Itopia Private Residences of St. Petersburg, FL has always been regarded as a very nice middle-class neighborhood to live. But in 2012, Itopia was drowning in debt, with property values plummeting as the board worked on a tighter and tighter budget and the grounds saw less and less maintenance.
When members of a community association fail to pay their association fees, it’s their neighbors who suffer —neighbors who moved in under the assumption that the quality of life advertised to them would remain intact throughout their stay. When 8% of an association’s units fall behind on their payments, many banks will no longer loan them money for capital improvements. At 15% delinquency, an association can no longer attain a federally backed mortgage, meaning that only cash buyers are eligible to buy their foreclosed units. Because there is no competition from traditional mortgage-backed buyers, these cash buyers pay far less than what the property should be worth.
In early 2013, LM Funding introduced the New Neighbor Guaranty™, and Itopia was one of the first to use it. Once Itopia signed the necessary contracts, they received funding within a week to cover the association dues owed by their delinquent units, leaving LM Funding and their preferred law firms to worry about collecting upon the debt. With payments coming in on a regular basis, Itopia’s board was finally able to properly budget again for painting, landscaping, and all the other amenities they would have been able to fund if everyone had paid their fees in the first place.
To date, LM Funding has paid off the debt for 151 of Itopia’s 384 total units—just under 40%. The legal fees incurred by LM Funding to collect upon these debts (fees which would have fallen upon the association under the traditional collection model) amounted to roughly $242,000. At Itopia’s lowest point, property values were averaging at about $60,000. Today that average is $100,000.
Rosy Badwal, president of Itopia, has nothing but positive words to say in regards to LM Funding and the New Neighbor Guaranty™. “Over the past several years when the first contract was signed with LM Funding for the many foreclosed units at Itopia Private Residences, the program was extremely beneficial to our community. The community received income through the program and was able to continue maintaining the property,” she says. “The community has gained immensely from our partnership with LM Funding, and we feel very fortunate to continue with [them] to this day.”
LM Funding collects debts at no cost to associations and offers many collection plans. When the delinquency rates are high, no lawyer, collection agency, or any other specialty finance company offers a more viable solution than the New Neighbor Guaranty™.
Itopia is the shining example of how LM Funding can increase property values at no cost to the association or its members.