Zlotowitz debuts direct-to-lender business after Eastern Union exit

The firm's model is to bring borrowers directly to lenders for a flat fee.

Ira Zlotowitz, the founder of New York-based mortgage brokerage Easter Consolidated, wants to bring borrowers directly to lenders with his new venture, GPARENCY.

Zlotowitz’s plans for GPARENCY are as practical as they are philosophical – bringing borrowers directly to banks for a flat fee and providing additional support as needed on an hourly basis. It’s more like what attorneys and accountants do, than traditional mortgage banking services, Zlotowitz told Real Estate Capital USA.

But there is a bigger psychological shift that Zlotowitz is hoping to capture through GPARENCY, which has raised $15 million of venture capital from more than 125 real estate professionals. The offering was oversubscribed.

“More borrowers were talking to banks directly,” Zlotowitz said. “I found myself waking every morning in a world that is diminishing and I thought, ‘Why don’t I go to the 80 percent?’ I always said I’d never be Netflixed out of my own business. If a Netflix-type company is coming into my business, it will be me.”

The firm will charge a flat fee of $5,000, working to help borrowers get in front of banks and provide support where needed on underwriting and shopping loans and negotiating term sheets. After a term sheet is signed, the borrower can work directly with the bank or hire GPARENCY underwriters for an hourly rate of $500, with a cap of 30 hours.

“Day 1, I am a broker priced like an attorney,” Zlotowitz said. “When they borrowers need a human, they will pay us an hourly fee.”

Zlotowitz underscored, however, that real estate will always be a people business and that the firm’s clients will always have the option of working with a person throughout the process of lining up a loan.

“I ask myself, ‘What is the future commercial real estate? Will there need to be a human or not?’ Yes, Telsa got a car to drive by itself, but I believe there will always need to be a human in real estate. Some of my competitor believe there will never be a human and they are going down the wrong path. I think a human will always need to be there, but the value will be different.”

Over the longer term, GPARENCY will make all necessary data and tools available to its clients via a subscription-based service that will allow them to bring together public information and banking information.

That’s not to say there won’t be interaction between GPARENCY and Eastern Union, which is now headed up by Abraham Bergman, who has been a managing partner at the mortgage brokerage since its launch.

“I’m leaving a great company in a good position on amazing terms, and I think they will continue to dominate the market as a boutique shop. Whenever they need to lean on technology, they can lean on and license our technology and we’ll be comparing notes on banking relationships and passing on referrals.”

Interested in US real estate debt? PEI Media has launched Real Estate Capital USA – to find out more, click here.

SHARE