Ellington Financial is approaching a deal to acquire a "small" servicer, with expectations of an agreement to come later this quarter. "It's a small servicer in the single-digit billions of servicing rights," said Ellington President and CEO Larry Penn during the call. Ellington executives said it had already redeployed substantial internal resources toward building a residential special servicing platform that can manage seriously delinquent liens. "More and more mortgage loans are ultimately finding their way into the private-label market," said Co-Chief Investment Officer Mark Tecotzky. The likely addition of a servicer this year may not be the last of merger-and-acquisition activity to come from Ellington, its executives said.