0.17 per share.
The key items impacting our results are as follows: net interest income of $31.8 million was $12.4 million higher sequentially.