The Tampa Times recently ran a story on a Tampa, Florida based company called LM Funding which details how the company’s motto is “We buy problems”. Part of the “problems” they buy are delinquent condominium and association fees through a series of complex transactions with the association that LM Funding ends up working “for” or “against” as the case may be in certain circumstances. First, check out the story, then scroll down below where I will begin to detail the problems with this collection and funding model and why I cannot for the life of me understand why investing in this whole enterprise would seem like a good idea for anyone. Please note that it’s not just me…consumer attorney…who details these problems, and that one of the most significant warnings comes from an attorney that represents condominium associations.
What I’m going to be doing here in a series of posts is detailing what I believe are the very real problems with the LM Funding business model. I’m going to do this by providing copies of court and deposition transcripts of a case that I am currently involved in…a case where my client was sued…ostensibly by their homeowner’s association, but when we peeled back the onion we find that the debt that was alleged to be in arrears to the named homeowner’s association had been transferred to another entity entirely…and therein lays the very real problem.
As you will see from all the transcripts and depositions that I will be posting later, it’s not just me that has very real problems and concerns….it’s the judge and the association president that suffer real problems in understanding how all this functions….before we get to all those depositions and pleadings and court transcripts for now, just read the Tampa Times article….
From the Tampa Times:
LM Funding — whose pitch is “We buy problems” — pays homeowners associations for the right to collect delinquent fees. The associations use the funds for maintenance and repairs while the company makes its money through what it calls “aggressive” debt collection.
Since it started seven years ago, LM Funding has contracted with 500 associations in Florida, Colorado and Washington state. With more than 320,000 community associations nationwide, the potential for profit is great.
LM Funding draws good reviews from some of its client associations. But there have been hiccups, too.
Several lawsuits have been filed against the company and the Tampa law firm that handles much of its debt collection — Business Law Group, founded by Rodgers. The suits accuse them of violating consumer protection laws including the Fair Debt Collection Practices Act.
Tampa attorney Shawn Brown has represented several condo associations that contracted with LM Funding early on and came to regret it. Business Law Group was so slow in its collection efforts, Brown said, that the associations experienced serious cash flow problems after the money they got from LM Funding ran out.
“When someone gives you $50,000, it helps you limp along for six months but when you’re in Year Three it’s long gone,” Brown said. “It really created financial issues because associations signed the contract in 2009 and they still had outstanding accounts with (LM Funding) in 2014.”
And here’s an excerpt from a court proceeding begining with a statement from their attorney:
5 LM is not a party to this lawsuit. They’re a
6 financial servicing company that invests money in
7 homeowner’s associations and, in exchange, takes an
8 assignment of further collection proceeds. It’s
9 not the law firm. The law firm is separate.
10 I work for Business Law Group. Business Law
11 Group was hired to collect on these units by
12 Brittany Place. And not just these units, but
13 other units in addition; but these two specific
14 units at issue today.
3 THE COURT: But you’re the plaintiff; you’re
4 driving this case.
5 MR. BAIR: Correct.
6 THE COURT: I’m asking, you’re coming in
7 today and you’re the plaintiff and you have the
8 burden to prove your case.
9 MR. BAIR: Yes, Your Honor.
10 THE COURT: Not at trial, not now, but
11 eventually at trial. But I’m perplexed that you’re
12 asking me today what the relationship is between
13 these parties —
The whole thing is most interesting….and will get even more curious as you see (and read in detail) how this case develops through all the depositions and transcripts…