Income/Deductions mult member Real Estate LLC with Property titled and mortgaged in members same

Please give your thoughts on the the following residential rental property llc issue.  Three individuals form a multi member llc in florida and file an election for S Corporation status.  Each member then contributes down payment money for a rental property that goes into a bank account in the LLC's name.  They subsequently find a property to purchase, but the bank will not loan to the llc.  With the agreement from the other members, one of the members titles and mortgages the property in his own name using downpayment funds from the LLC's bank account.  Later, rental revenue from the property is deposited directly into the LLC's bank and the mortgage payments and management costs are paid from the LLC's bank.  At tax time, an 1120S is to be filed and the members expect to deduct the mortgage interest, property insurance, property taxes, etc. on the 1120S.  These don't appear to be expenses of the LLC but merely a distribution of capital to the member who owns the property - thoughts?  I'd also be interested in thoughts about distributing the revenue.  Thank you!