August 27, 2015
VIA EDGAR
Ms. Kathryn McHale
Senior Staff Attorney
Division of Corporation Finance
U.S. Securities & Exchange Commission
100 F Street, NE
Washington, D.C. 20549
| Re: | LM Funding America, Inc. |
| Amendment No. 1 to Registration Statement on Form S-1 |
| Filed August 7, 2015 |
| File No. 333-205232 |
Dear Ms. McHale:
On behalf of LM Funding America, Inc. (the “Company”), we are transmitting the following responses to the Staff’s letter dated August 19, 2015 containing the Staff’s comments regarding Amendment No. 1 to Registration Statement on Form S-1 (the “Registration Statement”) submitted to the United States Securities and Exchange Commission (the “Commission”) on August 7, 2015. Simultaneous herewith, the Company is filing an Amendment No. 2 to the Registration Statement, and unless otherwise indicated or the context suggests otherwise, all references to the “Registration Statement” in this letter refer to the Amendment No. 2 to the Registration Statement being filed on the date hereof. For your convenience, the full text of each of the Staff’s comments is set forth below, and the Company’s response to each comment directly follows the applicable text.
Dilution, page 33
| 1. | We note your dilution calculation in which you utilized 3,300,000 total shares (assuming minimum number of shares offered) of common stock to calculate the pro forma net tangible book value per share as of June 30, 2015. It appears to us that it would be more meaningful to reflect only the corporate reorganization in your pro forma net tangible book value per share before the offering. Please revise and make similar changes to the calculation assuming maximum number of shares offered. |
RESPONSE: Please be advised that the Company has revised the calculation of pro forma net tangible book value per share as of June 30, 2015 in the Registration Statement based on the revised number of 2,100,000 outstanding pre-offering shares (rather than the previously indicated 3,300,000). Please see Page 33 of the Registration Statement.
| 2. | On a related matter, please revise the tabular disclosures on the bottom of page 33 and on page 34 to reflect the resulting stockholders from the corporate reorganization as existing stockholders and update the calculation as appropriate. |
| BOSTON BRUSSELS CHICAGO DETROIT |
JACKSONVILLE LOS ANGELES MADISON MIAMI |
MILWAUKEE NEW YORK ORLANDO SACRAMENTO |
SAN DIEGO SAN FRANCISCO SHANGHAI SILICON VALLEY |
TALLAHASSEE TAMPA TOKYO WASHINGTON, D.C. |
Ms. Kathryn McHale
<August 27, 2015>
Page 2
RESPONSE: Please be advised that the Company has revised the tabular disclosures on Pages 33 and 34 to reflect the resulting stockholders from the corporate reorganization as existing stockholders. The Company has also updated the calculation as appropriate.
Notes to the Consolidated Financial Statements
Note 1. Summary of Significant Accounting Policies
Revenue Recognition, page F-10
| 3. | We note your response to our comment 9. |
| • | Please tell us how you considered whether you satisfied the conditions in ASC 860-10-40-5a (isolation of transferred financial assets) and ASC 860-10-40-5b (transferee’s rights to pledge or exchange) in considering whether you had a completion of a transfer under ASC 310-30. |
| • | We note that an association has the ability to terminate the agreement at any time and restore all original claims on collections as long as the association remits all payments due on the account to you. Please tell us the circumstances in which an association would be incented to terminate the purchase agreement using this clause. Please clarify for us the benefits an association would receive using this termination clause considering the association is required to remit all payments due on the account to LMF. |
| • | Please clarify for us why you believe an association has the right to make material decisions regarding the collection process. According to paragraph 1.d. of the Association Receivables Purchase Agreement filed as Exhibit 10.10 to Form S-1 filed on June 25, 2015, the association assigns, transfers, sets over, and delivers unto you and grants to you all of the association’s right, title and interest in all decision making ability as it relates to the form and substance of the collection process and all decision making ability as it relates to settlement offers. Please discuss the role of law firms you engage to perform collection work, to whom they report, and the extent of interaction and influence associations have in the collection process. Also, please clarify for us why making material decisions regarding the collections process would result in the transferor maintaining effective control. Please cite specific guidance that supports your assertion. |
| • | Please tell us whether an association has the right to levy and collect finance charges, late fees and other costs against unit owners of delinquent accounts pursuant to its association agreement with unit owners and whether those fees and charges are assigned, transferred, set over and delivered unto you as part of the purchase agreement. |
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Ms. Kathryn McHale
<August 27, 2015>
Page 3
RESPONSE: Before responding to the Staff’s specific questions, the Company would like to provide the Staff with the following supplemental background information regarding the nature of the Company’s business and its contracts:
For the information of the Staff, the form of Association Receivables Purchase Agreement attached as Exhibit 10.10 to the Registration Statement is the base form of agreement currently used by the Company with its original product. However, the Company has over time made changes to the general form of agreement that it has used for the original product (the “Original Product Agreement”). Initially, the Company’s typical form of Original Product Agreement contained provisions granting Associations the right to make material decisions regarding the collections process (we refer to this variant of the Original Product Agreement as “Form A” solely for purposes of this letter). A representative sample of Form A is being supplementally provided to the Staff with this letter as Exhibit D hereto. We note that Section 4 of Form A provides that “[Law Firm] will seek full payoffs on all LMF accounts and will not settle any account for less than the full amount due under Section 718.116, Florida Statutes, without the express written consent of Association.” As a result of this provision, the Company cannot effect a settlement on an account, even if the debtor makes a good settlement offer, without the approval of the Association.
Beginning December 2012, the Company started phasing out the Associations’ rights to make material decisions regarding the collections process. As mentioned above, the form of Original Product Agreement attached as Exhibit 10.10 to the Registration Statement represents the Company’s current form of Original Product Agreement (we refer to this as “Form B” in this letter). As the Staff points out, Section 1.d of Form B grants to the Company all decision making ability as it relates to the collection process from account debtors. In lieu of giving Associations the right to influence the collections process, Form B grants Associations the right to terminate the agreement under Section 13.c.
The Company notes that the form of agreement typically used by the Company under the New Neighbor Guaranty (the “NNG Agreement”) is similar to Form B insofar as the Company having control over the collections process and the Association having a termination right.
For the information of the Staff, as of June 30, 2015, the Company’s portfolio represented approximately $1.58 million in receivables under a variant of the Form A agreement, $280 thousand in receivables under a variant of the Form B agreement, and $996 thousand in receivables under a NNG Agreement. However, as the Company proceeds to implement Form B going forward and expects that a greater portion of its business will be under the New Neighbor Guaranty, the Company anticipates that an increasingly smaller portion of its business will involve provisions of the type included in Form A.
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Ms. Kathryn McHale
<August 27, 2015>
Page 4
Further to the foregoing, the Company’s responses to the Staff’s specific bullet-point questions are as follows (in the same order as the Staff’s bullets):
| • | Analysis of ASC 860-10-40-5. The Company notes that, under ASC 860-10-40-5, a transfer of a financial asset, or a group of assets, is accounted for as a sale (and purchase) “if and only if, all of the following conditions are met”: (a) isolation of transferred financial assets, (b) transferee’s right to pledge or exchange, and (c) effective control. If any one of these conditions are not met, then a transaction is not deemed to be a transfer of a financial asset under ASC 860-10-40-5. For the reasons described below, the Company has historically determined, and continues to believe, that the “effective control” condition is not satisfied. Furthermore, the Company believes that the “isolation” prong of the analysis is not satisfied as described below. |
Effective Control Analysis. With respect to Form B, even though Section 1.d of Form B grants the Company all decision making authority over the collection process, the Company believes that several features of the relationship between the Company and its Association clients, together with the Association’s termination rights under Form B, have the cumulative effective of giving the Association effective control over the Company’s ability to realize the anticipated value from the contract. These features are as follows:
| (1) | Per the legal requirements in some states, including Florida, only the Association has the legal standing to enforce its lien against Association members and collect delinquent assessments (together with interest and late fees) from them. This fundamental legal barrier necessitates the continuing involvement of the Association in order for the Company to receive the anticipated benefits from its contract with the Association. For example, depending on applicable state procedural rules, a representative of the Association may need to render testimony or affidavits as to the validity and/or amount of the debt being collected. The Association may also be obligated to participate in the preparation of account ledgers. Often the Association will want to negotiate payment plans and other accommodations directly with the account debtor given the personal nature of relationships among people living in close proximity in a community. In view of the foregoing, even though Form B requires the Association to take enforcement-related actions that are requested by the Company, an Association may intentionally or unintentionally fail to cooperate or delay its compliance with these requests. |
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Ms. Kathryn McHale
<August 27, 2015>
Page 5
| (2) | The legal counsel that is engaged to collect from account debtors has an attorney/client relationship directly with the Association, which practically means that Associations typically have the ability under bar rules to direct the efforts of legal counsel and communicate with legal counsel confidentially in ways that may not serve the Company’s interests. Although Section 1.d attempts to grant all collection decision authority to the Company, the clause does not and cannot override the nature of the attorney/client relationship between legal counsel and the Association and the duties that legal counsel has toward its client. |
| (3) | The termination right in Section 13 of Form B, which is described in more detail below, also gives the Association the ability to terminate its relationship with the Company. Although the Company believes that Associations will typically not exercise this right, the Company believes that this right, when combined with the other features of the relationship, gives the Association a material level of control over the relationship envisioned by the contract. |
The Company has determined that, in its best judgment, the combined effect of the foregoing features of the Company’s unique business, as well as the nature of the Company’s relationship and contracts with Associations, gives the Association a material degree of control over the ability of the Company to realize the anticipated value that it expects to receive under its Form B contracts. This is the case even though the Company seeks to obtain control over the collection process under Form B. In addition, the Company believes that Form A provides an even greater level of control by the Associations and is sufficient to cause the Company’s transactions under Form A to fail the “effective control” condition of ASC 860-10-40-5.
Isolation Analysis. While the foregoing analysis focuses on the “effective control” prong of the ASC 860-10-40-5 analysis, the Company has also determined that the “isolation” prong of the ASC 860-10-40-5 analysis is not clearly satisfied. The Company notes that, because of the unique nature of its business and transactions, the Company cannot be certain that in all circumstances its rights under its Association contracts are beyond the reach of the transferor or its creditor, including a bankruptcy trustee or receiver. Although the Company seeks to structure its transactions so that its rights under its contracts will remain undisturbed in the event of the bankruptcy of an Association client, the Company has been involved in legal proceedings in which an Association (or receiver or bankruptcy trustee) alleged that the Company’s contract with Associations is, because of the ongoing nature of the contract and the potential involvement of the Association in collection activities, subject to rejection as an executory contract or otherwise adversely affected in bankruptcy proceedings. Accordingly, although the Company’s contracts involve an outright purchase of certain future collection proceeds of the Association with no recourse against the
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Ms. Kathryn McHale
<August 27, 2015>
Page 6
Association, the Company cannot be certain that in all cases that its right to receive the bargained-for future collection proceeds will not be adversely affected by the arguments of creditors.
In sum, the Company’s analysis of its contracts under ASC 860-10-40-5 has resulted in a determination that two of the three conditions of the pronouncement are not satisfied.
| • | Association Termination Right. Under Form B and the NNG Agreement, an Association has the right to terminate the agreement (either in its entirety or as to specified accounts) by paying in full to the Company all amounts that would have been payable to the Company, and paying to the applicable legal counsel all amounts that would have been payable to it, as if full collection on the account occurred on the termination date. The Staff has asked for information regarding the circumstances under which an Association would be incented to terminate agreement. |
This termination provision has been included in the Company’s contracts at the requests of some Associations to cover unusual and/or unexpected situations that may arise. The termination provision exists to give Associations the ability to terminate a relationship with the engaged legal counsel that the Association may be unhappy with or if the Association is otherwise dissatisfied with its business relationship with the Company. The termination right may also be beneficial to an Association if a combination of circumstances converge that lead the Association to believe that it may receive more financial benefit from terminating than by staying the relationship— such as if the Association believes that it is at risk of collecting unpaid assessments because the total collection amount is approaching the fair market value of the unit, or if the Association believes it will realize the upside of owning the unit as a result of a lien foreclosure sale. To date, a total of 241 Associations have exercised termination rights for an aggregate of 825 accounts, resulting in termination payments of approximately $530,000 to the Company.
The Company does not believe that Associations will frequently exercise the termination right and that they typically will not be incented to do so. However, as indicated above, the Company believes that even if the termination provision alone did not constitute “effective control” within the meaning of ASC 860-10-40-5, the combined effect of the termination provision and other features of the contract and relationship does result in effective control.
| • | Material Decisions Regarding Collections Process. As stated above, Form A reserves to the Association the right to make material decisions regarding the collections process, and therefore under such contracts the Associations maintain |
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Ms. Kathryn McHale
<August 27, 2015>
Page 7
| effective control over the account. Under Form A, an Association has the right to control all settlements which result in an account being settled for less than a full payoff. Form A contracts pay proceeds of collection first to the Company for purchase price, interest, and late fees, then to the law firm legal fees and costs, then past due assessments owed to the Association. This places the Association in a first loss position. In order to protect the Association from settlements that only benefit the Company and the law firm, the Form A contract places the law firm under direct control of the Association. This gives the Association under a Form A contract control over settlements which effectively determines the payoff outcome and timing for the Company as well as the Association. As mentioned above, as to Form B, even though Form B does not grant Associations the right to control the collection process, other features of Form B and the relationship thereunder confer “effective control” upon the Association. |
| • | Levy and Collect Finance Charges, etc. For the information of the Staff, state statutes and the organizational documents of Associations (Articles, Bylaws, Declaration of Condominium or Conditions Covenants and Restrictions in the case of HOA’s) collectively afford Associations the right to levy and collect finance charges, late fees and other costs against unit owners with delinquent accounts. Specifically, in Florida, finance charges are authorized by statute at 18% per annum unless the governing documents state otherwise. Florida Statutes authorize charging late fees if late fees are adopted in the organizational documents. Legal fees and costs are specifically authorized by Florida Statutes. The charges for these amounts remain the property of the Associations, with the law firms acting on behalf of the Associations to collect these charges (and the Associations having the obligation to provide witnesses and other necessary evidence). The right to enforce and collect these amounts directly from the account debtors is not assigned to the Company since the Company typically would not have standing to appear in court to collect them from the account debtor. However, the Association assigns its future collection proceeds from those actions and pays those amounts to the Company once collected, with such payment being made through the law firm’s trust account per the Company’s contract with the Associations. |
Finance Receivables, page F-11
| 4. | We note your response and related changes to our comment 11. Please revise to explain how you determine that the uncollectibility of the receivable is confirmed. |
7
Ms. Kathryn McHale
<August 27, 2015>
Page 8
RESPONSE: Please be advised that the Company has revised the Registration Statement to explain how it determines that the uncollectibility of the receivable is confirmed. Please see Page F-12 of the Registration Statement. As detailed in the Registration Statement, the Company considers writing off a receivable when (i) a first mortgage holder who names the Association in a foreclosure suit takes title and satisfies an estoppel letter for amounts owed which are less than amounts the Company funded to the association; (ii) a tax deed is issued with insufficient excess proceeds to pay amounts the Company funded to the Association; or (iii) an Association settles an account for less than amounts the Company funded to the Association. Upon the occurrence of any of these events, the Company evaluates the potential recovery via a deficiency judgment against the prior owner and the ability to collect upon the deficiency judgment within the 20 year statute of limitations period or whether the deficiency judgment can be sold. Additionally, with New Neighbor Guaranty accounts and other accounts where the Company has purchased insurance, the Company will determine if after applying insurance proceeds any write offs are warranted. If the Company determines that collection through a deficiency judgment or sale of a deficiency judgment is not feasible, the Company writes off the unrecoverable receivable amount.
Note 9. Fair Value of Financial Instruments, page F-15
| 5. | We note your response to our comment 12. |
| • | You state that the valuation calculation assumes much smaller collection rates as receivables age. Please provide us the quarterly or annual collection rates actually used in the valuation calculation. |
RESPONSE: The Company refers the Staff to the supplemental narrative and sample workpaper from our independent third party valuation firm, Marshall & Stevens, attached to this letter as Exhibit A. The Company notes that the collection rates do decline somewhat as accounts age but believes that use of an average quarterly collection rate of 3% is a reasonable assumption for estimating the timing of future cash flows based on the information the Company is able to derive from its systems.
| • | Please provide us the information used to support the assertion that your historical quarterly collection rate has been 3% over an 8.5 year period. |
RESPONSE: The Company refers the Staff to the collection rate table attached as Exhibit B hereto showing the Company’s collection rates based on the monthly age of an account. This table reflects dates through June 30, 2015 and is similar to the table used for the valuation at December 31, 2014. Please be advised that this table reflects the average time elapsed between original funding and payoff for all units funded through June 30, 2015. The table does not show the average collection cycle for an average unit in dollar terms, as that information is not readily available, and total amount of funding does not directly correlate to future cash flows. Please be advised that this table pools the receivables to show what percentage the Company collects based on the number of units that could have historically reached that age, and the number units that were collected at that age. This table “pools” the units to ensure an accurate representation of collectability.
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Ms. Kathryn McHale
<August 27, 2015>
Page 9
| • | Please provide us a table detailing the actual quarterly collection rate for the past 12 quarters. |
RESPONSE: The Company refers the Staff to Exhibit C hereto for the requested schedule detailing the actual quarterly collection rate based on total units at the beginning of each quarter and units paid off during the quarter. The table does not show the average collection cycle for an average unit in dollar terms, as that information is not readily available. The Company has determined that looking at the receivables in total, as is presented in the requested table, accurately reflects the actual aging and collections of the Company’s receivables balance needed to do a valuation. This table is inhibited by the Company’s purchasing of new units, thus skewing the data depending on whether the Company purchased more or less accounts than were collected in that given period. For instance, if the Company purchased significantly more accounts than it collected, in a specified period of time, using the logic in Exhibit C, the Company would have a negative average collection percentage. Therefore, the Company believes that to accurately depict the collection rates, the accounts must be looked at in static pools as noted by the data utilized by our independent third party valuation specialist.
| • | Please note that ASC 820 requires a reporting entity to use the best information available including considering expectations about the timing of future cash flows. If there is variability in the collection of cash flows, (e.g. significantly greater cash flows are expected earlier in the receivables life), this variability should be considered in your fair value measurement. |
RESPONSE: Please be advised that the Company relied on the expertise of our independent third party valuation firm, Marshall & Stevens, which believed that using a 3% average quarterly collection rate was the best estimate to use based on the information available from our system. Management answered all questions from Marshall & Stevens to help them fully understand the Company’s business and the nature of the Company’s receivables, as well as provided all historical data the Company has in its system for their analysis. The Company believes that, based on the methodology implied by Marshall & Stevens, all requirements of ASC 820 have been fulfilled, as receivables were grouped together by similar age and cash flows were derived from these different aging buckets.
Exhibit 5.1 – Opinion of Foley Lardner LLP
| 6. | We note your response to comment 14 from our letter dated July 8, 2015; however, it does not appear that the requested revision was made to Exhibit 5.1. Please revise to opine that the warrants are a binding obligation of the company under the laws of Florida. |
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Ms. Kathryn McHale
<August 27, 2015>
Page 10
RESPONSE: Please be advised that Foley & Lardner LLP revised its Opinion to opine that the warrants are a binding obligation of the Company under the laws of the state of Florida. Please refer to the third and fourth paragraphs of the Opinion.
If you have any questions or comments regarding the foregoing, please feel free to contact me.
| Very truly yours,
|
| /s/ Curt P. Creely
|
| Curt P. Creely |
10
Exhibit A
to filing letter of LM Funding America, Inc.
|
August 21, 2015 |
One Tampa City Center | |
| Suite 3405 | ||
| 201 N. Franklin St. | ||
| Tampa, FL 33602
| ||
| 813.962.7888 | ||
| 813.963.2251 fax www.marshall-stevens.com | ||
|
Mr. Steve Weclew LM Funding, LLC 302 Knights Run Avenue Tampa, FL 33602 |
Dear Steve:
In regards to your request, we have responded to comment 5 of the Securities and Exchange Commission letter entitled Amendment No. 1 to Registration Statement on Form S-1, Filed August 7, 2015, File No. 333-205232.
Please find a sample work paper attached for the valuation of LM Funding, LLC’s (LMF) 2013 Standard Deal receivables (Receivables), as well as support for the assumed 3% quarterly collection rate. We assumed all collections to happen within an 8.5 year period based on data provided by and conversations held with LMF management. In the course of the valuation, we grouped the Receivables by age and used the following formula to calculate an expected net cash flow to LMF:
(Expected Value) * (Probability of Collection) * (Number of Units Outstanding)
The Expected Value was determined by a regression analysis of the historical median payout of accounts by age.
The Probability of Collection was determined by an equal probability of collection in future periods with an account having a maximum lifespan of 8.5 years. For example, an account that is 6 years old would have an estimated remaining life of 2.5 years, while an account that is 2.5 years old would have an estimated remaining life of 6 years. An account is expected to pay out at the ratio of:
1
Number of periods in estimated remaining lifes
We have attached worksheets highlighting our intermediate calculations whereby we grouped the accounts by age as the probability of collection is determined by the remaining estimated life of the account. We followed the guidance of FASB ASC 820 and used the best available information about the expectations of the timing of the future cash flows.
Sincerely,
MARSHALL & STEVENS INCORPORATED
LMF Supporting Schedules
Standard Deal
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| Time Outstanding |
0.00 | 0.25 | 0.50 | 0.75 | 1.00 | 1.25 | 1.50 | 1.75 | 2.00 | 2.25 | 2.50 | 2.75 | 3.00 | 3.25 | 3.50 | 3.75 | 4.00 | 4.25 | 4.50 | 4.75 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Trend Payout (LINEAR) |
1304 | 1534 | 1763 | 1993 | 2222 | 2451 | 2681 | 2910 | 3140 | 3369 | 3598 | 3828 | 4057 | 4287 | 4516 | 4745 | 4975 | 5204 | 5434 | 5663 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Outstanding Accounts at age |
3 | — | — | — | 15 | 149 | 380 | 185 | 155 | 208 | 311 | 369 | 324 | 356 | 354 | 280 | 226 | 180 | 227 | 110 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Age Group |
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| 12/31/2014 | 3/31/2015 | 6/30/2015 | 9/30/2015 | 12/31/2015 | 3/31/2016 | 6/30/2016 | 9/30/2016 | 12/31/2016 | 3/31/2017 | 6/30/2017 | 9/30/2017 | 12/31/2017 | 3/31/2018 | 6/30/2018 | 9/30/2018 | 12/31/2018 | 3/31/2019 | 6/30/2019 | 9/30/2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 0.00 |
115 | 135 | 156 | 176 | 196 | 216 | 237 | 257 | 277 | 297 | 317 | 338 | 358 | 378 | 398 | 419 | 439 | 459 | 479 | 500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 0.25 |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 0.50 |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 0.75 |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1.00 |
1,111 | 1,226 | 1,340 | 1,455 | 1,570 | 1,684 | 1,799 | 1,914 | 2,029 | 2,143 | 2,258 | 2,373 | 2,487 | 2,602 | 2,717 | 2,831 | 2,946 | 3,061 | 3,176 | 3,290 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1.25 |
12,595 | 13,773 | 14,952 | 16,131 | 17,309 | 18,488 | 19,667 | 20,845 | 22,024 | 23,203 | 24,381 | 25,560 | 26,738 | 27,917 | 29,096 | 30,274 | 31,453 | 32,632 | 33,810 | 34,989 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1.50 |
36,381 | 39,494 | 42,608 | 45,721 | 48,834 | 51,948 | 55,061 | 58,174 | 61,288 | 64,401 | 67,514 | 70,627 | 73,741 | 76,854 | 79,967 | 83,081 | 86,194 | 89,307 | 92,421 | 95,534 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1.75 |
19,940 | 21,512 | 23,083 | 24,655 | 26,227 | 27,799 | 29,371 | 30,942 | 32,514 | 34,086 | 35,658 | 37,230 | 38,802 | 40,373 | 41,945 | 43,517 | 45,089 | 46,661 | 48,233 | 49,804 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2.00 |
18,716 | 20,084 | 21,452 | 22,819 | 24,187 | 25,554 | 26,922 | 28,289 | 29,657 | 31,025 | 32,392 | 33,760 | 35,127 | 36,495 | 37,863 | 39,230 | 40,598 | 41,965 | 43,333 | 44,700 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2.25 |
28,029 | 29,938 | 31,847 | 33,755 | 35,664 | 37,572 | 39,481 | 41,390 | 43,298 | 45,207 | 47,116 | 49,024 | 50,933 | 52,841 | 54,750 | 56,659 | 58,567 | 60,476 | 62,385 | 64,293 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2.50 |
46,628 | 49,601 | 52,574 | 55,546 | 58,519 | 61,492 | 64,464 | 67,437 | 70,410 | 73,382 | 76,355 | 79,327 | 82,300 | 85,273 | 88,245 | 91,218 | 94,191 | 97,163 | 100,136 | 103,109 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2.75 |
61,410 | 65,090 | 68,771 | 72,451 | 76,132 | 79,812 | 83,492 | 87,173 | 90,853 | 94,534 | 98,214 | 101,894 | 105,575 | 109,255 | 112,936 | 116,616 | 120,296 | 123,977 | 127,657 | 131,337 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3.00 |
59,750 | 63,129 | 66,507 | 69,886 | 73,264 | 76,643 | 80,021 | 83,400 | 86,778 | 90,156 | 93,535 | 96,913 | 100,292 | 103,670 | 107,049 | 110,427 | 113,806 | 117,184 | 120,563 | 123,941 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3.25 |
72,667 | 76,556 | 80,445 | 84,333 | 88,222 | 92,111 | 96,000 | 99,889 | 103,778 | 107,667 | 111,556 | 115,445 | 119,334 | 123,222 | 127,111 | 131,000 | 134,889 | 138,778 | 142,667 | 146,556 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3.50 |
79,932 | 83,992 | 88,053 | 92,113 | 96,173 | 100,234 | 104,294 | 108,355 | 112,415 | 116,476 | 120,536 | 124,596 | 128,657 | 132,717 | 136,778 | 140,838 | 144,898 | 148,959 | 153,019 | 157,080 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3.75 |
69,931 | 73,312 | 76,692 | 80,073 | 83,454 | 86,834 | 90,215 | 93,596 | 96,976 | 100,357 | 103,738 | 107,118 | 110,499 | 113,880 | 117,260 | 120,641 | 124,022 | 127,402 | 130,783 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4.00 |
62,460 | 65,341 | 68,221 | 71,101 | 73,982 | 76,862 | 79,742 | 82,622 | 85,503 | 88,383 | 91,263 | 94,143 | 97,024 | 99,904 | 102,784 | 105,664 | 108,545 | 111,425 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4.25 |
55,103 | 57,532 | 59,960 | 62,389 | 64,818 | 67,247 | 69,676 | 72,105 | 74,534 | 76,963 | 79,392 | 81,821 | 84,250 | 86,679 | 89,108 | 91,537 | 93,966 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4.50 |
77,088 | 80,343 | 83,597 | 86,852 | 90,107 | 93,361 | 96,616 | 99,871 | 103,125 | 106,380 | 109,635 | 112,889 | 116,144 | 119,398 | 122,653 | 125,908 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4.75 |
41,528 | 43,210 | 44,893 | 46,575 | 48,257 | 49,940 | 51,622 | 53,304 | 54,986 | 56,669 | 58,351 | 60,033 | 61,715 | 63,398 | 65,080 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5.00 |
47,139 | 48,974 | 50,809 | 52,644 | 54,480 | 56,315 | 58,150 | 59,985 | 61,820 | 63,656 | 65,491 | 67,326 | 69,161 | 70,996 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5.25 |
23,074 | 23,939 | 24,804 | 25,668 | 26,533 | 27,398 | 28,262 | 29,127 | 29,992 | 30,856 | 31,721 | 32,586 | 33,450 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5.50 |
34,931 | 36,193 | 37,455 | 38,716 | 39,978 | 41,240 | 42,501 | 43,763 | 45,025 | 46,287 | 47,548 | 48,810 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5.75 |
54,439 | 56,337 | 58,235 | 60,132 | 62,030 | 63,928 | 65,826 | 67,723 | 69,621 | 71,519 | 73,417 | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6.00 |
16,344 | 16,894 | 17,445 | 17,996 | 18,546 | 19,097 | 19,647 | 20,198 | 20,748 | 21,299 | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6.25 |
22,682 | 23,422 | 24,161 | 24,900 | 25,639 | 26,378 | 27,117 | 27,857 | 28,596 | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Net Cash Flow To LMF |
941,994 | 990,026 | 1,038,058 | 1,086,089 | 1,134,121 | 1,182,152 | 1,230,184 | 1,278,216 | 1,326,247 | 1,344,944 | 1,370,387 | 1,341,814 | 1,336,587 | 1,345,854 | 1,315,740 | 1,289,861 | 1,199,898 | 1,139,449 | 1,058,661 | 955,134 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Discount Factor |
1.0000 | 0.9836 | 0.9674 | 0.9515 | 0.9359 | 0.9205 | 0.9054 | 0.8905 | 0.8759 | 0.8615 | 0.8474 | 0.8334 | 0.8197 | 0.8063 | 0.7930 | 0.7800 | 0.7672 | 0.7546 | 0.7422 | 0.7300 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Present Value of Cash Flows |
941,994 | 973,762 | 1,004,232 | 1,033,438 | 1,061,414 | 1,088,192 | 1,113,803 | 1,138,279 | 1,161,650 | 1,158,675 | 1,161,200 | 1,118,311 | 1,095,654 | 1,085,128 | 1,043,420 | 1,006,093 | 920,548 | 859,811 | 785,727 | 697,245 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LMF Supporting Schedules
Standard Deal
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| Time Outstanding |
5.00 | 5.25 | 5.50 | 5.75 | 6.00 | 6.25 | 6.50 | 6.75 | 7.00 | 7.25 | 7.50 | 7.75 | 8.00 | 8.25 | ||||||||||||||||||||||||||||||||||||||||||
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| Trend Payout (LINEAR) |
5892 | 6122 | 6351 | 6581 | 6810 | 7039 | 7269 | 7498 | 7728 | 7957 | 8186 | 8416 | 8645 | 8875 | ||||||||||||||||||||||||||||||||||||||||||
| Outstanding Accounts at age |
112 | 49 | 66 | 91 | 24 | 29 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Age Group |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12/31/2019 | 3/31/2020 | 6/30/2020 | 9/30/2020 | 12/31/2020 | 3/31/2021 | 6/30/2021 | 9/30/2021 | 12/31/2021 | 3/31/2022 | 6/30/2022 | 9/30/2022 | 12/31/2022 | 3/31/2023 | |||||||||||||||||||||||||||||||||||||||||||
| 0.00 |
520 | 540 | 560 | 581 | 601 | 621 | 641 | 662 | 682 | 702 | 722 | 743 | 763 | 783 | ||||||||||||||||||||||||||||||||||||||||||
| 0.25 |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 0.50 |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 0.75 |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 1.00 |
3,405 | 3,520 | 3,634 | 3,749 | 3,864 | 3,978 | 4,093 | 4,208 | 4,323 | 4,437 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 1.25 |
36,168 | 37,346 | 38,525 | 39,704 | 40,882 | 42,061 | 43,240 | 44,418 | 45,597 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 1.50 |
98,647 | 101,761 | 104,874 | 107,987 | 111,100 | 114,214 | 117,327 | 120,440 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 1.75 |
51,376 | 52,948 | 54,520 | 56,092 | 57,663 | 59,235 | 60,807 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 2.00 |
46,068 | 47,436 | 48,803 | 50,171 | 51,538 | 52,906 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 2.25 |
66,202 | 68,110 | 70,019 | 71,928 | 73,836 | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 2.50 |
106,081 | 109,054 | 112,027 | 114,999 | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 2.75 |
135,018 | 138,698 | 142,379 | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 3.00 |
127,319 | 130,698 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 3.25 |
150,445 | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 3.50 |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 3.75 |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 4.00 |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 4.25 |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 4.50 |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 4.75 |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 5.00 |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 5.25 |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 5.50 |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 5.75 |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 6.00 |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 6.25 |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
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| Net Cash Flow To LMF |
821,249 | 690,111 | 575,341 | 445,210 | 339,485 | 273,015 | 226,108 | 169,728 | 50,601 | 5,139 | 722 | 743 | 763 | 783 | ||||||||||||||||||||||||||||||||||||||||||
| Discount Factor |
0.7180 | 0.7062 | 0.6946 | 0.6832 | 0.6720 | 0.6609 | 0.6501 | 0.6394 | 0.6289 | 0.6186 | 0.6084 | 0.5984 | 0.5886 | 0.5789 | ||||||||||||||||||||||||||||||||||||||||||
| Present Value of Cash Flows |
589,661 | 487,363 | 399,637 | 304,166 | 228,126 | 180,446 | 146,988 | 108,524 | 31,823 | 3,179 | 439 | 444 | 449 | 453 | ||||||||||||||||||||||||||||||||||||||||||
| Month |
— | 1 | 2 | 3 | 4 | |||||||||||||||
| Accounts Paid off |
155 | 570 | 477 | 439 | 391 | |||||||||||||||
| Accounts in Pool |
11,494 | 11,494 | 11,473 | 11,409 | 11,393 | |||||||||||||||
| Payoff Percent |
1.35 | % | 4.96 | % | 4.16 | % | 3.85 | % | 3.43 | % |
| Month | Qtr | |||||||
| Average Collection (Rounded) |
1.0 | % | 3.1 | % | ||||
| Month |
5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | ||||||||||||||||||||||||
| Accounts Paid off |
347 | 275 | 301 | 222 | 227 | 207 | 190 | 159 | ||||||||||||||||||||||||
| Accounts in Pool |
11,261 | 11,227 | 11,196 | 11,171 | 11,089 | 11,063 | 11,013 | 10,937 | ||||||||||||||||||||||||
| Payoff Percent |
3.08 | % | 2.45 | % | 2.69 | % | 1.99 | % | 2.05 | % | 1.87 | % | 1.73 | % | 1.45 | % |
| Month |
13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 | ||||||||||||||||||||||||
| Accounts Paid off |
201 | 154 | 143 | 168 | 177 | 148 | 124 | 142 | ||||||||||||||||||||||||
| Accounts in Pool |
10,889 | 10,804 | 10,723 | 10,673 | 10,648 | 10,600 | 10,566 | 10,515 | ||||||||||||||||||||||||
| Payoff Percent |
1.85 | % | 1.43 | % | 1.33 | % | 1.57 | % | 1.66 | % | 1.40 | % | 1.17 | % | 1.35 | % |
| Month |
21 | 22 | 23 | 24 | 25 | 26 | 27 | 28 | ||||||||||||||||||||||||
| Accounts Paid off |
164 | 124 | 125 | 125 | 124 | 116 | 116 | 125 | ||||||||||||||||||||||||
| Accounts in Pool |
10,495 | 10,385 | 10,333 | 10,281 | 10,217 | 10,072 | 9,763 | 9,677 | ||||||||||||||||||||||||
| Payoff Percent |
1.56 | % | 1.19 | % | 1.21 | % | 1.22 | % | 1.21 | % | 1.15 | % | 1.19 | % | 1.29 | % |
| Month |
29 | 30 | 31 | 32 | 33 | 34 | 35 | 36 | 37 | |||||||||||||||||||||||||||
| Accounts Paid off |
102 | 88 | 96 | 97 | 89 | 87 | 86 | 94 | 73 | |||||||||||||||||||||||||||
| Accounts in Pool |
9,630 | 9,529 | 9,429 | 9,350 | 9,301 | 9,171 | 9,048 | 8,981 | 8,825 | |||||||||||||||||||||||||||
| Payoff Percent |
1.06 | % | 0.92 | % | 1.02 | % | 1.04 | % | 0.96 | % | 0.95 | % | 0.95 | % | 1.05 | % | 0.83 | % |
| Month |
38 | 39 | 40 | 41 | 42 | 43 | 44 | 45 | 46 | |||||||||||||||||||||||||||
| Accounts Paid off |
91 | 92 | 73 | 59 | 86 | 85 | 52 | 62 | 46 | |||||||||||||||||||||||||||
| Accounts in Pool |
8,562 | 8,427 | 8,245 | 8,055 | 7,824 | 7,554 | 7,305 | 7,097 | 6,918 | |||||||||||||||||||||||||||
| Payoff Percent |
1.06 | % | 1.09 | % | 0.89 | % | 0.73 | % | 1.10 | % | 1.13 | % | 0.71 | % | 0.87 | % | 0.66 | % |
| Month |
47 | 48 | 49 | 50 | 51 | 52 | 53 | 54 | 55 | |||||||||||||||||||||||||||
| Accounts Paid off |
58 | 39 | 49 | 48 | 44 | 41 | 26 | 23 | 26 | |||||||||||||||||||||||||||
| Accounts in Pool |
6,712 | 6,372 | 6,097 | 5,766 | 5,397 | 5,225 | 5,088 | 4,772 | 4,551 | |||||||||||||||||||||||||||
| Payoff Percent |
0.86 | % | 0.61 | % | 0.80 | % | 0.83 | % | 0.82 | % | 0.78 | % | 0.51 | % | 0.48 | % | 0.57 | % |
| Month |
56 | 57 | 58 | 59 | 60 | 61 | 62 | 63 | 64 | |||||||||||||||||||||||||||
| Accounts Paid off |
25 | 26 | 15 | 16 | 18 | 20 | 5 | 11 | 7 | |||||||||||||||||||||||||||
| Accounts in Pool |
4,453 | 4,242 | 3,971 | 3,714 | 3,492 | 3,360 | 3,108 | 2,796 | 2,585 | |||||||||||||||||||||||||||
| Payoff Percent |
0.56 | % | 0.61 | % | 0.38 | % | 0.43 | % | 0.52 | % | 0.60 | % | 0.16 | % | 0.39 | % | 0.27 | % |
| Month |
65 | 66 | 67 | 68 | 69 | 70 | 71 | 72 | 73 | |||||||||||||||||||||||||||
| Accounts Paid off |
10 | 13 | 5 | 4 | 5 | 4 | 4 | 2 | 6 | |||||||||||||||||||||||||||
| Accounts in Pool |
2,434 | 2,342 | 2,105 | 1,929 | 1,744 | 1,560 | 1,281 | 1,081 | 1,019 | |||||||||||||||||||||||||||
| Payoff Percent |
0.41 | % | 0.56 | % | 0.24 | % | 0.21 | % | 0.29 | % | 0.26 | % | 0.31 | % | 0.19 | % | 0.59 | % |
| Month |
74 | 75 | 76 | 77 | 78 | 79 | 80 | 81 | 82 | |||||||||||||||||||||||||||
| Accounts Paid off |
2 | 4 | 3 | 4 | 1 | 2 | — | — | — | |||||||||||||||||||||||||||
| Accounts in Pool |
956 | 888 | 758 | 586 | 534 | 416 | 287 | 273 | 262 | |||||||||||||||||||||||||||
| Payoff Percent |
0.21 | % | 0.45 | % | 0.40 | % | 0.68 | % | 0.19 | % | 0.48 | % | 0.00 | % | 0.00 | % | 0.00 | % |
| Month |
83 | 84 | 85 | 86 | ||||||||||||
| Accounts Paid off |
— | — | — | — | ||||||||||||
| Accounts in Pool |
178 | 45 | 44 | 42 | ||||||||||||
| Payoff Percent |
0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % |
Exhibit B
to filing letter of LM Funding America, Inc.
LM Funding
Unit Aging and
Payoff Percentage
Workpaper
| Months Held |
0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | ||||||||||||||||||||||||||||||||||||
| Number Paid |
155 | 725 | 1201 | 1628 | 2012 | 2333 | 2600 | 2884 | 3092 | 3291 | 3484 | 3648 | ||||||||||||||||||||||||||||||||||||
| Number Active |
11339 | 10769 | 10272 | 9781 | 9379 | 8926 | 8627 | 8312 | 8079 | 7798 | 7579 | 7365 | ||||||||||||||||||||||||||||||||||||
| Total Accounts |
11494 | 11494 | 11473 | 11409 | 11391 | 11259 | 11227 | 11196 | 11171 | 11089 | 11063 | 11013 | ||||||||||||||||||||||||||||||||||||
| % of units paid off by this month |
1.3 | % | 5.0 | % | 4.2 | % | 3.8 | % | 3.4 | % | 3.1 | % | 2.4 | % | 2.6 | % | 1.9 | % | 2.0 | % | 1.8 | % | 1.6 | % | ||||||||||||||||||||||||
| Average Per Month |
1.0 | % | ||
| Average Per Quarter |
2.9 | % | ||
| Average Per Quarter (Rouneded) |
3.0 | % |
LM Funding
Unit Aging and
Payoff Percentage
Workpaper
| Months Held |
12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 | 21 | 22 | 23 | ||||||||||||||||||||||||||||||||||||
| Number Paid |
3758 | 3937 | 4058 | 4160 | 4298 | 4463 | 4581 | 4686 | 4792 | 4943 | 5003 | 5092 | ||||||||||||||||||||||||||||||||||||
| Number Active |
7176 | 6952 | 6746 | 6563 | 6375 | 6185 | 6019 | 5880 | 5723 | 5552 | 5382 | 5241 | ||||||||||||||||||||||||||||||||||||
| Total Accounts |
10934 | 10889 | 10804 | 10723 | 10673 | 10648 | 10600 | 10566 | 10515 | 10495 | 10385 | 10333 | ||||||||||||||||||||||||||||||||||||
| % of units paid off by this month |
1.2 | % | 1.8 | % | 1.4 | % | 1.2 | % | 1.5 | % | 1.6 | % | 1.3 | % | 1.1 | % | 1.2 | % | 1.5 | % | 1.1 | % | 1.1 | % | ||||||||||||||||||||||||
LM Funding
Unit Aging and
Payoff Percentage
Workpaper
| Months Held |
24 | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 | 33 | 34 | 35 | 36 | |||||||||||||||||||||||||||||||||||||||
| Number Paid |
5194 | 5263 | 5285 | 5221 | 5298 | 5367 | 5376 | 5421 | 5470 | 5521 | 5527 | 5527 | 5569 | |||||||||||||||||||||||||||||||||||||||
| Number Active |
5087 | 4949 | 4785 | 4511 | 4379 | 4263 | 4145 | 4008 | 3880 | 3780 | 3644 | 3521 | 3402 | |||||||||||||||||||||||||||||||||||||||
| Total Accounts |
10281 | 10212 | 10070 | 9732 | 9677 | 9630 | 9521 | 9429 | 9350 | 9301 | 9171 | 9048 | 8971 | |||||||||||||||||||||||||||||||||||||||
| % of units paid off by this month |
1.2 | % | 1.0 | % | 0.9 | % | 1.2 | % | 1.1 | % | 1.0 | % | 0.7 | % | 1.0 | % | 1.0 | % | 0.9 | % | 0.9 | % | 0.8 | % | 1.0 | % | ||||||||||||||||||||||||||
LM Funding
Unit Aging and
Payoff Percentage
Workpaper
| Months Held |
37 | 38 | 39 | 40 | 41 | 42 | 43 | 44 | 45 | 46 | 47 | 48 | 49 | |||||||||||||||||||||||||||||||||||||||
| Number Paid |
5538 | 5463 | 5478 | 5419 | 5346 | 5283 | 5162 | 5039 | 4949 | 4874 | 4769 | 4551 | 4387 | |||||||||||||||||||||||||||||||||||||||
| Number Active |
3287 | 3099 | 2949 | 2826 | 2709 | 2541 | 2392 | 2258 | 2148 | 2044 | 1943 | 1821 | 1710 | |||||||||||||||||||||||||||||||||||||||
| Total Accounts |
8825 | 8562 | 8427 | 8245 | 8055 | 7824 | 7554 | 7297 | 7097 | 6918 | 6712 | 6372 | 6097 | |||||||||||||||||||||||||||||||||||||||
| % of units paid off by this month |
0.7 | % | 1.1 | % | 1.2 | % | 0.7 | % | 0.6 | % | 1.2 | % | 0.8 | % | 0.7 | % | 0.7 | % | 0.7 | % | 0.6 | % | 0.4 | % | 0.5 | % | ||||||||||||||||||||||||||
LM Funding
Unit Aging and
Payoff Percentage
Workpaper
| Months Held |
50 | 51 | 52 | 53 | 54 | 55 | 56 | 57 | 58 | 59 | 60 | 61 | 62 | |||||||||||||||||||||||||||||||||||||||
| Number Paid |
4018 | 3923 | 3844 | 3737 | 3457 | 3405 | 3347 | 3200 | 2993 | 2781 | 2652 | 2573 | 2374 | |||||||||||||||||||||||||||||||||||||||
| Number Active |
1551 | 1456 | 1381 | 1311 | 1208 | 1146 | 1106 | 1038 | 952 | 885 | 837 | 787 | 734 | |||||||||||||||||||||||||||||||||||||||
| Total Accounts |
5569 | 5379 | 5225 | 5048 | 4665 | 4551 | 4453 | 4238 | 3945 | 3666 | 3489 | 3360 | 3108 | |||||||||||||||||||||||||||||||||||||||
| % of units paid off by this month |
0.2 | % | 0.8 | % | 0.6 | % | 0.5 | % | 0.1 | % | 0.7 | % | 0.3 | % | 0.3 | % | 0.4 | % | 0.0 | % | 0.2 | % | 0.6 | % | -0.2 | % | ||||||||||||||||||||||||||
LM Funding
Unit Aging and
Payoff Percentage
Workpaper
| Months Held |
63 | 64 | 65 | 66 | 67 | 68 | 69 | 70 | 71 | 72 | 73 | 74 | 75 | |||||||||||||||||||||||||||||||||||||||
| Number Paid |
2170 | 2005 | 1900 | 1846 | 1654 | 1513 | 1369 | 1234 | 1023 | 837 | 796 | 748 | 695 | |||||||||||||||||||||||||||||||||||||||
| Number Active |
626 | 580 | 524 | 496 | 438 | 414 | 375 | 326 | 258 | 235 | 223 | 208 | 193 | |||||||||||||||||||||||||||||||||||||||
| Total Accounts |
2796 | 2585 | 2424 | 2342 | 2092 | 1927 | 1744 | 1560 | 1281 | 1072 | 1019 | 956 | 888 | |||||||||||||||||||||||||||||||||||||||
| % of units paid off by this month |
1.2 | % | 0.0 | % | 0.8 | % | 0.4 | % | 0.2 | % | -0.5 | % | 0.0 | % | 0.6 | % | 0.8 | % | -1.8 | % | 0.0 | % | 0.1 | % | 0.0 | % | ||||||||||||||||||||||||||
LM Funding
Unit Aging and
Payoff Percentage
Workpaper
| Months Held |
76 | 77 | 78 | 79 | 80 | 81 | 82 | 83 | 84 | 85 | 86 | |||||||||||||||||||||||||||||||||
| Number Paid |
586 | 454 | 418 | 328 | 232 | 221 | 213 | 150 | 38 | 37 | 35 | |||||||||||||||||||||||||||||||||
| Number Active |
172 | 132 | 115 | 88 | 55 | 52 | 49 | 28 | 7 | 7 | 7 | |||||||||||||||||||||||||||||||||
| Total Accounts |
758 | 586 | 533 | 416 | 287 | 273 | 262 | 178 | 45 | 44 | 42 | |||||||||||||||||||||||||||||||||
| % of units paid off by this month |
-1.0 | % | 0.2 | % | 0.9 | % | 0.4 | % | 2.0 | % | 0.1 | % | 0.3 | % | 3.0 | % | 0.2 | % | -0.4 | % | -0.8 | % | ||||||||||||||||||||||
Exhibit C
to filing letter of LM Funding America, Inc.
| Quarter Ending |
Active At Start Of Quarter | Collected In Quarter | Percent Collected | |||||||||
| 3/31/2012 |
4304 | 353 | 8.2 | |||||||||
| 6/30/2012 |
4668 | 424 | 9.08 | |||||||||
| 9/30/2012 |
4806 | 374 | 7.78 | |||||||||
| 12/31/2012 |
4949 | 358 | 7.23 | |||||||||
| 3/31/2013 |
4899 | 330 | 6.74 | |||||||||
| 6/30/2013 |
4839 | 412 | 8.51 | |||||||||
| 9/30/2013 |
4682 | 432 | 9.23 | |||||||||
| 12/31/2013 |
4574 | 334 | 7.3 | |||||||||
| 3/31/2014 |
4433 | 371 | 8.37 | |||||||||
| 6/30/2014 |
4177 | 444 | 10.63 | |||||||||
| 9/30/2014 |
3874 | 466 | 12.03 | |||||||||
| 12/31/2014 |
3586 | 397 | 11.07 | |||||||||
| 3/31/2015 |
3327 | 315 | 9.47 | |||||||||
| 6/30/2015 |
3108 | 408 | 13.13 | |||||||||
Exhibit D
to filing letter of LM Funding America, Inc.
LM FUNDING, LLC
DELINQUENT ASSESSMENT PROCEEDS
PURCHASE AGREEMENT
| PARTIES: | DATE: |
LM FUNDING, LLC
301 W. Platt St. #375
Tampa, FL 33606
ASSOCIATION:
XXXXXXXXXXX
BACKGROUND
Association is a not for profit condominium owners’ association. Association assesses its owners for common expenses. Some owners have failed to pay assessments in accordance with Association’s governing rules. Association has the right to secure payment through a lien of an owner’s condominium unit which secures Association’s assessment along with interest, administrative fees, and costs of collection. LMF pays Associations for an assignment of an Association’s lien collection proceeds. LMF, at its expense, collects an Association’s delinquent assessments, accrued late interest and administrative fees, and exercises its foreclosure rights. LMF seeks a return on its investment by collecting and keeping the late interest payments and administrative late fee payments and through an option to bid for title of a condominium in the event the Association forecloses. The Association benefits by increasing its cash flows and eliminating the cost and effort required to collect delinquent assessments through the foreclosure process. LMF must limit amounts funded to amounts it can collect in the event of a first mortgage foreclosure (6 months past due or 1% of mortgage amount). Generally, LMF funds a percentage of this limited amount. Upon collection, LMF retains the late interest, administrative late fees, costs, attorney’s fees, and the purchase price paid by LMF. LMF pays the balance of all delinquent assessments collected to the Association as further described in this Agreement.
| 1 | ||||
| Association Initial | LMF Initial |
DEFINITIONS:
“Assessments” means regular, and not special, charges for common expenses of Association’s condominium which are regularly assessed against the unit owner but not including additional charges for interest, administrative fees, costs, and attorney’s fees.
“Association” means the not for profit condominium owners’ association listed as a party to this agreement and its agents and representatives including its Management Company.
“Collection Proceeds” means any amount recovered through any means including payment plans or tenant payors pursuant to Florida Statute §718.116(11).
“Delinquent Assessments” means for each past due Assessment pertaining to a Delinquent Unit set forth on the Schedule of Assignments, the proceeds from, (a) the past due Assessment, (b) interest, administrative fees, costs and attorney’s fees chargeable thereon by Association as described in Association’s Declaration, (c) all accelerated Assessments charged to a Delinquent Unit, (d) any other recovery arising from Association’s lien, or future lien, against a Delinquent Unit, and (e) any recovery from the owner of a Delinquent Unit.
“Delinquent Unit” means a unit of the condominium which owes past due Assessments.
“LMF” means LM Funding, LLC, a Florida limited liability company and its assigns.
“Origination Fee” means 5.0000% of the Purchase Price paid on each Schedule of Assignments.
“Purchase Price” means the initial amount paid by LMF to Association for Delinquent Assessments set forth on the Schedule of Assignments which shall be the sum of past due Assessments charged to a Delinquent Unit not to exceed the lesser of (i) the sum of six (6) months Assessments, or (ii) one percent (1%) of the original principal balance of the first mortgage recorded against a Delinquent Unit.
“Pre-Existing Legal Fees” means any legal fees paid by Association for the collection of delinquent assessments prior to assignment of a Delinquent Assessment to LMF.
“Retainage” means the sum of all past due or accelerated Assessments for a Delinquent Unit less the Purchase Price.
“Schedule of Assignments” means a list of Delinquent Units and Delinquent Assessments whose proceeds Association wishes to sell and assign to LMF and LMF agrees to purchase pursuant to this Agreement.
| 2 | ||||
| Association Initial | LMF Initial |
1. Offer and Acceptance. During the term of this Agreement, Association will have the right to offer and LMF will accept an assignment of proceeds of Delinquent Assessments. LMF will purchase all Delinquent Assessments for any Delinquent Unit for the Purchase Price.
2. Purchase Price Payment. Within one calendar week of delivery by Association of due diligence information set forth in Schedule 1 attached hereto, LMF will prepare a Schedule of Assignments to this Agreement setting forth Delinquent Assessments assigned and the Purchase Price.
3. Allocation of Proceeds. LMF shall apply the Collection Proceeds of the Delinquent Assessments received for each Delinquent Unit as follows:
(a) First, to LMF, (i) any interest, (ii) administrative late fees, (iii) costs and (iv) attorney’s fees accrued or incurred upon all or any portion of the Delinquent Assessment(s);
(b) Second, to LMF the Purchase Price;
(c) Third, to LMF, fifty percent (50%), and Association, fifty percent (50%), of Pre-Existing Legal Fees subsequently collected by LMF; and
(d) Fourth, to Association 100% of all Retainage.
LMF shall remit all amounts owed to Association by the 15th day of the month following collection. Upon payment in full for a Delinquent Unit’s Delinquent Assessment(s), LM shall record a satisfaction of lien, if necessary, and re-assign all rights relating to the Delinquent Unit to Association.
4. Attorney in Fact — Power of Attorney. For the limited purposes of this Agreement, Association hereby constitutes and appoints LMF to represent Association in collection of Delinquent Assessments and to distribute the proceeds pursuant to the terms of this Agreement. Association authorizes LMF to (i) engage Business Law Group, P.A. (“BLG”) and other legal counsel to act upon behalf of Association as attorney in fact for Association and Association acknowledges, accepts, and waives all conflicts if BLG also represents other condominium or homeowner associations within or superior to Association; (ii) issue invoices for Delinquent Assessments and collect, receive and deposit the payments thereon; (iii) accelerate payments and file liens and foreclosure actions against a Delinquent Unit for Delinquent Assessment(s); (iv) file civil suit against the Delinquent Unit owners for collection of Delinquent Assessments; (v) substitute counsel on behalf of the association; and (vi) enforce all other rights of Association with respect to the collection of Delinquent Assessment granted to Association by Florida Law, the Association’s Declaration, Articles, By-Laws or otherwise including attesting
| 3 | ||||
| Association Initial | LMF Initial |
via sworn affidavit to the correctness of amounts due and owing. LMF shall advance any and all attorneys’ fees, court costs, copy costs, postage, lien recording fees or other fees and costs incurred in connection with collecting upon any Delinquent Assessment which shall be recoverable by LMF pursuant to Section 3 of this Agreement. BLG will seek full payoffs on all LMF accounts and will not settle any account for less than the full amount due under Section 718.116, Florida Statutes, without the express written consent of Association. Should Association request Business Law Group to perform other services, such as attending board meetings and rendering advice unrelated to collections, Association shall be responsible for these legal fees. Association shall be liable for filing fees and service of process costs in the event Association orders a foreclosure action without LMF’s consent.
Association further agrees and shall direct its Management Company to cooperate with LMF’s efforts to collect Delinquent Assessments by providing reasonably requested information, executing court documents necessary to protect Association’s rights in the collection of Delinquent Assessments, providing an officer of Association for testimony or other purposes, and endorsing checks made payable to Association for Delinquent Assessments so that LMF may apply and divide them pursuant to this Agreement. Any and all Management Company charges are the sole responsibility of Association. Association shall note all assignments of proceeds from Delinquent Assessments to LMF upon its books and records of account. Association shall issue “coupon stop pay” instructions to its bank on all Delinquent Units funded by LMF. LMF shall have the right to file a UCC-1 to perfect its security interest upon amounts owed to LMF held in Association’s accounts.
Association has designated this board member as its Designated Member to communicate directly with LMF:
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Association will promptly notify LMF of any change of Designated Member or Management Company.
5. Foreclosure. During the time a foreclosure is pending and thereafter in the event the Association takes title to a Delinquent Unit, at the request of LMF, Association will exercise its rights set forth in its Declaration and ask a court to appoint a receiver to collect any rents being paid upon the Delinquent Unit in foreclosure. Rents collected shall be applied to Delinquent Assessments in accordance with Section 3. In the event
| 4 | ||||
| Association Initial | LMF Initial |
collection of a Delinquent Assessment results in the Unit being sold in a foreclosure auction, LMF shall have the right to bid for the Delinquent Unit as attorney in fact for Association applying amounts owed for the Delinquent Assessment of the Delinquent Unit to the foreclosure price as well as any additional funds that LMF, in its sole discretion, decides to pay. If a foreclosure auction for a Delinquent Unit results in the Association taking title to the Delinquent Unit, LMF in its sole discretion may direct the Association to immediately quit claim title of the Unit to LMF, and at LMF’s direction the Association shall immediately quit claim title of the unit to LMF. After quit claim of a Delinquent Unit from Association to LMF, LMF shall pay all future assessments on a current basis. Association shall permit LMF to lease all Units purchased by LMF pursuant to this section in a manner consistent with leases permitted under Association’s Declaration and By-laws. Proceeds collected from the rental or sale of the unit shall be applied pursuant to section 3 of this agreement with any additional funds paid by LMF to purchase the unit added to the amounts distributed to LMF in section 3(b). LMF agrees to advise the Association of all material terms of its leases and all such leases shall comply with Association’s lawful restrictions regarding use of Units, including, but not limited to restrictions regarding pets, motor vehicles, motorcycles, antennae, satellite dishes, patio furniture, barbeques, and the like.
6. LMF Reports. LMF shall provide monthly Status reports to Association of all Delinquent Assessments detailing outstanding balances. Upon request from Association’s Designated Member, LMF will provide Association with statement of accounts for any Delinquent Unit.
7. Mistakes. LMF’s purchase of the proceeds of a Delinquent Assessment is non-recourse to Association except in the event of a Mistake made by Association. Mistake shall be defined as when LMF reasonably determines it has been unable to collect a Delinquent Assessment because:
(i) A Delinquent Owner has proved payment to Association was made prior to assignment of proceeds to LMF;
(ii) Association has supplied materially inaccurate information with respect to the Delinquent Assessment, Delinquent Unit, or Delinquent Unit Owner that results in a lapse or violation of a statutory deadline, failure to effect service of process, or denial of a lien or foreclosure action with regard to the Delinquent Assessment;
(iii) The Association has made a conflicting assignment of the proceeds of the Delinquent Assessment to its management company, lenders, attorneys or others; or
(iv) The Association compromises with the Unit owner amounts owed for a Delinquent Assessment or takes any other action to diminish the value or probability of collection of a Delinquent Assessment.
The Association is obligated to reimburse LMF for the Purchase Price for any of the foregoing Mistakes through the Set-Off described in this Agreement. After the occurrence of three Mistakes, LMF shall have the right to decline to purchase additional accounts and to demand payment of the Purchase Price in cash.
| 5 | ||||
| Association Initial | LMF Initial |
8. Unit Owner Defenses. In the event a Delinquent Owner has challenged the validity of a Delinquent Assessment because it is in violation of the Association’s Articles, By-Laws, Declaration or as a matter of law and such challenge has required additional pleadings to be filed to protect a lien or foreclosure action LMF shall return the account to the Association and recover the Purchase Price via Set-Off. Such challenges are best defended by the Association’s counsel rather than LMF’s collection attorneys.
9. Unit Owner Bankruptcy or Master Association Foreclosure. In the event a Delinquent Unit Owner files for protection under federal bankruptcy laws or a Master Association with a superior lien files a foreclosure action, LMF may at its option be reimbursed by the Association for the Purchase Price paid for Delinquent Assessments owed by such Delinquent Unit Owner, in which case all collection rights on such account will be re-assigned to the Association. Once a Delinquent Unit Owner has filed for bankruptcy protection and the account has been reassigned to the association, the association shall have the option to leave the account at the attorney whom LMF has nominated, for monitoring, and LMF shall pay for monitoring expenses.
10. Set-Off and Repayment. Except where specifically stated otherwise, amounts owed by Association to LMF shall be paid through set-off against amounts owed by LMF to Association for a period of six months and thereafter shall be due and payable in cash upon demand of LMF.
11. LMF Indemnification. LMF will indemnify, defend and hold harmless Association from any damages incurred by Association solely and directly arising from LMF’s, or its, officers’, employees’, or agents’ negligence or willful misconduct while acting to collect Delinquent Assessments on behalf of Association pursuant to this Agreement.
12. Term and Termination. This Agreement may be terminated by either party upon ten (10) days written notice. Upon termination, Association shall have no obligation to assign the proceeds of any additional Delinquent Assessments and LMF shall have no obligation to purchase assignments of proceeds of any additional Delinquent Assessments. All other provisions herein shall survive termination until all Delinquent Assessments on the accounts assigned to LMF are paid in full or the outstanding value of the sum of all such Delinquent Assessments is less than ten percent (10%) of the total balance due at the date of termination, or when LMF decides to re-assign remaining amounts it is handling to the Association.
| 6 | ||||
| Association Initial | LMF Initial |
13. Mortgagee Foreclosure Protection Under Declaration. If the date of Association’s Declaration precedes the effective date of Section 718.116, Florida Statutes, or if the Association’s Declaration excuses anyone taking title through foreclosure or deed in lieu of foreclosure from payment of Delinquent Assessments, then in the event such purchaser refuses to pay Delinquent Assessments because of the provisions of Association’s Declaration, LMF will have the option to return the account to Association pursuant to the terms of Section 7.
14. Miscellaneous. (i) Expenses. Except as otherwise provided herein, each party shall pay its own expenses in connection with the execution and performance of this Agreement including professional fees. (ii) Entire Agreement. This Agreement constitutes the entire agreement among the parties hereto and supersedes all prior agreements and understandings. (iii) Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida. All disputes arising hereunder shall be resolved exclusively in the state courts of Florida.
In any dispute arising hereunder the prevailing party shall be entitled to recovery of reasonable attorney’s fees and costs from investigation through appeal. (iv) Construction. The language in all parts of this Agreement shall be construed as a whole according to its fair meaning, strictly neither for nor against any party hereto, and without implying a presumption that the terms thereof shall be more strictly construed against the person who drafted the document, it being acknowledged and agreed that representatives of both parties have participated in the preparation hereof. (v) Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original and all of which together will constitute the same agreement, whether or not all parties execute each counterpart. (vi) Further Assurances. The parties agree that they will from time to time, upon the reasonable request of the other party and without additional consideration, execute, acknowledge and deliver all such further endorsements, assignments, and transfers as may be required in conformity with this Agreement for the collection of Delinquent Assessments and distribution of the proceeds there from in accordance with this Agreement. (vii) Communication with Unit Owners. Association shall answer all inquiries of Unit owners as required by Section 718.112(2)(a)(2), Florida Statutes.
| 7 | ||||
| Association Initial | LMF Initial |
IN WITNESS WHEREOF, the parties have each executed this Agreement on the date first above written.
| LM FUNDING, LLC |
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| Manager |
AGREED AND ACCEPTED THIS DAY OF , 201 .
| XXXXXXXXXXX | ||
| Signature: |
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| Print: |
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| Title: |
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| 8 | ||||
| Association Initial | LMF Initial |
