The problem of dealers not delivering agency mortgage-backed securities continues to escalate even as talk of hefty penalties to offenders picks up steam. The proper settlement of bond purchases is key to maintaining the liquidity of the $5trn agency mortgage world. This ensures that bonds are bought and sold without any disruption, and signals smooth functioning of the market. The problem shouldn’t affect mortgage rates that homeowners pay. The amount of these securities that dealers failed to deliver to investors who had bought them again rose to a high of $132bn last week.