April 24, 2008
Factoring 101: The REAL Truth About Servicing
In reference to Matt Bracy’s post on April 22, 2008 “Factoring 101: The Truth
About Servicing”, the facts are as follows:
1. No annuity issuer in the structured settlement writing business has ever
refused to permit an annuitant to sell only a portion of periodic payments (ie
100 of 250 payments) or sell just lump sums or periodic payments in a mixed
payment scenario.
2. To our knowledge, only one annuity issuer out of approximately 39 issuers who
write structured settlements refuses to “split” individual payments (ie refuses
to cut two checks if the annuitant wishes to sell only $400.00 of a series of
$1,000 monthly payments.) The other 38 annuity issuers permit such splitting.
3. In the limited circumstance where the annuity issuer refuses to split, our
company arranges for an arms length, independent and bonded servicer to service
the payments. We do not service the payments ourselves as we believe such is a
conflict of interest.
The bottom line is that companies that engage in routine servicing do so with
the objective to eliminate competition and low ball offers to annuitants who
later want to sell the remaining payments. The practice is extensive and
long-standing and the fact that a company like Settlement Capital (whom we have
proof has serviced payments in a #1 scenario above) is trying to defend its
practice suggests that
Cravenho and
Darer have hit a raw nerve.
Written by David Springer the president of Sovereign Funding Group.
Sovereign Funding Group is an experienced, reputable company that offers
convenient, no-pressure services to help individuals with the selling of their deferred
structured settlement
payments.
Posted by dspringer at 08:41 AM
April 14, 2008
Structured Settlement Sellers Beware
We have recently become aware of a sales practice employed by some structured settlement factoring companies, including Settlement Capital, J.G. Wentworth, Stonestreet, Peachtree and others as follows:
1. Annuitant wishes to sell only part of their structured settlement
2. Factoring company offers to buy the partial payments but sale contract provides for ALL of the payments to be transferred to factoring company and factoring company then becomes responsible for paying the unsold payments to the annuitant as and when paid to factoring company (“servicing”).
3. Annuitant then is solicited to sell the balance of the payments at a later date.
4. When or if the annuitant decides to sell later, factoring company lowballs the offer and is a captive because other factoring companies are loath to buy payments being made by their competitor.
When selling partial payments, you should be aware of this practice and avoid it.
Once payments are transferred to the factoring company you lose the benefit of an A-AAA rated insurance company being responsible for making the payment to you with all of the tangible benefits associated therewith and become dependent upon the factoring company to make the payment to you. Also, you lose the benefit of being able to have factoring companies compete for any subsequent sale because many companies may not want to rely on a competitor to pay them.
At Sovereign Funding Group we only take assignment of those payments which we buy, entitling you to receive the balance of the payments directly from the insurance company as originally bargained for.
Please exercise caution when reviewing a sales contract. If you would like a second opinion, please call us at 877-836-4661.
Posted by dspringer at 08:01 PM
Case Demonstrates Importance of Getting a Second Quote on the Sale of your Structured Settlement
On April 2, 2008 DealFlowMedia.com and on April 4, 2008 Structured Settlements 4 Real Blog discussed a New York structured settlement factoring case in which the Court denied a request by Settlement Funding of New York LLC “Peachtree” to buy three lump sum structured payments for a net price of $9,517.07 or 19.9% discount rate. The Court concluded that the transaction was not in Eric R. Lindsey’s best interest.
Sovereign Funding Group would have offered a net price of $39,802.00 for the same set of payments.
This case represents another example of how important it is for prospective sellers to get a price quote from Sovereign Funding Group before making a final decision to sell.
Sovereign Funding Group offers the best price upfront and routinely makes offers in the 8% to 9% discount rate range.
Please give us a call to get a second opinion. Call us toll free at 877-836-4661.
Posted by dspringer at 05:32 PM
March 30, 2008
Structured Settlement Factoring Company Sales Tactics to Avoid
Some companies who offer to buy structured settlement payments on the secondary market (factoring companies) engage in the following practice:
1. Make a low ball offer and test whether the seller will accept or shop for a better price.
2. If the seller shops and receives a better offer they will make a counter offer higher than the highest offering price and drag the completion of the case out several months so as to recover the lost profits through interest drag.
Interest drag is the widening spread between the fixed purchase price payable to the seller and the floating sale price set at transaction completion with the investor or securitizer. This spread can be significant, and sometimes more than $100.00 per each day that the transaction remains uncompleted. If a case is dragged for an extra 2 months, that would amount to an extra profit of $6,000.00 due to the factoring company.
Unfortunately this tactic is employed by many structured settlement factoring companies. As a first line of defense make sure that the company that you are obtaining a quote from are members of the Better Business Bureau and have no complaints.
At Sovereign Funding Group we deplore such tactics. We not only offer the best price upfront to the seller but we also offer a Closing Guarantee* whereby if a transaction takes longer than 8 weeks to close we will guarantee the per diem interest drag by way of a additional payment due to the seller at completion of the transaction.
At Sovereign Funding Group we explore all of your financial needs and help you to make the best informed choice with no pressure an no games! Call us today at 877-836-4661.
*Certain conditions apply. Please contact us for more information.
Posted by dspringer at 09:28 PM
March 16, 2008
A RESPONSE TO RHONDA BENTZEN’S MARCH 14, 2008 BLOG
In Rhonda Bentzen’s March 14, 2008 blog entry she states:
"A price is just a price…It’s what comes with that price that makes it all make sense in the end."
With respect, I must disagree with Ms. Bentzen when she implies price is not as important as service, or in other words, better service warrants a less favorable price.
At Sovereign Funding it is Job #1 to offer the very best price for the transfer and sale of each structured settlement case on the secondary market. At the same time, we offer the most comprehensive service available in the industry.
Our March 3, 2008 Commentary demonstrates how much better the Sovereign Funding purchase price is to the next highest price offered in each of the actual case examples.
Our January 10, 2008, January 31, 2008 and February 9, 2008 Commentaries demonstrate our approach to counseling potential sellers. We will not recommend a sale unless it is in the seller’s best interest.
Sovereign Funding has both a seasoned Insurance Broker and an Attorney on staff to provide both the insurance options and expertise in shepherding each case through the legal transfer process.
Ask yourself this question: Would Walmart be the most successful retail store in the World today if while providing excellent service it did not make Price the #1 focus of its attention?
The next time one of your clients contacts you asking for advice regarding obtaining a quote on their structured settlement. Do them a favor and contact Sovereign Funding Group where we are dedicated to offering the highest level of service and the best price in the industry.
Sovereign Funding Group
Toll free phone & fax: 877-836-4661
Email: info@sovereignfunding.com
Posted by dspringer at 05:12 PM
March 03, 2008
Comparing Sovereign Funding Group’s Quotes With Next The Highest Competitor Quotes
Sovereign Funding Group’s mission is to offer the most money to structured settlement annuitants, upfront.
The following three recent cases illustrate our mission in practice:
*Information supplied by sellers
The sellers in both the FL and GA cases agreed to sell to us.
The NY case is the widely publicized Ciemielewski case that was recently denied by the court. We never bid on that case. Our price reflects the sale price that we would have been prepared to pay had the seller contacted us.
At Sovereign Funding Group we explore all of your financial needs and help you to make the best informed choice. Call us today at 877-836-4661.
Posted by dspringer at 03:59 PM
February 09, 2008
When Is It Appropriate For An Annuitant To Sell Their Structured Settlement?
A structured settlement annuity may well be an annuitant’s biggest asset. The decision to sell some or all of the annuity payments should be carefully considered.
Each structured settlement sale and transfer requires court approval. Each state has a different test that the court must apply to determine if a sale ought to proceed. These tests range from “best interest of the annuitant taking into account the welfare and support of the annuitant’s payees” to “imminent financial hardship”.
In determining whether or not to sell, the annuitant should consider the following:
1. What are the immediate financial needs including family needs?
2. What are the assets and net income available to service these needs?
3. What is the shortfall, if any?
4. Is there a substantial asset (such as a car or house) that needs to be bought in order to maintain or improve the individual or family’s standard of living?
5. Are there medical, school, or other expenses currently due or will be due in the future unfunded by current resources?
6. What is the ability to obtain conventional financing and at what rate?
If there is a current cash need, if that need cannot be financed at rates in the range of 7 to 7.5%, and even if you can get financing if it cannot be serviced at current income levels, then it is likely appropriate to sell your structured settlement at this time.
Other circumstances may make it sensible to sell now:
1. You have investment opportunities at rates of return greater than 8% per year.
2. You have inherited the structured settlement and do not need the payment stream.
3. You no longer have the same needs that were present at the time the structured settlement was arranged.
At Sovereign Funding Group we explore all of your financial needs and help you to make the best informed choice. Call us today at 877-836-4661.
Posted by dspringer at 01:24 PM
January 31, 2008
Determining the Optimal Payment Set to be Sold in a Structured Settlement Annuity
After you have carefully thought through the ramifications of selling your structured settlement payments there are three factors that must be considered when determining what is the optimal payment set to be sold in a structured settlement annuity:
1. What are the immediate and medium term cash needs of your client?
2. What are the fixed costs of the sale and transfer?
3. What are the long-term financial planning goals?
Below I'll discuss each of these factors.
1. It is important to accurately assess how much cash is required by your client now. Often clients will underestimate this need and then have to resort to a further partial sale of payments in six months to a year thereby doubling the processing costs. It is better to overestimate the immediate and medium term needs to avoid double cost penalties.
2. There are significant fixed costs associated with a sale and transfer of structured settlement annuity payments. These costs include transfer legal fees and court costs, independent professional advice fees (mandatory in some states), insurance company transfer fees (ranging from $500 - $800 in most cases), lien search costs, courier costs, and wiring fees. Depending on the state and insurance company involved, often the total fixed costs can exceed $3,000.00.
When considering splitting a payment (partial to be sold while balance to be retained) it is important to understand that insurance companies have the right to object to such a transaction. As well, some insurance companies charge double the transfer fee as they must now make two payments instead of one.
The discount rate obviously goes up when the fixed costs comprise a greater proportion of the present value being sought by your client. This provides another reason for your client to generously estimate the funding amount they require now so as to spread the fixed costs over more payments being sold.
3. In many structured settlement cases the long-term care or retirement of your client was considered when designing the original payment stream. If the seller is currently working but planning to retire in a few years, it may be better to sell the immediate payments and keep the future payments to supplement retirement cash needs. On the other hand, further out payments fetch a lower discount rate so it may be more financially beneficial to sell them first.
Sovereign Funding takes all of these considerations into account when developing the best solution for your client. Please give us a call to get a second opinion. Call us toll free at 877-836-4661.
Posted by dspringer at 07:57 AM
January 10, 2008
FOCUS: TO ALL STRUCTURED SETTLEMENT BROKERS
The topics of broker assistance and compensation have been discussed at
length in recent months. In late December this debate became heated when John
Darer, a settlement planning consultant from 4structures.com, LLC went head to
head with Rhonda Bentzen, a structured settlement factoring broker doing
business as Bentzen Funding Solutions.
The debate between Darer and Bentzen revolved around whether or not it is
acceptable for you as a settlement planning consultant to charge a fee when you
refer clients to a factoring company. On this topic I would have to agree with
Bentzen that it is not unethical, per se, for a structured settlement planner to
charge such a fee provided such fee is reasonable in all of the circumstances.
My reasoning for this is as follows.
Similar to Bentzen, I have been on both sides. I was a life and annuity sales
agent for four years. I had created countless annuities for my clients and on
occasion when their financial positions changed I was asked to help them find a
way out of their annuity. This happened often enough that I found out about the
structured settlement factoring business and eventually changed my orientation
when I started Sovereign Funding Group in 2002.
Firstly as an insurance and annuities agent and now in the structured settlement
factoring business, I have always put my clients’ best interest first. I think
that it is reasonable for a structured settlement planner or an insurance and
annuity representative to be compensated for his or her professional assistance
to clients when seeking out a reputable factoring company and assisting with the
sale details.
Where I disagree with Bentzen is when she states in her December 21, 2007 post
that “…The referral fee ultimately saves the annuitant money and comes out of my
pocket”. That statement is simply untrue. Contrary to her assertion, any fee
charged adds to the overall sale costs and impacts the best price available to
the client in the marketplace.
In light of the recent controversy I think that it is important to provide some
guidance to structured settlement planners and annuity company representatives
who want your clients to make an informed decision that best serves their needs,
gets them the most money for their annuity as well as the fastest, most
professional service.
1. There are many circumstances when a structured settlement may no longer be
appropriate for your client. Times change. Your client’s assets must be flexible
to weather these changes.
2. You have taken great care to design a structured settlement that best suits
your client’s needs. The factoring company you choose to advise on the sale of
your client’s annuity should take the same care in deciding:
(a) is a sale appropriate in the circumstances, and if so what compliment of
payments ought to be sold;
(b) what is the best price available for these payments;
(c) what is the most expedient court process to complete the sale?
3. Each sale requires court approval based on the best interest test of the
annuitant and any dependants.
4. Purchase price and service level can vary widely between factoring companies.
Just as you would get competing quotes for structured settlement annuities, you
should get at least two quotes from competing factoring companies.
5. Your client will generally get more money and better service if you consult
with a factoring company that specializes in the insurance field and has legal
expertise to complete the transfer process rather than a general buyer of
receivables or an intermediary who lacks control of the transfer or funding
process.
6. You should monitor the average length of time the factoring company you
choose takes to complete the transfer process and disperse funds to your client.
The benchmark is six to eight weeks. Unexplained delays beyond eight weeks will
cost your client money.
7. Throughout the transfer process the factoring company should keep you and
your client informed of the benchmarks and be proactive in resolving legal
issues that may arise.
8. In the case where your client decides to sell only partial payments, be
careful that your client does not agree to sell all payments in return for the
factoring company servicing the remaining unsold payments back to your client.
Servicing arrangements could jeopardize your client’s recourse against an
annuity issuer in the event of a default. Furthermore, your client may not be
able to sell the remaining payments at a future date if they are serviced by a
factoring company.
9. It is acceptable for you to be compensated for your professional assistance
to your clients and referral to a reputable factoring company. You decide.
However, contrary to some assertions made in blogs, any fee you charge will
impact the best price available to your client. You should be careful that your
fee is reasonable in all circumstances.
Sovereign Funding Group has specialized in buying structured settlements for 6
years. We offer plaintiff brokers:
1. the benefit of six years of experience in buying insurance annuities and
in-house legal expertise to make sure the transfer process is completed in a
timely manner.
2. the most money for your client’s annuities by requiring our investors to
compete for each case thereby establishing the best market rate.
3. the fastest service by guaranteeing your client a price quote within two
hours of contact and sale documentation delivered the same day.
Compare our price and service level the next time one of your client’s
contacts you. Call David Springer at 877-836-4661.
Posted by dspringer at 10:04 AM
