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Groove Portfolio Focus Stock #4
LM Funding America (NASDAQ: LMFA)

Price - $1.46
Market Cap - $8.8 million
LT Debt - 0
Shares Outstanding: 5.9 million
Public Float: 1.01 million
Insider Ownership (69%) 12/31/17

LM Funding was founded to serve the recognized need for nonprofit community associations like homeowner associations and condominium associations to better manage unpaid association dues and to secure the funds needed for successful operations. As all homeowners know, if you don't pay your property taxes, the local municipality has the right to issue a tax lien on your property. If your tax continues to go unpaid, they can auction off a certificate representing the tax lien against your property and ultimately take your home. This auction process allows the municipality to monetize their delinquent receivables, which results in municipalities being able to fund their budgets and continue to provide government services. Now if you live in a community association, your elected association's Board of Directors sets a budget and poses assessments on the community residence, which is effectively a tax. In order to provide all the promised association amenities. When too many association fees go unpaid, associations become unable to meet their budgets, and ultimately, they must either levy a special assessment on all the paying residents or cut association services, like closing down the hot tub or pool, or foregoing property maintenance.

If a homeowner or a condo owner doesn't pay their dues, associations have similar lien and foreclosure rights as municipalities. However, unlike municipalities, there was no easy way for associations to monetize these delinquent receivables. They cannot convert them into lien certificates and sell them at auction. The market for this simply does not exist. The only option is to hire a law firm to pursue collections, and traditionally, this has been a very slow, expensive, complicated and inefficient process. In fact, associations are sometimes left with legal bills that are equal to the amounts collected by the law firm, that is, if they're successful in collecting anything at all. LMFA has established a long and successful track record of returning capital to associations in a highly efficient manner, with over 12,000 collection events resulting in more than $57 million returned to the approximately 500 associations we have contracted with over the last 10 years.


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