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CORRESP
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July 13, 2023

Ms. Babette Cooper

Division of Corporation Finance

Office of Real Estate & Construction

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Re:         Ellington Financial Inc.

Form 10-K for the Fiscal Year Ending December 31,
2022

Filed March 1, 2023

File No. 001-34569

Dear Ms. Cooper:

Set forth below are the responses of Ellington Financial Inc. (the
 “Company,” “we,” “us,” or “our”) to the comments received from the staff of the Division
of Corporation Finance (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”) by letter
dated June 28, 2023, with respect to the Company’s Form 10-K for the fiscal year ended December 31, 2022 (the “Form 10-K”)
filed with the Commission on March 1, 2023, under File No. 001-34569.

For your convenience, each response is prefaced by the exact text of
the Staff’s corresponding comment in bold, italicized text. All references to page numbers and captions correspond to the Form 10-K,
unless otherwise specified.

Form 10-K for the Fiscal Year Ending December 31,
2022

Management's Discussion and Analysis of Financial Condition
and Results of Operations

Adjusted Distributable Earnings, page 97

1. Please tell us and enhance your disclosure to clarify the
nature of the adjustment titled "Non-capitalized transaction costs and other expense adjustments." Provide us with the various
components of this adjustment for the year ended December 31, 2022 and the three months ended March 31, 2023. To the extent
you believe any of these individual items are quantitatively significant, please consider separately quantifying such items in future
filings and in your earnings press release.

RESPONSE: We respectfully advise the
Staff that as part of our computation of Adjusted Distributable Earnings, we adjust net income for certain expense items, including non-capitalized
transaction costs, non-cash equity compensation expense, and certain expense items that are of a non-recurring nature which are included
in the line item, Non-capitalized transaction costs and other expense adjustments (the “Adjustment”).

“Non-capitalized transaction costs”
include expenses, generally professional fees, incurred in connection to the acquisition of investments and the issuance of long-term
debt. We do not consider these expenses as part of our core operations as they are akin to realized losses incurred at the time of acquisition/issuance.
For the year ended December 31, 2022 and for the three-month period ended March 31, 2023, such non-capitalized transaction costs
included in the Adjustment that related to investments acquired totaled $4.1 million and $0.7 million, respectively. For the year ended
December 31, 2022, the amount of non-capitalized transaction costs related to the issuance of long-term debt (also referred to as
debt issuance costs in the Form 10-K) included in the Adjustment were $9.9 million; no such costs were incurred during the three-month
period ended March 31, 2023.

“Non-cash equity compensation”
includes non-cash expenses related to the vesting of long-term incentive plan units and employee stock options. For the year ended December 31,
2022 and for the three-month period ended March 31, 2023, such non-cash equity compensation costs included in the Adjustment were
$1.5 million and $0.4 million, respectively.

“Other expense adjustments” for
the periods listed include expenses, including non-recurring professional fees, associated with the initial consolidation and integration
of Longbridge Financial, LLC (“Longbridge”) in connection with the Company’s acquisition of a controlling stake in Longbridge
in the fourth quarter of 2022. For the year ended December 31, 2022 and for the three-month period ended March 31, 2023, such
business transaction integration costs included in the Adjustment were $0.3 million and $1.1 million, respectively.

“Other expense adjustments” also
includes various other expenses, such as the non-cash expense related to the amortization of the Company’s intangible assets. For
the year ended December 31, 2022 and for the three-month period ended March 31, 2023, such expenses included in the Adjustment
were $0.6 million and $0.5 million, respectively.

To address the Staff’s comment, in future
filings, we plan to enhance our disclosure and provide further clarification regarding the nature
of the expenses included in the Adjustment. Additionally, in future filings, we will provide additional quantitative information
identifying the larger components of the Adjustment for each period. The following is an excerpt from the Form 10-K revised to provide
an example of the enhanced disclosure we expect to provide in future filings (disclosure added to reflect our response to this Comment
1 is denoted by underline):

Adjusted Distributable Earnings

Beginning with the financial results for the quarter
ended June 30, 2022, the supplemental non-GAAP financial measure that we previously referred to as "Core Earnings," we
now refer to as "Adjusted Distributable Earnings." We calculate Adjusted Distributable Earnings as U.S. GAAP net income (loss)
as adjusted for: (i) realized and unrealized gain (loss) on securities and loans, REO, mortgage servicing rights, financial derivatives
(excluding periodic settlements on interest rate swaps), any borrowings carried at fair value, and foreign currency transactions; (ii) incentive
fee to affiliate; (iii) Catch-up Premium Amortization Adjustment (as defined below); (iv) non-cash equity compensation expense;
(v) provision for income taxes; (vi) certain non-capitalized transaction costs; and (vii) other income or loss items that
are of a non-recurring nature. For certain investments in unconsolidated entities, we include the relevant components of net operating
income in Adjusted Distributable Earnings. The Catch-up Premium Amortization Adjustment is a quarterly adjustment to premium amortization
triggered by changes in actual and projected prepayments on our Agency RMBS (accompanied by a corresponding offsetting adjustment to realized
and unrealized gains and losses). The adjustment is calculated as of the beginning of each quarter based on our then-current assumptions
about cashflows and prepayments, and can vary significantly from quarter to quarter. Non-capitalized transaction costs include expenses,
generally professional fees, incurred in connection with the acquisition of an investment or issuance of long-term debt. For the contribution
to Adjusted Distributable Earnings from Longbridge, we adjust Longbridge's contribution to our net income in a similar manner, but we
include in Adjusted Distributable Earnings certain realized and unrealized gains (losses) from Longbridge's origination business ("gain-on-sale
income").

Adjusted Distributable Earnings is a supplemental
non-GAAP financial measure. We believe that the presentation of Adjusted Distributable Earnings provides information useful to investors,
because: (i) we believe that it is a useful indicator of both current and projected long-term financial performance, in that it excludes
the impact of certain current-period earnings components that we believe are less useful in forecasting long-term performance and dividend-paying
ability; (ii) we use it to evaluate the effective net yield provided by our investment portfolio, after the effects of financial
leverage and by Longbridge, to reflect the earnings from its reverse mortgage origination and servicing operations; and (iii) we
believe that presenting Adjusted Distributable Earnings assists investors in measuring and evaluating our operating performance, and comparing
our operating performance to that of our residential mortgage REIT and mortgage originator peers. Please note, however, that: (I) our
calculation of Adjusted Distributable Earnings may differ from the calculation of similarly titled non-GAAP financial measures by our
peers, with the result that these non-GAAP financial measures might not be directly comparable; and (II) Adjusted Distributable Earnings
excludes certain items that may impact the amount of cash that is actually available for distribution.

In addition, because Adjusted Distributable Earnings
is an incomplete measure of our financial results and differs from net income (loss) computed in accordance with U.S. GAAP, it should
be considered supplementary to, and not as a substitute for, net income (loss) computed in accordance with U.S. GAAP.

Furthermore, Adjusted Distributable Earnings is
different from REIT taxable income. As a result, the determination of whether we have met the requirement to distribute at least 90% of
our annual REIT taxable income (subject to certain adjustments) to our stockholders, in order to maintain our qualification as a REIT,
is not based on whether we distributed 90% of our Adjusted Distributable Earnings.

In setting our dividends, our Board of Directors
considers our earnings, liquidity, financial condition, REIT distribution requirements, and financial covenants, along with other factors
that the Board of Directors may deem relevant from time to time.

The following table reconciles, for the year ended
December 31, 2022, our Adjusted Distributable Earnings by strategy to the line on our Consolidated Statement of Operations entitled
Net Income (Loss), which we believe is the most directly comparable U.S. GAAP measure:

    Year Ended December 31, 2022

    (In thousands, except per share amounts)
    Investment

 Portfolio
    Longbridge
    Corporate/

Other
    Total

    Net Income (Loss)
    $ (59,110 )
    $ 14,492
    $ (26,251 )
    $ (70,869 )

    Income tax expense (benefit)
      —
      —
      (17,716 )
      (17,716 )

    Net income (loss) before income tax expense (benefit)
      (59,110 )
      14,492
      (43,967 )
      (88,585 )

    Adjustments:

    Realized (gains) losses, net(1)
      (5,103 )
      —
      (73 )
      (5,176 )

    Unrealized (gains) losses, net(2)
      184,621
      —
      (37,842 )
      146,779

    Unrealized (gains) losses on HMBS MSR Equivalent, net of hedge (gains) losses(3)
      —
      (15,319 )
      —
      (15,319 )

    Bargain purchase (gain)
      (7,932 )
      —
      —
      (7,932 )

    Negative (positive) component of interest income represented by Catch-up Premium Amortization Adjustment
      (4,115 )
      —
      —
      (4,115 )

    Non-capitalized transaction costs and other expense adjustments(5)
      10,132
      1,485
      4,760
      16,377

    (Earnings) losses from investments in unconsolidated entities
      63,614
      —
      —
      63,614

    Adjusted distributable earnings from investments in unconsolidated entities(4)
      11,982
      —
      —
      11,982

    Total Adjusted Distributable Earnings
    $ 194,089
    $ 658
    $ (77,122 )
    $ 117,625

    Dividends on preferred stock
      —
      —
      15,292
      15,292

    Adjusted Distributable Earnings attributable to non-controlling interests
      469
      5
      1,274
      1,748

    Adjusted Distributable Earnings Attributable to Common Stockholders
    $ 193,620
    $ 653
    $ (93,688 )
    $ 100,585

    Adjusted Distributable Earnings Attributable to Common Stockholders, per share
    $ 3.23
    $ 0.01
    $ (1.56 )
    $ 1.68

 (1) Includes realized (gains) losses on securities and loans, REO, MSRs, financial derivatives (excluding periodic settlements on interest
rate swaps and foreign currency transactions which are components of Other Income (Loss) on the Consolidated Statement of Operations.

 (2) Includes unrealized (gains) losses on securities and loans, REO, MSRs, financial derivatives (excluding periodic settlements on interest
rate swaps), borrowings carried at fair value, and foreign currency transactions which are components of Other Income (Loss) on the Consolidated
Statement of Operations.

 (3) Represents net change in fair value of HMBS MSR Equivalent attributable to changes in market conditions and model assumptions. This
adjustment is also net of (gains) losses on HMBS MSR hedging instruments, which are components of realized and/or unrealized gains (losses)
on financial derivatives, net.

 (4) Includes net interest income and operating expenses for certain investments in unconsolidated entities.

 (5) Includes non-capitalized transaction costs of $14.0 million (of which $9.9 million constitute debt issuance costs), $1.5 million
of non-cash equity compensation expense, and $0.9 million of various other expenses including various expenses related to the integration
of Longbridge.

Liquidity and Capital Resources, page 98

2. It appears that your dividends exceed your net cash provided
by operating activities for the years ended December 31, 2022 and 2021 and for the three months ended March 31, 2023. Please
tell us what consideration you gave to disclosing the specific sources of cash used to make dividend payments and the amount from each
source including cash from operations.

RESPONSE: Our dividend payments are supported by cash inflows
from multiple sources, including cash flows from operating, investing, and financing activities. Our sources of cash flow have been and
continue to be diversified, and such sources of cash flow have been maintained, and are expected to continue to be maintained, at levels
far in excess of what has been needed to make our dividend payments. As explained below, we have provided significant disclosure in our
public filings concerning the sources of cash for many uses, including making dividend payments. That said, upon further reflection in
light of the Staff’s question, we intend to enhance our disclosure as set forth below.

In the Liquidity and Capital Resources section of Management’s
Discussion and Analysis (the “MD&A”) of our previous filings for each of the relevant periods, we provide the reader with
a detailed description of the contributing components of our overall change in cash on hand. This section summarizes the Company’s
sources and uses of cash (the “Cash Flow Summary”); the following is such disclosure for the year ended December 31,
2022, as disclosed on page 104 of the Form 10-K:

“For the year ended December 31, 2022, our
operating activities provided net cash in the amount of $42.7 million and our investing activities used net cash in the amount of $1.753
billion. Our repo activity used to finance many of our investments (including repayments of amounts borrowed under our repos) provided
net cash of $702.2 million. We received $1.370 billion in proceeds from the issuance of Total other secured borrowings. We used $508.0
million for principal payments on our Total other secured borrowings. Thus our operating and investing activities, when combined with
our repo financings and Other secured borrowings (net of repayments), used net cash of $145.3 million for the year ended December 31,
2022. We received proceeds from HMBS-related obligations of $424.7 million and used $235.1 million for principal payments on HMBS-related
obligations. We received proceeds from the issuance of Senior notes, at fair value of $206.4 million, net of debt issuance costs, proceeds
from the issuance of common and preferred stock, net of underwriters' discounts and commissions, agent commissions, and offering costs
paid, of $99.1 million, and contributions from non-controlling interests of $9.8 million. We used $123.1 million to pay dividends, $19.9
million for distributions to non-controlling interests (our joint venture partners), $86.0 million for repayment of senior notes, and
$1.7 million to repurchase common stock. As a result there was an increase in our cash holdings of $129.0 million, from $92.8 million
as of December 31, 2021 to $221.9 million as of December 31, 2022.”

As mentioned above, upon further reflection in light of the Staff’s
question, we intend to enhance our disclosure by inserting an additional paragraph in t