EXHIBIT 10.1


MFA MORTGAGE INVESTMENTS, INC.
2004 EQUITY COMPENSATION PLAN


1. PURPOSE. The Plan is intended to provide incentives to key employees,
officers, directors and others expected to provide significant services to the
Company, including the employees, officers and directors of the other
Participating Companies, to encourage a proprietary interest in the Company, to
encourage such key employees to remain in the employ of the Company and the
other Participating Companies, to attract new employees with outstanding
qualifications, and to afford additional incentive to others to increase their
efforts in providing significant services to the Company and the other
Participating Companies. In furtherance thereof, the Plan permits awards of
equity-based incentives to key employees, officers and directors of, and certain
other providers of services to, the Company or any other Participating Company.
The Plan is an amendment and complete restatement of the Second Amended and
Restated 1997 Stock Option Plan, which was initially approved by the
stockholders of the Company on December 12, 1997 and which was thereafter
amended as of March 17, 2000 and March 8, 2001.

2. DEFINITIONS. As used in this Plan, the following definitions apply
(provided that, in the case of capitalized terms used in Agreements to prior
versions of the Plan, which terms have been replaced by capitalized terms
defined herein, the capitalized terms in such Agreements shall, as the context
so requires, have the respective meanings ascribed herein to such replacement
terms):

"Act" shall mean the Securities Act of 1933, as amended.

"Agreement" shall mean a written agreement entered into between the
Company and a Grantee pursuant to the Plan.

"Board" shall mean the Board of Directors of the Company.

"Cause" shall mean, unless otherwise provided in the Grantee's Agreement,
(i) engaging in (A) willful or gross misconduct or (B) willful or gross neglect,
(ii) repeatedly failing to adhere to the directions of superiors or the Board or
the written policies and practices of the Company, (iii) the commission of a
felony or a crime of moral turpitude, or any crime involving the Company, (iv)
fraud, misappropriation, embezzlement or material or repeated insubordination,
(v) a material breach of the Grantee's employment agreement (if any) with the
Company (other than a termination of employment by the Grantee), or (vi) any
illegal act detrimental to the Company; all as determined by the Committee.

"Code" shall mean the Internal Revenue Code of 1986, as amended.

"Committee" shall mean the Compensation Committee of the Company as
appointed by the Board in accordance with Section 4 of the Plan; provided,
however, that the Committee shall at all times consist solely of persons who, at
the time of their appointment, each qualified as a "Non-Employee Director" under
Rule 16b-3(b)(3)(i) promulgated under the Exchange Act and, to the extent that
relief from the limitation of Section 162(m) of the Code is sought, as an
"Outside Director" under Section 1.162-27(e)(3)(i) of the Treasury Regulations.

"Common Stock" shall mean the Company's common stock, par value $0.01 per
share, either currently existing or authorized hereafter.

"Company" shall mean MFA Mortgage Investments, Inc., a Maryland
corporation.


"DER" shall mean a right awarded under Section 11 of the Plan to receive
(or have credited) the equivalent value (in cash or Shares) of dividends paid on
Common Stock.

"Disability" shall mean, unless otherwise provided by the Committee in the
Grantee's Agreement, the occurrence of an event which would entitle an employee
of the Company to the payment of disability income under one of the Company's
approved long-term disability income plans or a long-term disability as
determined by the Committee in its absolute discretion pursuant to any other
standard as may be adopted by the Committee.

"Eligible Persons" shall mean officers, directors and employees of the
Participating Companies and other persons expected to provide significant
services (of a type expressly approved by the Committee as covered services for
these purposes) to one or more of the Participating Companies. For purposes of
the Plan, a consultant, vendor, customer or other provider of significant
services to the Company or any other Participating Company shall be deemed to be
an Eligible Person, but will be eligible to receive Grants (but in no event
Incentive Stock Options), only after a finding by the Committee in its
discretion that the value of the services rendered or to be rendered to the
Participating Company is at least equal to the value of the Grants being
awarded.

"Employee" shall mean an individual, including an officer of a
Participating Company, who is employed (within the meaning of Code Section 3401
and the regulations thereunder) by the Participating Company.

"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

"Exercise Price" shall mean the price per Share of Common Stock,
determined by the Board or the Committee, at which an Option may be exercised.

"Fair Market Value" shall mean the value of one share of Common Stock,
determined as follows:

(i) If the Shares are then listed on a national stock exchange, the
closing sales price per Share on the exchange for the last preceding
date on which there was a sale of Shares on such exchange, as
determined by the Committee.

(ii) If the Shares are not then listed on a national stock exchange but
are then traded on an over-the-counter market, the average of the
closing bid and asked prices for the Shares in such over-the-counter
market for the last preceding date on which there was a sale of such
Shares in such market, as determined by the Committee.

(iii) If neither (i) nor (ii) applies, such value as the Committee in its
discretion may in good faith determine. Notwithstanding the
foregoing, where the Shares are listed or traded, the Committee may
make discretionary determinations in good faith where the Shares
have not been traded for 10 trading days.

"Grant" shall mean the issuance of an Incentive Stock Option,
Non-qualified Stock Option, Restricted Stock, Phantom Share, DER, other
equity-based grant as contemplated herein or any combination thereof as
applicable to an Eligible Person. The Committee will determine the eligibility
of employees, officers, directors and others expected to provide significant
services to the Participating Companies based on, among other factors, the
position and responsibilities of such individuals, the nature and value to the
Participating Company of such individuals' accomplishments and potential
contribution to the success of the Participating Company whether directly or
through its subsidiaries.

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"Grantee" shall mean an Eligible Person to whom Options, Restricted Stock,
Phantom Shares or DERs are granted hereunder.

"Incentive Stock Option" shall mean an Option of the type described in
Section 422(b) of the Code issued to an Employee.

"Non-qualified Stock Option" shall mean an Option not described in Section
422(b) of the Code.

"Option" shall mean any option, whether an Incentive Stock Option or a
Non-qualified Stock Option, to purchase, at a price and for the term fixed by
the Committee in accordance with the Plan, and subject to such other limitations
and restrictions in the Plan and the applicable Agreement, a number of Shares
determined by the Committee.

"Optionee" shall mean any Eligible Person to whom an Option is granted, or
the Successors of the Optionee, as the context so requires.

"Participating Companies" shall mean the Company and any of its
Subsidiaries which with the consent of the Board participates in the Plan.

"Phantom Share" shall mean a right, pursuant to the Plan, of the Grantee
to payment of the Phantom Share Value.

"Phantom Share Value," per Phantom Share, shall mean the Fair Market Value
of a Share or, if so provided by the Committee, such Fair Market Value to the
extent in excess of a base value established by the Committee at the time of
grant.

"Plan" shall mean the Company's 2004 Equity Compensation Plan, as set
forth herein, and as the same may from time to time be amended.

"Purchase Price" shall mean the Exercise Price times the number of Shares
with respect to which an Option is exercised.

"Restricted Stock" shall mean an award of Shares that are subject to
restrictions hereunder.

"Retirement" shall mean, unless otherwise provided by the Committee in the
Grantee's Agreement, the Termination of Service (other than for Cause) of a
Grantee:

(i) on or after the Grantee's attainment of age 65;

(ii) on or after the Grantee's attainment of age 55 with five consecutive
years of service with the Participating Companies; or

(iii) as determined by the Committee in its absolute discretion pursuant
to such other standard as may be adopted by the Committee.

"Shares" shall mean shares of Common Stock of the Company, adjusted in
accordance with Section 15 of the Plan (if applicable).

"Subsidiary" shall mean any corporation, partnership or other entity at
least 50% of the economic interest in the equity of which is owned by the
Company or by another subsidiary.

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"Successors of the Optionee" shall mean the legal representative of the
estate of a deceased Optionee or the person or persons who shall acquire the
right to exercise an Option by bequest or inheritance or by reason of the death
of the Optionee.

"Termination of Service" shall mean the time when the employee-employer
relationship or directorship, or other service relationship (sufficient to
constitute service as an Eligible Person), between the Grantee and the
Participating Companies is terminated for any reason, with or without Cause,
including, but not limited to, any termination by resignation, discharge, death
or Retirement; provided, however, Termination of Service shall not include a
termination where there is a simultaneous reemployment of the Grantee by a
Participating Company or other continuation of service (sufficient to constitute
service as an Eligible Person) for a Participating Company. The Committee, in
its absolute discretion, shall determine the effects of all matters and
questions relating to Termination of Service, including, but not limited to, the
question of whether any Termination of Service was for Cause and all questions
of whether particular leaves of absence constitute Terminations of Employment.
For this purpose, the service relationship shall be treated as continuing intact
while the Grantee is on military leave, sick leave or other bona fide leave of
absence (to be determined in the discretion of the Committee).

3. EFFECTIVE DATE. The effective date of this restatement of the Plan
shall be the date on which it is approved by the holders of the requisite
percentage of shares of Common Stock, at a meeting duly called for such purpose.

4. ADMINISTRATION.

a. Membership on Committee. The Plan shall be administered by the
Committee appointed by the Board. If no Committee is designated by the Board to
act for those purposes, the full Board shall have the rights and
responsibilities of the Committee hereunder and under the Agreements.

b. Committee Meetings. The acts of a majority of the members present at
any meeting of the Committee at which a quorum is present, or acts approved in
writing by a majority of the entire Committee, shall be the acts of the
Committee for purposes of the Plan. If and to the extent applicable, no member
of the Committee may act as to matters under the Plan specifically relating to
such member.

c. Grant of Awards.

(i) The Committee shall from time to time at its discretion select the
Eligible Persons who are to be issued Grants and determine the
number and type of Grants to be issued under any Agreement to an
Eligible Person. In particular, the Committee shall (A) determine
the terms and conditions, not inconsistent with the terms of the
Plan, of any Grants awarded hereunder (including, but not limited to
the performance goals and periods applicable to the award of
Grants); (B) determine the time or times when and the manner and
condition in which each Option shall be exercisable and the duration
of the exercise period; and (C) determine or impose other conditions
to the Grant or exercise of Options under the Plan as it may deem
appropriate. The Committee may establish such rules, regulations and
procedures for the administration of the Plan as it deems
appropriate, determine the extent, if any, to which Options, Phantom
Shares, Shares (whether or not Shares of Restricted Stock) or DERs
shall be forfeited (whether or not such forfeiture is expressly
contemplated hereunder), and take any other actions and make any
other determinations or decisions that it deems necessary or
appropriate in connection with the Plan or the administration or
interpretation thereof. The Committee shall also cause each Option
to be designated as an Incentive Stock Option or a Non-qualified
Stock Option,

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except that no Incentive Stock Options may be granted to an Eligible
Person who is not an Employee of the Company. The Grantee shall take
whatever additional actions and execute whatever additional
documents the Committee may in its reasonable judgment deem
necessary or advisable in order to carry or effect one or more of
the obligations or restrictions imposed on the Grantee pursuant to
the express provisions of the Plan and the Agreement. DERs will be
exercisable separately or together with Options, and paid in cash or
other consideration at such times and in accordance with such rules,
as the Committee shall determine in its discretion. Unless expressly
provided hereunder, the Committee, with respect to any Grant, may
exercise its discretion hereunder at the time of the award or
thereafter. The Committee shall have the right and responsibility to
interpret the Plan and the interpretation and construction by the
Committee of any provision of the Plan or of any Grant thereunder,
including, without limitation, in the event of a dispute, shall be
final and binding on all Grantees and other persons to the maximum
extent permitted by law. Without limiting the generality of Section
23, no member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any
Grant hereunder.

(ii) Notwithstanding clause (i) of this Section 4(c) and Section 7(a),
any award under the Plan to an Eligible Person who is a member of
the Committee shall be made by the full Board, but for these
purposes the directors of the Corporation who are on the Committee
shall be required to be recused in respect of such awards and shall
not be permitted to vote.

d. Awards.

(i) Agreements. Grants to Eligible Persons shall be evidenced by written
Agreements in such form as the Committee shall from time to time
determine. Such Agreements shall comply with and be subject to the
terms and conditions set forth below.

(ii) Number of Shares. Each Grant issued to an Eligible Person shall
state the number of Shares to which it pertains or which otherwise
underlie the Grant and shall provide for the adjustment thereof in
accordance with the provisions of Section 15 hereof.

(iii) Grants. Subject to the terms and conditions of the Plan and
consistent with the Company's intention for the Committee to
exercise the greatest permissible flexibility under Rule 16b-3 under
the Exchange Act in awarding Grants, the Committee shall have the
power:

(1) to determine from time to time the Grants to be issued to Eligible
Persons under the Plan and to prescribe the terms and provisions
(which need not be identical) of Grants issued under the Plan to
such persons;

(2) to construe and interpret the Plan and the Grants thereunder and to
establish, amend and revoke the rules, regulations and procedures
established for the administration of the Plan. In this connection,
the Committee may correct any defect or supply any omission, or
reconcile any inconsistency in the Plan, in any Agreement, or in any
related agreements, in the manner and to the extent it shall deem
necessary or expedient to make the Plan fully effective. All
decisions and determinations by the Committee in the exercise of
this power shall be final and binding upon the Participating
Companies and the Grantees;

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(3) to amend any outstanding Grant, subject to Section 17, and to
accelerate or extend the vesting or exercisability of any Grant and
to waive conditions or restrictions on any Grants, to the extent it
shall deem appropriate; and

(4) generally to exercise such powers and to perform such acts as are
deemed necessary or expedient to promote the best interests of the
Company with respect to the Plan.

5. PARTICIPATION.

a. Eligibility. Only Eligible Persons shall be eligible to receive Grants
under the Plan.

b. Limitation of Ownership. No Grants shall be issued under the Plan to
any person who after such Grant would beneficially own more than 9.8% of the
outstanding shares of Common Stock of the Company, unless the foregoing
restriction is expressly and specifically waived by action of the independent
directors of the Board.

c. Stock Ownership. For purposes of Section 5(b) above, in determining
stock ownership a Grantee shall be considered as owning the stock owned,
directly or indirectly, by or for his brothers, sisters, spouses, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be considered as being owned
proportionately by or for its stockholders, partners or beneficiaries. Stock
with respect to which any person holds an Option shall be considered to be owned
by such person.

d. Outstanding Stock. For purposes of Section 5(b) above, "outstanding
shares" shall include all stock actually issued and outstanding immediately
after the issue of the Grant to the Grantee. With respect to the stock ownership
of any Grantee, "outstanding shares" shall include shares authorized for issue
under outstanding Options held by such Grantee, but not options held by any
other person.

6. STOCK. Subject to adjustments pursuant to Section 15, Grants with
respect to an aggregate of no more than 3,500,000 Shares may be granted under
the Plan (all of which may be issued as Options). Subject to adjustments
pursuant to Section 15, (i) the maximum number of Shares with respect to which
any Options may be granted in any one year to any Grantee shall not exceed
500,000, and (ii) the maximum number of Shares that may underlie Grants, other
than Grants of Options, in any one year to any Grantee shall not exceed 500,000.
Notwithstanding the first sentence of this Section 6, (i) Shares that have been
granted as Restricted Stock or that have been reserved for distribution in
payment for Options or Phantom Shares but are later forfeited or for any other
reason are not payable under the Plan; and (ii) Shares as to which an Option is
granted under the Plan that remains unexercised at the expiration, forfeiture or
other termination of such Option, may be the subject of the issue of further
Grants. Shares of Common Stock issued hereunder may consist, in whole or in
part, of authorized and unissued shares, treasury shares or previously issued
Shares under the Plan. The certificates for Shares issued hereunder may include
any legend which the Committee deems appropriate to reflect any restrictions on
transfer hereunder or under the Agreement, or as the Committee may otherwise
deem appropriate. Shares subject to DERs, other than DERs based directly on the
dividends payable with respect to Shares subject to Options or the dividends
payable on a number of Shares corresponding to the number of Phantom Shares
awarded, shall be subject to the limitation of this Section 6. Notwithstanding
the limitations above in this Section 6, except in the case of Grants intended
to qualify for relief from the limitations of Section 162(m) of the Code, there
shall be no limit on the number of Phantom Shares or DERs to the extent they are
paid out in cash that may be granted under the Plan. If any Phantom Shares or
DERs are paid out in cash, the underlying Shares may again be made the subject
of Grants under the Plan, notwithstanding the first sentence of this Section 6.

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7. TERMS AND CONDITIONS OF OPTIONS.

a. Initial Awards to Compensation Committee Members. Each member of the
Committee shall automatically be granted a Non-qualified Stock Option to
purchase 5,000 shares of Common Stock and 1,250 DERs upon the date such person
is initially appointed to the Committee, with such terms as may be set forth in
the applicable Agreement. Each Option granted to a Committee member under this
Section 7(a) shall become exercisable commencing one year after the date of
Grant (unless otherwise provided in the applicable Agreement) and shall expire
10 years thereafter. Such Options shall be subject to adjustment as provided in
Section 15; provided that such adjustment and any action by the Board or the
Committee with respect to the Plan and such Options satisfies the requirements
for exemption under Rule 16b-3 under the Exchange Act and does not cause any
member of the Committee to be disqualified as a Non-Employee Director under such
Rule. Notwithstanding the foregoing, the Board may prospectively, from time to
time, discontinue, reduce or increase the amount of any or all of the Grants
otherwise to be made under this Section 7(a).

b. Each Agreement with an Eligible Person shall state the Exercise Price.
The Exercise Price for any Option shall not be less than the Fair Market Value
on the date of Grant.

c. Medium and Time of Payment. Except as may otherwise be provided below,
the Purchase Price for each Option granted to an Eligible Person shall be
payable in full in United States dollars upon the exercise of the Option. In the
event the Company determines that it is required to withhold taxes as a result
of the exercise of an Option, as a condition to the exercise thereof, an
Employee may be required to make arrangements satisfactory to the Company to
enable it to satisfy such withholding requirements in accordance with Section
20. If the applicable Agreement so provides, or the Committee otherwise so
permits, the Purchase Price may be paid in one or a combination of the
following:

(i) by a certified or bank cashier's check;

(ii) by the surrender of shares of Common Stock in good form for
transfer, owned by the person exercising the Option and having a
Fair Market Value on the date of exercise equal to the Purchase
Price, or in any combination of cash and shares of Common Stock, as
long as the sum of the cash so paid and the Fair Market Value of the
shares of Common Stock so surrendered equals the Purchase Price;

(iii) by cancellation of indebtedness owed by the Company to the Grantee;

(iv) subject to Section 17(e), by a loan or extension of credit from the
Company evidenced by a full recourse promissory note executed by the
Grantee. The interest rate and other terms and conditions of such
note shall be determined by the Committee (in which case the
Committee may require that the Grantee pledge his or her Shares to
the Company for the purpose of securing the payment of such note,
and in no event shall the stock certificate(s) representing such
Shares be released to the Grantee until such note shall have been
paid in full); or

(v) by any combination of such methods of payment or any other method
acceptable to the Committee in its discretion.

Except in the case of Options exercised by certified or bank cashier's check,
the Committee may impose such limitations and prohibitions on the exercise of
Options as it deems appropriate, including, without limitation, any limitation
or prohibition designed to avoid accounting consequences which may result from
the use of Common Stock as payment upon exercise of an Option. Any fractional
shares of

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Common Stock resulting from a Grantee's election that are accepted by the
Company shall in the discretion of the Committee be paid in cash.

d. Term and Nontransferability of Grants and Options.

(i) Each Option under this Section 7 shall state the time or times which
all or part thereof becomes exercisable, subject to the following
restrictions.

(ii) No Option shall be exercisable except by the Grantee or a transferee
permitted hereunder.

(iii) No Option shall be assignable or transferable, except by will or the
laws of descent and distribution of the state wherein the Grantee is
domiciled at the time of his death; provided, however, that the
Committee may (but need not) permit other transfers, where the
Committee concludes that such transferability (i) does not result in
accelerated taxation, (ii) does not cause any Option intended to be
an Incentive Stock Option to fail to be described in Section 422(b)
of the Code and (iii) is otherwise appropriate and desirable.

(iv) No Option shall be exercisable until such time as set forth in the
applicable Agreement (but in no event after the expiration of such
Grant).

(v) The Committee may not modify, extend or renew any Option granted to
any Eligible Person unless such modification, extension or renewal
shall satisfy any and all applicable requirements of Rule 16b-3
under the Exchange Act. The foregoing notwithstanding, no
modification of an Option shall, without the consent of the
Optionee, alter or impair any rights or obligations under any Option
previously granted.

e. Termination of Service, Except by Death, Retirement or Disability.
Unless otherwise provided in the applicable Agreement, upon any Termination of
Service for any reason other than his or her death, Retirement or Disability, an
Optionee shall have the right, subject to the restrictions of Section 4(c)
above, to exercise his or her Option at any time within three months after
Termination of Service, but only to the extent that, at the date of Termination
of Service, the Optionee's right to exercise such Option had accrued pursuant to
the terms of the applicable Agreement and had not previously been exercised;
provided, however, that, unless otherwise provided in the applicable Agreement,
if there occurs a Termination of Service by a Participating Company for Cause or
a Termination of Service by the Optionee (other than on account of death,
Retirement or Disability), any Option not exercised in full prior to such
termination shall be canceled.

f. Death of Optionee. Unless otherwise provided in the applicable
Agreement, if the Optionee of an Option dies while an Eligible Person or within
three months after any Termination of Service other than for Cause or a
Termination of Service by the Optionee (other than on account of death,
Retirement or Disability), and has not fully exercised the Option, then the
Option may be exercised in full, subject to the restrictions of Section 4(c)
above, at anytime within 12 months after the Optionee's death, by the Successor
of the Optionee, but only to the extent that, at the date of death, the
Optionee's right to exercise such Option had accrued and had not been forfeited
pursuant to the terms of the Agreement and had not previously been exercised.

g. Disability or Retirement of Optionee. Unless otherwise provided in the
Agreement, upon any Termination of Service for reason of his or her Disability
or Retirement, an Optionee shall have the right, subject to the restrictions of
Section 4(c) above, to exercise the Option at any time within 24 months after
Termination of Service, but only to the extent that, at the date of Termination
of Service, the Optionee's

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right to exercise such Option had accrued pursuant to the terms of the
applicable Agreement and had not previously been exercised.

h. Rights as a Stockholder. An Optionee, a Successor of the Optionee, or
the holder of a DER shall have no rights as a stockholder with respect to any
Shares covered by his or her Grant until, in the case of an Optionee, the date
of the issuance of a stock certificate for such Shares. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or
other property), distributions or other rights for which the record date is
prior to the date such stock certificate is issued, except as provided in
Section 15.

i. Modification, Extension and Renewal of Option. Within the limitations
of the Plan, and only with respect to Options granted to Eligible Persons, the
Committee may modify, extend or renew outstanding Options or accept the
cancellation of outstanding Options (to the extent not previously exercised) for
the granting of new Options in substitution therefor (but not including
repricings, in the absence of stockholder approval). The Committee may modify,
extend or renew any Option granted to any Eligible Person, unless such
modification, extension or renewal would not satisfy any applicable requirements
of Rule 16b-3 under the Exchange Act. The foregoing notwithstanding, no
modification of an Option shall, without the consent of the Optionee, alter or
impair any rights or obligations under any Option previously granted.

j. Stock Appreciation Rights. The Committee, in its discretion, may also
permit the Optionee to elect to exercise an Option by receiving Shares, cash or
a combination thereof, in the discretion of the Committee, with an aggregate
Fair Market Value (or, to the extent of payment in cash, in an amount) equal to
the excess of the Fair Market Value of the Shares with respect to which the
Option is being exercised over the aggregate Purchase Price, as determined as of
the day the Option is exercised.

k. Deferral. The Committee may establish a program under which Optionees
will have Phantom Shares subject to Section 10 credited upon their exercise of
Options, rather than receiving Shares at that time.

l. Other Provisions. The Agreement authorized under the Plan may contain
such other provisions not inconsistent with the terms of the Plan (including,
without limitation, restrictions upon the exercise of the Option) as the
Committee shall deem advisable.

8. SPECIAL RULES FOR INCENTIVE STOCK OPTIONS.

a. In the case of Incentive Stock Options granted hereunder, the aggregate
Fair Market Value (determined as of the date of the Grant thereof) of the Shares
with respect to which Incentive Stock Options become exercisable by any Optionee
for the first time during any calendar year (under the Plan and all other plans
maintained by the Participating Companies, their parent or Subsidiaries) shall
not exceed $100,000.

b. In the case of an individual described in Section 422(b)(6) of the Code
(relating to certain 10% owners), the Exercise Price with respect to an
Incentive Stock Option shall not be less than 110% of the Fair Market Value of a
Share on the day the Option is granted and the term of an Incentive Stock Option
shall be no more than five years from the date of grant.

c. If Shares acquired upon exercise of an Incentive Stock Option are
disposed of in a disqualifying disposition within the meaning of Section 422 of
the Code by an Optionee prior to the expiration of either two years from the
date of grant of such Option or one year from the transfer of Shares to the
Optionee pursuant to the exercise of such Option, or in any other disqualifying
disposition

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within the meaning of Section 422 of the Code, such Optionee shall notify the
Company in writing as soon as practicable thereafter of the date and terms of
such disposition and, if the Company thereupon has a tax-withholding obligation,
shall pay to the Company an amount equal to any withholding tax the Company is
required to pay as a result of the disqualifying disposition.

9. PROVISIONS APPLICABLE TO RESTRICTED STOCK.

a. Vesting Periods. In connection with the grant of Restricted Stock,
whether or not Performance Goals apply thereto, the Committee shall establish
one or more vesting periods with respect to the shares of Restricted Stock
granted, the length of which shall be determined in the discretion of the
Committee. Subject to the provisions of this Section 9, the applicable Agreement
and the other provisions of the Plan, restrictions on Restricted Stock shall
lapse if the Grantee satisfies all applicable employment or other service
requirements through the end of the applicable vesting period.

b. Grant of Restricted Stock. Subject to the other terms of the Plan, the
Committee may, in its discretion as reflected by the terms of the applicable
Agreement: (i) authorize the granting of Restricted Stock to Eligible Persons;
(ii) provide a specified purchase price for the Restricted Stock (whether or not
the payment of a purchase price is required by any state law applicable to the
Company); (iii) determine the restrictions applicable to Restricted Stock and
(iv) determine or impose other conditions to the grant of Restricted Stock under
the Plan as it may deem appropriate.

c. Certificates.

(i) Each Grantee of Restricted Stock shall be issued a stock certificate
in respect of Shares of Restricted Stock awarded under the Plan.
Such certificate shall be registered in the name of the Grantee.
Without limiting the generality of Section 6, in addition to any
legend that might otherwise be required by the Board or the
Company's charter, bylaws or other applicable documents, the
certificates for Shares of Restricted Stock issued hereunder may
include any legend which the Committee deems appropriate to reflect
any restrictions on transfer hereunder or under the applicable
Agreement, or as the Committee may otherwise deem appropriate, and,
without limiting the generality of the foregoing, shall bear a
legend referring to the terms, conditions, and restrictions
applicable to such Grant, substantially in the following form:

THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF
STOCK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND
CONDITIONS (INCLUDING FORFEITURE) OF THE MFA MORTGAGE
INVESTMENTS, INC. 2004 EQUITY COMPENSATION PLAN, AND AN
AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER AND MFA
MORTGAGE INVESTMENTS, INC. COPIES OF SUCH PLAN AND AWARD
AGREEMENT ARE ON FILE IN THE OFFICES OF MFA MORTGAGE
INVESTMENTS, INC. AT 350 PARK AVENUE, NEW YORK, NEW YORK
10022.

(ii) The Committee shall require that the stock certificates evidencing
such Shares be held in custody by the Company until the restrictions
hereunder shall have lapsed and that, as a condition of any grant of
Restricted Stock, the Grantee shall have delivered a stock power,
endorsed in blank, relating to the stock covered by such Grant. If
and when such restrictions so lapse, the stock certificates shall be
delivered by the Company to the Grantee or his or her designee as
provided in Section 9(d).

10


d. Restrictions and Conditions. Unless otherwise provided by the
Committee, the Shares of Restricted Stock awarded pursuant to the Plan shall be
subject to the following restrictions and conditions:

(i) Subject to the provisions of the Plan and the applicable Agreement,
during a period commencing with the date of such Grant and ending on
the date the period of forfeiture with respect to such Shares
lapses, the Grantee shall not be permitted voluntarily or
involuntarily to sell, transfer, pledge, anticipate, alienate,
encumber or assign Shares of Restricted Stock awarded under the Plan
(or have such Shares attached or garnished). Subject to the
provisions of the applicable Agreement and clauses (iii) and (iv)
below, the period of forfeiture with respect to Shares granted
hereunder shall lapse as provided in the applicable Agreement.
Notwithstanding the foregoing, unless otherwise expressly provided
by the Committee, the period of forfeiture with respect to such
Shares shall only lapse as to whole Shares.

(ii) Except as provided in the foregoing clause (i), below in this clause
(ii), or in Section 15, the Grantee shall have, in respect of the
Shares of Restricted Stock, all of the rights of a stockholder of
the Company, including the right to vote the Shares; provided,
however, that cash dividends on such Shares shall, unless otherwise
provided by the Committee in the applicable Agreement, be held by
the Company (unsegregated as a part of its general assets) until the
period of forfeiture lapses (and forfeited if the underlying Shares
are forfeited), and paid over to the Grantee as soon as practicable
after such period lapses (if not forfeited). Certificates for Shares
(not subject to restrictions hereunder) shall be delivered to the
Grantee or his or her designee promptly after, and only after, the
period of forfeiture shall lapse without forfeiture in respect of
such Shares of Restricted Stock.

(iii) Termination of Service, Except by Death, Retirement or Disability.
Unless otherwise provided in the applicable Agreement, and subject
to clause (iv) below, if the Grantee has a Termination of Service
for Cause or by the Grantee for any reason other than his or her
death, Retirement or Disability, during the applicable period of
forfeiture, then (A) all Restricted Stock still subject to
restriction shall thereupon, and with no further action, be
forfeited by the Grantee, and (B) the Company shall pay to the
Grantee as soon as practicable (and in no event more than 30 days)
after such termination an amount equal to the lesser of (x) the
amount paid by the Grantee for such forfeited Restricted Stock as
contemplated by Section 9(b), and (y) the Fair Market Value on the
date of termination of the forfeited Restricted Stock.

(iv) Death, Disability or Retirement of Grantee. Unless otherwise
provided in the applicable Agreement, in the event the Grantee has a
Termination of Service on account of his or her death, Disability or
Retirement, or the Grantee has a Termination of Service by the
Company for any reason other than Cause, during the applicable
period of forfeiture, then restrictions under the Plan will
immediately lapse on all Restricted Stock granted to the applicable
Grantee.

10. PROVISIONS APPLICABLE TO PHANTOM SHARES.

a. Grant of Phantom Shares. Subject to the other terms of the Plan, the
Committee shall, in its discretion as reflected by the terms of the applicable
Agreement: (i) authorize the Granting of Phantom Shares to Eligible Persons and
(ii) determine or impose other conditions to the grant of Phantom Shares under
the Plan as it may deem appropriate.

11


b. Term. The Committee may provide in an Agreement that any particular
Phantom Share shall expire at the end of a specified term.

c. Vesting.

(i) Subject to the provisions of the applicable Agreement and Section
10(c)(ii), Phantom Shares shall vest as provided in the applicable
Agreement.

(ii) Unless otherwise determined by the Committee at the time of Grant,
the Phantom Shares granted pursuant to the Plan shall be subject to
the following vesting conditions:

(1) Termination of Service for Cause. Unless otherwise provided in
the applicable Agreement and subject to clause (2) below, if
the Grantee has a Termination of Service for Cause, all of the
Grantee's Phantom Shares (whether or not such Phantom Shares
are otherwise vested) shall thereupon, and with no further
action, be forfeited by the Grantee and cease to be
outstanding, and no payments shall be made with respect to
such forfeited Phantom Shares.

(2) Termination of Service for Death, Disability or Retirement of
Grantee or by the Company for Any Reason Other than Cause.
Unless otherwise provided in the applicable Agreement, in the
event the Grantee has a Termination of Service on account of
his or her death, Disability or Retirement, or the Grantee has
a Termination of Service by the Company for any reason other
than Cause, all outstanding Phantom Shares granted to such
Grantee shall become immediately vested.

(3) Except as contemplated above, in the event that a Grantee has
a Termination of Service, any and all of the Grantee's Phantom
Shares which have not vested prior to or as of such
termination shall thereupon, and with no further action, be
forfeited and cease to be outstanding, and the Grantee's
vested Phantom Shares shall be settled as set forth in Section
10(d).

d. Settlement of Phantom Shares.

(i) Each vested and outstanding Phantom Share shall be settled by the
transfer to the Grantee of one Share; provided, however, that, the
Committee at the time of grant (or, in the appropriate case, as
determined by the Committee, thereafter) may provide that a Phantom
Share may be settled (A) in cash at the applicable Phantom Share
Value, (B) in cash or by transfer of Shares as elected by the
Grantee in accordance with procedures established by the Committee
or (C) in cash or by transfer of Shares as elected by the Company.

(ii) Each Phantom Share shall be settled with a single-sum payment by the
Company; provided, however, that, with respect to Phantom Shares of
a Grantee which have a common Settlement Date (as defined below),
the Committee may permit the Grantee to elect in accordance with
procedures established by the Committee to receive installment
payments over a period not to exceed 10 years.

(iii) (1) The settlement date with respect to a Grantee is the first
day of the month to follow the Grantee's Termination of
Service ("Settlement Date"); provided, however, that a Grantee
may elect, in accordance with procedures to be adopted

12


by the Committee, that such Settlement Date will be deferred
as elected by the Grantee to a time permitted by the Committee
under procedures to be established by the Committee. Unless
otherwise determined by the Committee, elections under this
Section 10(d)(iii)(1) must be made at least six months before,
and in the year prior to the year in which, the Settlement
Date would occur in the absence of such election.

(2) Notwithstanding Section 10(d)(iii)(1), the Committee may
provide that distributions of Phantom Shares can be elected at
any time in those cases in which the Phantom Share Value is
determined by reference to Fair Market Value to the extent in
excess of a base value, rather than by reference to unreduced
Fair Market Value.

(3) Notwithstanding the foregoing, the Settlement Date, if not
earlier pursuant to this Section 10(d)(iii), is the date of
the Grantee's death.

(iv) Notwithstanding any other provision of the Plan, a Grantee may
receive any amounts to be paid in installments as provided in
Section 10(d)(ii) or deferred by the Grantee as provided in Section
10(d)(iii) in the event of an "Unforeseeable Emergency." For these
purposes, an "Unforeseeable Emergency," as determined by the
Committee in its sole discretion, is a severe financial hardship to
the Grantee resulting from a sudden and unexpected illness or
accident of the Grantee or "dependent," as defined in Section 152(a)
of the Code, of the Grantee, loss of the Grantee's property due to
casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of
the Grantee. The circumstances that will constitute an Unforeseeable
Emergency will depend upon the facts of each case, but, in any case,
payment may not be made to the extent that such hardship is or may
be relieved:

(1) through reimbursement or compensation by insurance or
otherwise;

(2) by liquidation of the Grantee's assets, to the extent the
liquidation of such assets would not itself cause severe
financial hardship; or

(3) by future cessation of the making of additional deferrals
under Section 10(d)(ii) and (iii).

Without limitation, the need to send a Grantee's child to
college or the desire to purchase a home shall not constitute
an Unforeseeable Emergency. Distributions of amounts because
of an Unforeseeable Emergency shall be permitted to the extent
reasonably needed to satisfy the emergency need.

e. Other Phantom Share Provisions.

(i) Rights to payments with respect to Phantom Shares granted under the
Plan shall not be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, attachment,
garnishment, levy, execution, or other legal or equitable process,
either voluntary or involuntary; and any attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber, attach or
garnish, or levy or execute on any right to payments or other
benefits payable hereunder, shall be void.

13


(ii) A Grantee may designate in writing, on forms to be prescribed by the
Committee, a beneficiary or beneficiaries to receive any payments
payable after his or her death and may amend or revoke such
designation at any time. If no beneficiary designation is in effect
at the time of a Grantee's death, payments hereunder shall be made
to the Grantee's estate. If a Grantee with a vested Phantom Share
dies, such Phantom Share shall be settled and the Phantom Share
Value in respect of such Phantom Shares paid, and any payments
deferred pursuant to an election under Section 10(d)(iii) shall be
accelerated and paid, as soon as practicable (but no later than 60
days) after the date of death to such Grantee's beneficiary or
estate, as applicable.

(iii) The Committee may establish a program under which distributions with
respect to Phantom Shares may be deferred for periods in addition to
those otherwise contemplated by the foregoing provisions of this
Section 10. Such program may include, without limitation, provisions
for the crediting of earnings and losses on unpaid amounts and, if
permitted by the Committee, provisions under which Grantees may
select from among hypothetical investment alternatives for such
deferred amounts in accordance with procedures established by the
Committee.

(iv) Notwithstanding any other provision of this Section 10, any
fractional Phantom Share will be paid out in cash at the Phantom
Share Value as of the Settlement Date.

(v) No Phantom Share shall give any Grantee any rights with respect to
Shares or any ownership interest in the Company. Except as may be
provided in accordance with Section 11, no provision of the Plan
shall be interpreted to confer upon any Grantee of a Phantom Share
any voting, dividend or derivative or other similar rights with
respect to any Phantom Share.

f. Claims Procedures.

(i) The Grantee, or his beneficiary hereunder or authorized
representative, may file a claim for payments with respect to
Phantom Shares under the Plan by written communication to the
Committee or its designee. A claim is not considered filed until
such communication is actually received. Within 90 days (or, if
special circumstances require an extension of time for processing,
180 days, in which case notice of such special circumstances should
be provided within the initial 90-day period) after the filing of
the claim, the Committee will either:

(1) approve the claim and take appropriate steps for satisfaction
of the claim; or

(2) if the claim is wholly or partially denied, advise the
claimant of such denial by furnishing to him or her a written
notice of such denial setting forth (A) the specific reason or
reasons for the denial; (B) specific reference to pertinent
provisions of the Plan on which the denial is based and, if
the denial is based in whole or in part on any rule of
construction or interpretation adopted by the Committee, a
reference to such rule, a copy of which shall be provided to
the claimant; (C) a description of any additional material or
information necessary for the claimant to perfect the claim
and an explanation of the reasons why such material or
information is necessary; and (D) a reference to this Section
10(f) as the provision setting forth the claims procedure
under the Plan.

14


(ii) The claimant may request a review of any denial of his or her
claim by written application to the Committee within 60 days
after receipt of the notice of denial of such claim. Within 60
days (or, if special circumstances require an extension of
time for processing, 120 days, in which case notice of such
special circumstances should be provided within the initial
60-day period) after receipt of written application for
review, the Committee will provide the claimant with its
decision in writing, including, if the claimant's claim is not
approved, specific reasons for the decision and specific
references to the Plan provisions on which the decision is
based.

11. PROVISIONS APPLICABLE TO DIVIDEND EQUIVALENT RIGHTS.

a. Grant of DERs. Subject to the other terms of the Plan (including,
without limitation, Section 7(a)), the Committee shall, in its discretion as
reflected by the terms of the Agreements, authorize the granting of DERs to
Eligible Persons based on the dividends declared on Common Stock, to be credited
as of the dividend payment dates, during the period between the date a Grant is
issued, and the date such Grant is exercised, vests or expires, as determined by
the Committee. Such DERs shall be converted to cash or additional Shares by such
formula and at such time and subject to such limitation as may be determined by
the Committee. With respect to DERs granted with respect to Options intended to
be qualified performance-based compensation for purposes of Section 162(m) of
the Code, such DERs shall be payable regardless of whether such Option is
exercised. If a DER is granted in respect of another Grant hereunder, then,
unless otherwise stated in the Agreement, or, in the appropriate case, as
determined by the Committee, in no event shall the DER be in effect for a period
beyond the time during which the applicable related portion of the underlying
Grant has been exercised or otherwise settled, or has expired, been forfeited or
otherwise lapsed, as applicable.

b. Certain Terms.

(i) The term of a DER shall be set by the Committee in its discretion.

(ii) Payment of the amount determined in accordance with Section 11(a)
shall be in cash, in Common Stock or a combination of the both, as
determined by the Committee at the time of grant.

c. Other Types of DERs. The Committee may establish a program under which
DERs of a type whether or not described in the foregoing provisions of this
Section 11 may be granted to Eligible Persons. For example, without limitation,
the Committee may grant a DER in respect of each Share subject to an Option or
with respect to a Phantom Share, which right would consist of the right (subject
to Section 11(d)) to receive a cash payment in an amount equal to the dividend
distributions paid on a Share from time to time.

d. Deferral.

(i) The Committee may establish a program under which Grantees (i) will
have Phantom Shares credited, subject to the terms of Sections 10(d)
and 10(e) as though directly applicable with respect thereto, upon
the granting of DERs, or (ii) will have payments with respect to
DERs deferred.

(ii) The Committee may establish a program under which distributions with
respect to DERs may be deferred. Such program may include, without
limitation, provisions for the crediting of earnings and losses on
unpaid amounts, and, if permitted by the Committee, provisions under
which Grantees may select from among hypothetical investment

15


alternatives for such deferred amounts in accordance with procedures
established by the Committee.

12. OTHER STOCK-BASED AWARDS. The Board shall have the right to issue
other Grants based upon the Common Stock having such terms and conditions as the
Board may determine, including, without limitation, the grant of Shares based
upon certain conditions, and the grant of securities convertible into Common
Stock.

13. PERFORMANCE GOALS. The Committee, in its discretion, shall in the case
of Grants (including, in particular, Grants other than Options) intended to
qualify for an exception from the limitation imposed by Section 162(m) of the
Code ("Performance-Based Grants") (i) establish one or more performance goals
("Performance Goals") as a precondition to the issue of Grants, and (ii)
provide, in connection with the establishment of the Performance Goals, for
predetermined Grants to those Grantees (who continue to meet all applicable
eligibility requirements) with respect to whom the applicable Performance Goals
are satisfied. The Performance Goals shall be based upon the criteria set forth
in Exhibit A hereto which is hereby incorporated herein by reference as though
set forth in full. The Performance Goals shall be established in a timely
fashion such that they are considered preestablished for purposes of the rules
governing performance-based compensation under Section 162(m) of the Code. Prior
to the award of Restricted Stock hereunder, the Committee shall have certified
that any applicable Performance Goals, and other material terms of the Grant,
have been satisfied. Performance Goals which do not satisfy the foregoing
provisions of this Section 13 may be established by the Committee with respect
to Grants not intended to qualify for an exception from the limitations imposed
by Section 162(m) of the Code.

14. TERM OF PLAN. Grants may be granted pursuant to the Plan until the
expiration of 10 years from the effective date of the Plan.

15. RECAPITALIZATION AND CHANGES OF CONTROL.

a. Subject to any required action by stockholders and to the specific
provisions of Section 16, if (i) the Company shall at any time be involved in a
merger, consolidation, dissolution, liquidation, reorganization, exchange of
shares, sale of all or substantially all of the assets or stock of the Company
or a transaction similar thereto, (ii) any stock dividend, stock split, reverse
stock split, stock combination, reclassification, recapitalization or other
similar change in the capital structure of the Company, or any distribution to
holders of Common Stock other than cash dividends, shall occur or (iii) any
other event shall occur which in the judgment of the Committee necessitates
action by way of adjusting the terms of the outstanding Grants, then:

(1) the maximum aggregate number of Shares which may be made
subject to Options and DERs under the Plan, the maximum
aggregate number and kind of Shares of Restricted Stock that
may be granted under the Plan, the maximum aggregate number of
Phantom Shares and other Grants which may be granted under the
Plan may be appropriately adjusted by the Committee in its
discretion; and

(2) the Committee shall take any such action as in its discretion
shall be necessary to maintain each Grantees' rights hereunder
(including under their applicable Agreements) so that they
are, in their respective Options, Phantom Shares and DERs,
substantially proportionate to the rights existing in such
Options, Phantom Shares and DERs prior to such event,
including, without limitation, adjustments in (A) the number
of Options, Phantom Shares and DERs (and other Grants

16


under Section 12) granted, (B) the number and kind of shares
or other property to be distributed in respect of Options,
Phantom Shares and DERs (and other Grants under Section 12, as
applicable, (C) the Exercise Price, Purchase Price and Phantom
Share Value, and (D) performance-based criteria established in
connection with Grants (to the extent consistent with Section
162(m) of the Code, as applicable); provided that, in the
discretion of the Committee, the foregoing clause (D) may also
be applied in the case of any event relating to a Subsidiary
if the event would have been covered under this Section 15(a)
had the event related to the Company.

To the extent that such action shall include an increase or decrease in the
number of Shares subject to all outstanding Grants, the number of Shares
available under Section 6 above shall be increased or decreased, as the case may
be, proportionately.

b. Any Shares or other securities distributed to a Grantee with respect to
Restricted Stock or otherwise issued in substitution of Restricted Stock
pursuant to this Section 15 shall be subject to the restrictions and
requirements imposed by Section 9, including depositing the certificates
therefor with the Company together with a stock power and bearing a legend as
provided in Section 9(c)(i).

c. If the Company shall be consolidated or merged with another corporation
or other entity, each Grantee who has received Restricted Stock that is then
subject to restrictions imposed by Section 9(d) may be required to deposit with
the successor corporation the certificates for the stock or securities or the
other property that the Grantee is entitled to receive by reason of ownership of
Restricted Stock in a manner consistent with Section 9(c)(ii), and such stock,
securities or other property shall become subject to the restrictions and
requirements imposed by Section 9(d), and the certificates therefor or other
evidence thereof shall bear a legend similar in form and substance to the legend
set forth in Section 9(c)(i).

d. The judgment of the Committee with respect to any matter referred to in
this Section 15 shall be conclusive and binding upon each Grantee without the
need for any amendment to the Plan.

e. Subject to any required action by stockholders, if the Company is the
surviving corporation in any merger or consolidation, the rights under any
outstanding Grant shall pertain and apply to the securities to which a holder of
the number of Shares subject to the Grant would have been entitled. In the event
of a merger or consolidation in which the Company is not the surviving
corporation, the date of exercisability of each outstanding Option and settling
of each Phantom Share or, as applicable, other Grant under Section 12, shall be
accelerated to a date prior to such merger or consolidation, unless the
agreement of merger or consolidation provides for the assumption of the Grant by
the successor to the Company.

f. To the extent that the foregoing adjustment related to securities of
the Company, such adjustments shall be made by the Committee, whose
determination shall be conclusive and binding on all persons.

g. Except as expressly provided in this Section 15, a Grantee shall have
no rights by reason of subdivision or consolidation of shares of stock of any
class, the payment of any stock dividend or any other increase or decrease in
the number of shares of stock of any class or by reason of any dissolution,
liquidation, merger or consolidation or spin-off of assets or stock of another
corporation, and any issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number of
Shares subject to a Grant or the Exercise Price of Shares subject to an Option.

17


h. Grants made pursuant to the Plan shall not affect in any way the right
or power of the Company to make adjustments, reclassifications, reorganizations
or changes of its capital or business structure, to merge or consolidate or to
dissolve, liquidate, sell or transfer all or any part of its business assets.

i. Upon the occurrence of a Change of Control:

(i) The Committee as constituted immediately before the Change of
Control may make such adjustments as it, in its discretion,
determines are necessary or appropriate in light of the Change of
Control (including, without limitation, the substitution of stock
other than stock of the Company as the stock optioned hereunder, and
the acceleration of the exercisability of the Options and settling
of each Phantom Share or, as applicable, other Grant under Section
12), provided that the Committee determines that such adjustments do
not have a substantial adverse economic impact on the Grantee as
determined at the time of the adjustments.

(ii) All restrictions and conditions on each DER shall automatically
lapse and all Grants under the Plan shall be deemed fully vested.

(iii) Notwithstanding the provisions of Section 10, the Settlement Date
for Phantom Shares shall be the date of such Change of Control and
all amounts due with respect to Phantom Shares to a Grantee
hereunder shall be paid as soon as practicable (but in no event more
than 30 days) after such Change of Control, unless such Grantee
elects otherwise in accordance with procedures established by the
Committee.

j. "Change of Control" shall mean the occurrence of any one of the
following events:

(i) any "person," as such term is used in Sections 13(d) and 14(d) of
the Exchange Act(other than the Company, any of its affiliates or
any trustee, fiduciary or other person or entity holding securities
under any employee benefit plan or trust of the Company or any of
its affiliates and, with respect to any particular Eligible
Employee, other than such Eligible Employee) together with all
"affiliates" and "associates" (as such terms are defined in Rule
12b-2 under the Exchange Act) of such person, shall become the
"beneficial owner" (as such term is defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing 30% or more of either (A) the combined voting power of
the Company's then outstanding securities having the right to vote
in an election of the Board ("voting securities") or (B) the then
outstanding Shares (in either such case other than as a result of an
acquisition of securities directly from the Company); or

(ii) persons who, as of the effective date of the Plan, constitute the
Board (the "Incumbent Directors") cease for any reason, including,
without limitation, as a result of a tender offer, proxy contest,
merger or similar transaction, to constitute at least a majority of
the Board, provided that any person becoming a member of the Board
subsequent to the effective date whose election or nomination for
election was approved and/or ratified by a vote of at least a
majority of the Incumbent Directors shall, for purposes of the Plan,
be considered an Incumbent Director; or


(iii) there shall occur (A) any consolidation or merger of the Company or
any Subsidiary where the stockholders of the Company, immediately
prior to the consolidation or merger, would not, immediately after
the consolidation or merger, beneficially own (as such term is
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, shares

18


representing in the aggregate 50% or more of the voting securities
of the corporation issuing cash or securities in the consolidation
or merger (or of its ultimate parent corporation, if any), (B) any
sale, lease, exchange or other transfer (in one transaction or a
series of transactions contemplated or arranged by any party as a
single plan) of all or substantially all of the assets of the
Company or (C) any plan or proposal for the liquidation or
dissolution of the Company.

Notwithstanding the foregoing, a "Change of Control" shall not be
deemed to have occurred for purposes of the foregoing clause (i) solely as the
result of an acquisition of securities by the Company which, by reducing the
number of Shares or other voting securities outstanding, increases (x) the
proportionate number of Shares beneficially owned by any person to 30% or more
of the Shares then outstanding or (y) the proportionate voting power
represented by the voting securities beneficially owned by any person to 30% or
more of the combined voting power of all then outstanding voting securities;
provided, however, that, if any person referred to in clause (x) or (y) of this
sentence shall thereafter become the beneficial owner of any additional Shares
or other voting securities(other than pursuant to a stock split, stock dividend,
or similar transaction), then a "Change of Control" shall be deemed to have
occurred for purposes of this subsection (j).

16. EFFECT OF CERTAIN TRANSACTIONS. In the case of (i) the dissolution or
liquidation of the Company, (ii) a merger, consolidation, reorganization or
other business combination in which the Company is acquired by another entity or
in which the Company is not the surviving entity, or (iii) any sale, lease,
exchange or other transfer (in one transaction or a series of transactions
contemplated or arranged by any party as a single plan) of all or substantially
all of the assets of the Company, the Plan and the Grants issued hereunder shall
terminate upon the effectiveness of any such transaction or event, unless
provision is made in connection with such transaction for the assumption of
Grants theretofore granted, or the substitution for such Grants of new Grants,
by the successor entity or parent thereof, with appropriate adjustment as to the
number and kind of shares and the per share exercise prices, as provided in
Section 15. In the event of such termination, all outstanding Options and Grants
shall be exercisable in full for at least fifteen days prior to the date of such
termination whether or not otherwise exercisable during such period.

17. SECURITIES LAW REQUIREMENTS.

a. Legality of Issuance. The issuance of any Shares pursuant to Grants
under the Plan and the issuance of any Grant shall be contingent upon the
following:

(i) the obligation of the Company to sell Shares with respect to Grants
issued under the Plan shall be subject to all applicable laws, rules
and regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by
governmental agencies as may be deemed necessary or appropriate by
the Committee;

(ii) the Committee may make such changes to the Plan as may be necessary
or appropriate to comply with the rules and regulations of any
government authority or to obtain tax benefits applicable to stock
options; and

(iii) each grant of Options, Restricted Stock, Phantom Shares (or issuance
of Shares in respect thereof) or DERs (or issuance of Shares in
respect thereof), or other Grant under Section 12 (or issuance of
Shares in respect thereof), is subject to the requirement that, if
at any time the Committee determines, in its discretion, that the
listing, registration or qualification of Shares issuable pursuant
to the Plan is required by any securities exchange or under any
state or federal law, or the consent or approval of any

19


governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the issuance of Options, Shares
of Restricted Stock, Phantom Shares, DERs, other Grants or other
Shares, no payment shall be made, or Phantom Shares or Shares issued
or grant of Restricted Stock or other Grant made, in whole or in
part, unless listing, registration, qualification, consent or
approval has been effected or obtained free of any conditions in a
manner acceptable to the Committee.

b. Restrictions on Transfer. Regardless of whether the offering and sale
of Shares under the Plan has been registered under the Act or has been
registered or qualified under the securities laws of any state, the Company may
impose restrictions on the sale, pledge or other transfer of such Shares
(including the placement of appropriate legends on stock certificates) if, in
the judgment of the Company and its counsel, such restrictions are necessary or
desirable in order to achieve compliance with the provisions of the Act, the
securities laws of any state or any other law. In the event that the sale of
Shares under the Plan is not registered under the Act but an exemption is
available which requires an investment representation or other representation,
each Grantee shall be required to represent that such Shares are being acquired
for investment, and not with a view to the sale or distribution thereof, and to
make such other representations as are deemed necessary or appropriate by the
Company and its counsel. Any determination by the Company and its counsel in
connection with any of the matters set forth in this Section 17 shall be
conclusive and binding on all persons. Without limiting the generality of
Section 6, stock certificates evidencing Shares acquired under the Plan pursuant
to an unregistered transaction shall bear a restrictive legend, substantially in
the following form, and such other restrictive legends as are required or deemed
advisable under the provisions of any applicable law:

"THE SALE OF THE SECURITIES REPRESENTED HEREBY HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). ANY TRANSFER OF SUCH
SECURITIES WILL BE INVALID UNLESS A REGISTRATION STATEMENT UNDER THE
ACT IS IN EFFECT AS TO SUCH TRANSFER OR IN THE OPINION OF COUNSEL FOR
THE ISSUER SUCH REGISTRATION IS UNNECESSARY IN ORDER FOR SUCH TRANSFER
TO COMPLY WITH THE ACT."

c. Registration or Qualification of Securities. The Company may, but shall
not be obligated to, register or qualify the issuance of Grants and/or the sale
of Shares under the Act or any other applicable law. The Company shall not be
obligated to take any affirmative action in order to cause the issuance of
Grants or the sale of Shares under the Plan to comply with any law.

d. Exchange of Certificates. If, in the opinion of the Company and its
counsel, any legend placed on a stock certificate representing Shares sold under
the Plan is no longer required, the holder of such certificate shall be entitled
to exchange such certificate for a certificate representing the same number of
Shares but lacking such legend.

e. Certain Loans. Notwithstanding any other provision of the Plan, the
Company shall not be required to take or permit any action under the Plan or any
Agreement which, in the good-faith determination of the Company, would result in
a material risk of a violation by the Company of Section 13(k) of the Exchange
Act.

18. AMENDMENT OF THE PLAN. The Board may from time to time, with respect
to any Shares at the time not subject to Grants, suspend or discontinue the Plan
or revise or amend it in any respect whatsoever. The Board may amend the Plan as
it shall deem advisable, except that no amendment may adversely affect a Grantee
with respect to Grants previously granted unless such amendments are in
connection with compliance with applicable laws; provided, however, that the
Board may not make any amendment in the Plan that would, if such amendment were
not approved by the holders of the Common

20


Stock, cause the Plan to fail to comply with any requirement of applicable law
or regulation, or of any applicable exchange or similar rule, unless and until
the approval of the holders of such Common Stock is obtained.

19. APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of Common Stock pursuant to the exercise of an Option, the sale of
Restricted Stock or in connection with other Grants under the Plan will be used
for general corporate purposes.

20. TAX WITHHOLDING. Each Grantee shall, no later than the date as of
which the value of any Grant first becomes includable in the gross income of the
Grantee for federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Company regarding payment of any federal, state
or local taxes of any kind that are required by law to be withheld with respect
to such income. A Grantee may elect to have such tax withholding satisfied, in
whole or in part, by (i) authorizing the Company to withhold a number of Shares
to be issued pursuant to a Grant equal to the Fair Market Value as of the date
withholding is effected that would satisfy the withholding amount due, (ii)
transferring to the Company Shares owned by the Grantee with a Fair Market Value
equal to the amount of the required withholding tax, or (iii) in the case of a
Grantee who is an Employee of the Company at the time such withholding is
effected, by withholding from the Grantee's cash compensation. Notwithstanding
anything contained in the Plan to the contrary, the Grantee's satisfaction of
any tax-withholding requirements imposed by the Committee shall be a condition
precedent to the Company's obligation as may otherwise by provided hereunder to
provide Shares to the Grantee, and the failure of the Grantee to satisfy such
requirements with respect to a Grant shall cause such Grant to be forfeited.

21. NOTICES. All notices under the Plan shall be in writing, and if to the
Company, shall be delivered to the Board or mailed to its principal office,
addressed to the attention of the Board; and if to the Grantee, shall be
delivered personally or mailed to the Grantee at the address appearing in the
records of the Participating Company. Such addresses may be changed at any time
by written notice to the other party given in accordance with this Section 21.

22. RIGHTS TO EMPLOYMENT OR OTHER SERVICE. Nothing in the Plan or in any
Grant issued pursuant to the Plan shall confer on any individual any right to
continue in the employ or other service of the Participating Company (if
applicable) or interfere in any way with the right of the Participating Company
and its stockholders to terminate the individual's employment or other service
at any time.

23. EXCULPATION AND INDEMNIFICATION. To the maximum extent permitted by
law, the Company shall indemnify and hold harmless the members of the Board and
the members of the Committee from and against any and all liabilities, costs and
expenses incurred by such persons as a result of any act or omission to act in
connection with the performance of such person's duties, responsibilities and
obligations under the Plan, other than such liabilities, costs and expenses as
may result from the gross negligence, bad faith, willful misconduct or criminal
acts of such persons.

24. NO FUND CREATED. Any and all payments hereunder to any Grantee under
the Plan shall be made from the general funds of the Company (or, if applicable,
a Participating Company), no special or separate fund shall be established or
other segregation of assets made to assure such payments, and the Phantom Shares
(including for purposes of this Section 24 any accounts established to
facilitate the implementation of Section 10(d)(iii)) and any other similar
devices issued hereunder to account for Plan obligations do not constitute
Common Stock and shall not be treated as (or as giving rise to) property or as a
trust fund of any kind; provided, however, that the Company (or a Participating
Company) may establish a mere bookkeeping reserve to meet its obligations
hereunder or a trust or other funding vehicle that would not cause the Plan to
be deemed to be funded for tax purposes or for purposes of Title I of the

21


Employee Retirement Income Security Act of 1974, as amended. The obligations of
the Company (or, if applicable, a Participating Company) under the Plan are
unsecured and constitute a mere promise by the Company (or, if applicable, a
Participating Company) to make benefit payments in the future and, to the extent
that any person acquires a right to receive payments under the Plan from the
Company (or, if applicable, a Participating Company), such right shall be no
greater than the right of a general unsecured creditor of the Company (or, if
applicable, a Participating Company). Without limiting the foregoing, Phantom
Shares and any other similar devices issued hereunder to account for Plan
obligations are solely a device for the measurement and determination of the
amounts to be paid to a Grantee under the Plan, and each Grantee's right in the
Phantom Shares and any such other devices is limited to the right to receive
payment, if any, as may herein be provided.

25. NO FIDUCIARY RELATIONSHIP. Nothing contained in the Plan (including
without limitation Section 10(e)(iii)), and no action taken pursuant to the
provisions of the Plan, shall create or shall be construed to create a trust of
any kind, or a fiduciary relationship between the Company, the Participating
Companies, or their officers or the Committee, on the one hand, and the Grantee,
the Company, the Participating Companies or any other person or entity, on the
other.

26. CAPTIONS. The use of captions in the Plan is for convenience. The
captions are not intended to provide substantive rights.

27. GOVERNING LAW. THE PLAN SHALL BE GOVERNED BY THE LAWS OF MARYLAND,
WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS.


28. EXECUTION. The Company has caused the Plan to be executed in the name
and on behalf of the Company by an officer of the Company thereunto duly
authorized as of this 30th day of March, 2004.

MFA MORTGAGE INVESTMENTS, INC.,
a Maryland corporation



By: /s/ Stewart Zimmerman
-------------------------------------
Name: Stewart Zimmerman
Title: Chairman of the Board, Chief
Executive Officer and President



22



EXHIBIT A

PERFORMANCE CRITERIA


Performance-Based Grants intended to qualify as "performance based"
compensation under Section 162(m) of the Code, may be payable upon the
attainment of objective performance goals that are established by the Committee
and relate to one or more Performance Criteria, in each case on specified date
or over any period, up to 10 years, as determined by the Committee. Performance
Criteria may be based on the achievement of the specified levels of performance
under one or more of the measures set out below relative to the performance of
one or more other corporations or indices.

"Performance Criteria" means the following business criteria (or any
combination thereof) with respect to one or more of the Company, any
Participating Company or any division or operating unit thereof:

i.) pre-tax income,

ii.) after-tax income,

iii.) net income (meaning net income as reflected in the Company's
financial reports for the applicable period, on an aggregate,
diluted and/or per share basis),

iv.) operating income,

v.) cash flow,

vi.) earnings per share,

vii.) return on equity,

viii.) return on invested capital or assets,

ix.) cash and/or funds available for distribution,

x.) appreciation in the fair market value of the Common Stock,

xi.) return on investment,

xii.) total return to stockholders (meaning the aggregate Common Stock
price appreciation and dividends paid (assuming full
reinvestment of dividends) during the applicable period),

xiii.) net earnings growth,

xiv.) stock appreciation (meaning an increase in the price or value of
the Common Stock after the date of grant of an award and during
the applicable period),

xv.) related return ratios,

xvi.) increase in revenues,

A-1


xvii.) the Company's published ranking against its peer group of real
estate investment trusts based on total stockholder return,

xviii.) net earnings,

xix.) changes (or the absence of changes) in the per share or
aggregate market price of the Company's Common Stock,

xx.) number of securities sold,

xxi.) earnings before any one or more of the following items:
interest, taxes, depreciation or amortization for the applicable
period, as reflected in the Company's financial reports for the
applicable period, and

xxii.) total revenue growth (meaning the increase in total revenues
after the date of grant of an award and during the applicable
period, as reflected in the Company's financial reports for the
applicable period).

Except as otherwise expressly provided, all financial terms are used as
defined under Generally Accepted Accounting Principles ("GAAP") and all
determinations shall be made in accordance with GAAP, as applied by the Company
in the preparation of its periodic reports to stockholders.

To the extent permitted by Section 162(m) of the Code, unless the
Committee provides otherwise at the time of establishing the performance goals,
for each fiscal year of the Company, the Committee may provide for objectively
determinable adjustments, as determined in accordance with GAAP, to any of the
Performance Criteria described above for one or more of the items of gain, loss,
profit or expense: (A) determined to be extraordinary or unusual in nature or
infrequent in occurrence, (B) related to the disposal of a segment of a
business, (C) related to a change in accounting principle under GAAP, (D)
related to discontinued operations that do not qualify as a segment of a
business under GAAP, and (E) attributable to the business operations of any
entity acquired by the Company during the fiscal year.

A-2