There's a need in the marketplace for a non-bank conduit mortgage origination, according to David Spector, president and chief operating officer of PennyMac Mortgage Investment Trust (PMT). And he intends to fill that void through a new securitization initiative taking shape in 2011. In an interview with HousingWire, Spector provides details. He said that because the correspondent mortgage market is now dominated by the big four banks and the private lending sector is in remission, smaller community banks are hesitant to work with Bank of America or Wells Fargo for fear that their business will be stolen. PennyMac has been working the last year to prepare funds for bundling into a retained securitization platform, and in the third quarter, invested $125 million in distressed mortgages. After establishing conduit funding for the line, the real estate investment trust plans to buy its own loans for securitization, thereby providing financing for further mortgage originations. PennyMac also plans to internally service the mortgages they acquire, that way "we make sure the product is a type we want for our servicing portfolio," Spector said. "We want our sellers to be well capitalized and regulated." The conduit funding line will be set up for originating conventional and jumbo mortgages Spector said, adding the optimal pricing for securitization is close to being achieved. "Ultimately securitized products are going to come back. There are new rules, but still a need for securitization," Spector said. "We want to be ready and prepared to hit the ground running when the markets do open up." Write to Christine Ricciardi. Disclosure: The author holds no relevant investments.