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BROOKLYN, NY⁠—Eastern Union has launched a distressed notes initiative that will identify investors interested in purchasing lenders' troubled mortgages. The company plans to tap its database of investors to help community banks and private debt funds find buyers for their distressed debt.

The initiative will be led by company co-founder and managing partner Abe Bergman. Day-to-day management of the new unit will be handled by Eastern Union vice presidents Mark Rosenzweig and Boruch Mandel, both senior real estate finance executives at the firm.

"We understand what lenders need and we will serve their best interests," Bergman says in prepared remarks. "At the same time, we have strong and well-established business relationships with vast numbers of investors. Many will be willing to take troubled loans off of lenders' hands."

According to Bergman, a number of lenders have recently reached out to the national commercial mortgage brokerage firm indicating that they expected to face liquidity issues in the coming weeks or months, especially as regulatory circumstances evolve. These lenders said they expected to need brokerage assistance in selling off troubled loans, and asked if Eastern Union could assist.

It is expected that there will be a strong appetite for this paper. Billions of dollars are being raised for newly-formed distressed funds, including including KKR & Co., Kayne Anderson Real Estate and Terra Capital Partners, according to sources cited in a recent Wall Street Journal article. As one example, Kayne Anderson raised a $1.3 billion fund targeting debt being sold by distressed sellers in about two weeks, the company told the WSJ.