Eastern Union Funding settled its lawsuit with a group of brokers who bolted the firm two weeks ago over its new commission policy. The mortgage brokerage also said it’s on a hiring spree to expand the new model.
On Monday, attorneys for the company withdrew the petition they filed in court last week, accusing the eight brokers of breaching their employment agreements by starting their own competing firm and taking with them trade secrets.
The eight brokers left after Eastern announced a plan to cut the commissions it charges on certain refinancing deals from 1 percentage point to .25 point.
Eastern president Ira Zlotowitz said the two sides settled their dispute amicably, and the company and the brokers are “parting as friends.”
He added that Eastern Union has recently hired about 30 brokers and plans to bring on 20 more as it looks to expand with its new pricing model. The company has about 100 brokers in offices in New York, New Jersey, Maryland and Florida.
Zlotowitz said that outside of New York, most property owners don’t use a broker to seek financing. He said the lower commission should help his agents break into those markets.
The move, he added, will compel major competitors to bring down their pricing.
“Everyone in the industry is going to have to follow us,” he said.
The company’s new multifamily group leading the new commission initiative is headed by brokers Michael Muller and Marc Tropp.
Contact Rich Bockmann at rb@therealdeal.com or 908-415-5229.