by Structured Settlement Watchdog
Structured Settlement Partial Sellers Experiencing Payment Delays from SuttonPark on Remaining Payments
I have received a number of calls from anxious structured settlement annuitants, who have sold only partnot all of their structured settlement payments and are affected by the troubles at SuttonPark See 777 Managing Partners Resigned in May | Mary Walsh Substack a Must Read – Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews
Lenders to 777 Partners accused it of fraud, claiming that the Miami-based investment firm borrowed against $US350 million ($530 million) of assets that it did not own, did not exist or were already promised to someone else. There has been plenty to unpack. My concern turns to structured settlement annuitants.
SuttonPark has been late since January. Now Two Weeks Late and Nobody Returns Calls”-Payee
Today I received a call from a worried payee, a lady from Georgia who stated she sold only a portion of her Pacific Life structured settlement payments to Sempra Finance in 2019 [My readers may recall the name Sempra Finance as the structured settlement factoring company in the 4th deal in the Barber case, a disgraceful factoring exploitation of a Pennsylvania minor
For background on the Kyle Barber case see Structured Settlement Investors’ Bad Hair Day in Barber Case as PA Superior Court Quashes Appeal – Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews
- Barber case opinion—affirmed (1) 2021; and
- 2022-251-wal-2021 Barber case Sempra Finance petition to appeal denied
The payments from the June 2024 Georgia caller last week, were subject to a servicing agreement with SuttonPark, a substantial if not the largest servicer of structured settlement receivables. The payments were on time, or subtantially ontime, until January 2024 she relates. Now she reports that the portion of payments that she did not sell are two weeks late and nobody returns her calls regarding status of payments.
Late payments from the payment servicer and no communication are not acceptable business practices
Why Does Structured Settlement Payment Servicing Exist?
- Servicing exists primarily due to unwillingness of some current and former structured settlement annuity issuers to split or dice structured settlement payments. Ostensibly the frictional transaction costs are passed on to the minority who choose to factor (some repetitively).
- Servicing is legal and very common in real estate loans for home mortgages. You take out a mortgage with one company (the originating company) and then you’re notified a short time later that another bank is servicing the loan and directing you to make your mortgage payments to the servicer instead of the original lender.
- With structured settlement, servicing may be something forced by the structured settlement annuity issuer, OR it could be something driven by investors seeking privacy. A structured settlement factoring transaction involves a court proceeding. While the structured settlement factoring business is legal, the undeniable ick factor means that certain investors might not want the public or their other customers know that they are investing in structured settlement receivables.
- Some structured settlement factoring companies have both a servicer AND a back up servicer.
- Sometimes servicing is used increase operational efficiencies on a discontinued line of business. For an example, please see my recent article on the decision by Everlake Life (formerly Allstate Life Insurance Company) Everlake Life Structured Settlements (4structures.com)
Why Can’t You Just Call the Annuity Issuer when Payments are Being Serviced?
When payments are being serviced following a partial structured settlement transfer, the structured settlement annuity issuer customer service channel is generally unavailable to the customer. If customers were to call the annuity issuer when payments are being serviced, they would likely be referred to the payment servicer.
I have previously raised questions of how payment servicing affects an insurer’s brand and maintain my longstanding concern where there are partial transfers. Structured settlement payments may stretch for years into the future. Interactions happen throughout the customer journey and give insurer brands an opportunity to connect with customers, understand their needs, and enhance the structured settlement customer’s experience.
Will a New Structured Settlement Payment Servicer Replace SuttonPark?
One of my sources mentions that a backup servicer is being arranged, with DRB Capital possibly involved. While it’s worth staying updated, I want to point out that back in an October 2009 podcast with Dallas bankruptcy attorney Bruce Akerly, I raised questions about what would happen if servicer viability was compromised. Now, here we are. What steps could the industry take to improve? What could have been prevented?