by Structured Settlement Watchdog®
At a minimum, individuals selling their structured settlement payment rights, in cases involving a payment servicing arrangement, must receive a written disclosure before signing an absolute assignment or transfer of such rights, stating that payments may be delayed. The Connecticut woman’s distress and subsequent complications persist.
Background
- Less than a year ago the settlement adviser to “Betsy Ross”, a Connecticut woman placed her into a very large structured annuity with American International Life Assurance Company of New York.
- As far as this author can tell from interviewing the woman, an inadequate amount of up front cash was considered in the final settlement plan
- Consider that less than a month later the woman sought cash to make a home modification to accomodate housing her father during a serious illness.
The NSSTA member referred the CT woman to a representative of Structured Asset Funding.
“Betsy Ross” agreed to factor a portion ($1,600/month) of her structured settlement payment rights.
- Structured Asset Funding did not “deliver the goods” to her in timely fashion despite the representation by its representative that it was “business as usual” in September 2008, when the financial world was falling part.
- Structured Asset Funding (a/k/a 123 Lump Sum), ultimately paid the woman in May 2009 after 6 months.
- Among other things, she had to hire a lawyer
- She contacted this author and this author subsequently interceded on her behalf to expose the poor lady’s situation to the structured settlement industry and public and put pressure on Structured Asset Funding to act.
This was not the first substantial delay during this period involving a deal referred to Structured Asset Funding.
What Next?
- Our investigation into the Connecticut woman’s issue in April revealed that a payment servicing agreement stipulated that Structured Asset Funding is responsible for servicing her structured settlement payments.
- This means that they receive all of the woman’s payments from American International Life Assurance Company of New York, take their cut and then pass through the difference to the CT woman.
When the CT woman was dealing directly with American International Life Assurance Company of New York she maintains that she received payments on time via direct deposit. Now she is receiving checks and the July payment, due July 1, 2009 was not received after the middle of the month. Purportedly American International Life Assurance Company of New York mailed the check to Structured Asset Funding on June 26, 2009. Mailing a structured settlement check 5 days in advance of a due date is common procedure.
The Structured Asset Funding delay caused the woman to miss her mortgage payment and her health insurance payment
Audrey Nadler, the Structured Asset Funding representative now dealing with the CT woman, purportedly cannot give the CT woman a definitive date when payments will arrive each month.
Purportedly under servicing arrangements American International Life Assurance Company of New York will not make a direct deposit of structured annuity payments to the factoring company. This author is not aware of how other annuity issuers deal payment delivery under servicing arrangements.
Structured Settlement Payment Servicing Can Be Frustrating
Common and Needed Where Annuity Issuer Will not Split Internally
- For individuals who depend on their settlement checks, timely delivery is essential. When payments are delayed, the so-called “cash now pusher” service fails to fulfill its intended purpose.
- Furthermore, in my opinion those life insurance companies who will not split annuity payments to those who factor structured settlement payment rights are sending the annuitants to the wolves.
- It seems reasonable that, at the very least, people selling their structured settlement payment rights—when a servicing arrangement is involved—should receive a written disclosure before signing an absolute assignment or transfer, informing them that payments may be delayed.
Message to the structured settlement industry
- Don’t over structure! Ask the right questions. Employ the approach of a settlement planner not a short order chef!
- NSSTA MUST tackle the issue of structured settlement servicing by factoring companies to assure that its life company members are not contributing to the problem. For all the good the structured settlement industry does it can easily be tainted by unreliable or ineffective solutions that affect timing of payments to structured settlement payees.
- Are commutation riders a possible solution, where the liquidity is provided in-house and there is no need to split payments? A good industry resource would be Dan Durbin, the NSSTA President who is with Allstate Life Insurance Company, an annuity issuer that has had its Advanced Funding Exchange Notice (AFEN) in place for some time.
Message to the factoring industry
- Come out and say something about servicing NASP members. If you have some procedures in place to assure that what is happening to ” Betsy Ross” does not happen with your company when payments are being “serviced”, tell us what you are doing!
Fast Forward 15 years to 2024
Betsy Ross payments became wrapped up in the SuttonPark Nightmared
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