"As you may be aware a number of annuity issuers/assignees are permitting
factoring companies to "service" the annuity issuer/assignee's structured
settlement obligations. The arrangement starts off with the first factoring
deal, which is for a portion of the payments and the factoring company ends up
with all the payments paid to them (not just the factored payments) with the
"balance" to be "passed through" to the annuitant. We believe that life
insurers may agree to this to save administrative costs [on "split annuity payments" when a factoring request comes in (see footnote)]. This has apparently been going on
since before the financial crisis. But what are the ramifications? Has anyone
considered them?
interface with the annuity issuer and instead must interface with
the factoring company on the non factored payments being
serviced. GET THIS! Upon calling the annuity issuer the
annuitants are purportedly being told to call the "servicing" factoring company
by the annuity issuer! This is nuts! Why would an annuity issuer give up face time with its own customer and a potential prospect for other services?
factoring company that is "servicing her payments". This is all
within a year of annuity issue. The factoring deal was referred
by an NSSTA member (who swears to me that he/she did not
take any compensation on the liquidity scheme).
- Does the annuitant have to take any extra steps to be assured of timely
receipt of payments, when they are completely dependent on them? - What extra costs are incurred or potentially
incurred in the event there is a bankruptcy as a result of the
"servicing".
some NSSTA member life companies wittingly, or unwittingly complicit in
facilitating the next factoring deal? What is the perception? How many members
are marketing the spendthrift protection of structures and are unaware of these
issues?
general public through a white paper that goes through the Who What and Why"
Furthermore:
The Society of Settlement Planners is also called upon to publicly do so inasmuch as its longstanding membership chairwoman is a factoring broker who primarily deals with a cash now pushing factoring funding source that "services" structured settlements.
The 2008 SSP Annual meeting had a whole panel on factoring. It's may very well be the case of "what did they know and when did they know it?" But I certainly hope not! To what extent have attorneys who are clients of SSP members been informed of "servicing"? How many of the factoring deals that its members have referred to the company of the membership chairwoman (Bentzen Funding Solutions), end up having the entire structured settlement (not just the factored piece) being "serviced" by Structured Asset Funding? Is servicing simply "the QSF of the factoring world"?
Those settlement planners who have held themselves out as fiduciaries
to the trial bar ought to think hard and clear about the answer to
these questions. It is hard to see how "servicing" benefits the annuitant.
Perhaps Rhonda Bentzen can address the truth about her relationship with Structured Asset Funding AND the issue of structured settlement payment "servicing" on her blog and thereby do more for the industry than provide an out of date gossip column and a 5 month old post wherein mixed metaphors demonstrate a poor grasp of political history while seeking to thwart an attempt to provide transparency that appears to be lacking in her own business dealings with the industry.
Footnotes
- Factoring Company Servicing of Structured Settlement Payments-Thought Leaders Butt Heads April 2008 (see comment of Matt Bracy, General Counsel of Settlement Capital Corporation
- Which Life Companies Effectively Charge Back Door Fees To Structured Settlement Annuitants? March 27, 2008
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