Today I received a call from an annuitant who was contemplating factoring a structured settlement that she agreed to in 2007. The reasons for factoring need not be displayed here for privacy reasons, but in my opinion they are legitimate and unforeseen reasons.
Apparently the annuitant contacted Peachtree Settlement Funding after seeing one of their ads on TV.
Peachtree Settlement Funding thrives on the unsophisticated consumer who does no shopping. This author is not questioning the legality. After all, a spider is free spin a large web hoping that an unsophisticated bug can get caught in it.
Active knowledgeable shoppers would probably never do business with Peachtree. They charge high discount rates that (in part) help cover their heavy cost of advertising and spreads that they must offer to institutional investors.
The first time she spoke to them, in 2009, Peachtree purportedly offered the annuitant $7,000 for payment rights to an annuity that cost $25,000 in 2007. This represented 28% of the original cost and 12.5% of the future benefit she is scheduled to receive. A year later and a year closer to the first payment date that has been increased more recently to $12,000. The first period certain payment is due in 2012 and the annuity pays for 15 years certain. The annuitant does not understand how she could essentially invest $25,000 and have "less than 50% left" in a safe investment.
According to the woman (and if this really is true it is very serious), the Peachtree representative tried to explain away the dip as being because "less money was invested" in the annuity than the $25,000 that was in fact invested and was disclosed in the settlement papers under 5-1702 of the New York General Obligations Law. She has not pulled the trigger on the deal and fortunately contacted me. I referred her to a factoring exchange where she could be part of a competitive bidding process.
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