Here are two testimonials written within the last 20 days about Structured Asset Funding located on TrustLink.org:

There can be certain complications that can delay a structured settlement factoring transaction such as waiting for a benefits letter, bankruptcy, divorce, and other mitigating factors. After reading the two testimonials, logic says that it must be something other than the above circumstances. It appears there is an issue with the investor or financial institution that funds Structured Asset Funding’s cases. With the high demand for these financial vehicles from investors, this author finds it unusual that a company is unable to find money to fund a transaction. If there is an issue with rates or a shortage of money, why not tell the client the truth so they can take the proper steps to ensure their financial stability?

If or when any of these annuitants were to be paid, who receives the Per Diem interest that has accrued during the time this case has taken to fund? Lets take the following case as an example. Lets say John Smith wants to sell 100 monthly payments of $1000 each starting in February of 2010. Everyday that it takes a company to fund this case, the annuity is worth more because it is one day closer to a payout date. In the example given above, everyday that passes, that annuity is worth approximately $23 more per day. If this case were to drag on for 9 months then the annuity would have accrued approximately $6000 worth of interest.

Who receives this interest when it comes to Structured Asset Funding and their unpaid clients?

The servicing of structured settlement payments occurs when an annuitant enters into a structured settlement factoring agreement in which the annuitant chooses to split one or more payments and the factoring company becomes the payee of the entire payment. Once the factoring company receives the entire payment from the insurance company, they keep their agreed upon amount and pay the annuitant their portion.

How does this relate to structured settlement factoring?

The process of servicing payments for structured settlement recipients after completing a structured settlement factoring transaction is not a new practice and is a common occurrence in the industry. To this author’s knowledge there are a total of three life insurance companies who will “split payments but won’t dice payments.” For example, if an annuitant decides to sell a certain number of their monthly payments, all insurance companies will cut the check to the appropriate party, whether it may be the tort victim, or the investor who has purchased the rights to the payments.

The issue is caused when an annuitant decides to sell a portion of their payment, but rather than selling an entire payment, they decide to keep a portion of that payment and dice the payment in half or as they see fit. Most insurance companies will accommodate this process and send the appropriate portions to both parties, the tort victim and the investor. The problem arises when a structured settlement factoring company does a transaction with an annuitant who decides that they want to dice payments and the issuer is 1 of the 3 companies who will not dice the payments. To solve this problem the factoring companies would purchase the rights to the entire payment and pay the agreed upon amount to the annuitant.

There are a few issues with this scenario:

1. Certain structured settlement factoring companies were using this scenario as an excuse to service annuities that did not need to be serviced. In other words, an annuitant would decide to sell their payments, the insurance company would agree to this, but the factoring company would still service the payments. The reason for this is because the factoring company is securing future deals by owning the rights to all of the future payments. Many annuitants would not understand this process and would think this is the norm for this type of transaction. That is false and has many implications.
2. The annuitant no longer owns the rights to their future payments. If they need help with anything regarding their annuity, they can no longer simply call the insurance company and speak to a licensed representative, instead they have to call the structured settlement factoring company to ask their question.
3. If the annuitant was ever in a situation where they needed to sell more payments, the structured settlement factoring company who completed their last transaction is the only company that is able to complete any  future transactions for that individual. Since the Chapter 11 Bankruptcy filing by JG Wentworth, investors are not interested in purchasing the rights to structured settlement payments serviced by other factoring companies. This means that any annuitant who has their payments serviced by a structured settlement factoring company will most likely be price gouged if they decide to sell more payments.
4. Structured Settlements 4 Real reported a story where Structured Asset Funding serviced a tort victim’s payments, but failed to mail the check on time. This should not happen, but can happen because these types of companies are not geared to service annuity payments.

There are a couple ways to eliminate this problem:

1. The first solution would be to have the insurance companies who currently won’t dice payments, start dicing payments. This would eliminate any and all need for any structured settlement factoring company to service payments.
2. In the meantime, companies who may need to service payments should use a third party bonded, insured, and licensed company to handle their servicing.

Over a year ago Settlement Quotes, LLC alerted others to this issue. From that date forward many companies have stopped the practice of servicing payments unnecessarily.

If you have any questions on this matter, please feel free to comment below. I will answer any and all of your questions as soon as possible.

Is it illegal to sell the rights to a structured settlement?

No, it’s not illegal to sell the rights to a structured settlement. Most states have a Structured Settlement Protection Act which outlines the requirements that need to be met in order to sell future payments. Some of those requirements are as follows:

1. The company purchasing structured settlement payments must provide full disclosure about the financial terms of the transaction.
2. A hearing is held where a judge decides whether the transaction is in the best interest of the structured settlement recipient. Such factors such as the discount rate of the transaction, reason for selling the payments, and other income sources are taken into consideration before approving such a transaction.
3. The judge must issue a court order approving the sale of the transaction.

The list above does not stipulate all of the requirements of a structured settlement factoring transaction.

What happens if the Settlement Agreement has anti-sale or anti-assignment language?

First of all, anti-assignment or anti-sale language means that the annuity payments cannot be sold or transferred.

As mentioned above, most states have a Structured Settlement Protection Act which states that a judge must approve the transfer of such payments. A judge has the power to approve the sale even if anti-assignment language exists in the Settlement Agreement or Annuity Policy.

Can an annuitant sell a portion of their structured settlement payments?

Yes, annuitants have the option to sell all or some of their structured settlement payments. There has been much controversy over this in recent years. Some companies will purchase the rights to a portion of an annuitant’s payments, but instead of allowing the insurance company to continue to service the rest of their payments, the funding company will service the payments to the annuitant taking control of future sales of that annuity policy.

Settlement Quotes is currently in the process of finding out more information about this practice.

Is the Lump Sum Payment received from the sale of a structured settlement tax free?

In most cases the lump sum payment received from selling the rights of a structured settlement are tax free. The same tax treatment is applied to the lump sum payment that was given to the previous structured settlement payments. If an annuitant’s previous payments were tax free, then the money received from the sale of future payments will be tax free as well.

Section 104(a)(2) of the Internal Revenue Code confirms that damages received for personal injury or sickness are not considered income and are not subject to tax.

In 2002 federal legislation was passed to protect payees in the sale of their structured settlement payments.  As a result, Section 5891 was added to the Internal Revenue Code.

Section 5891 requires the sale of structured settlement payments must be approved by a court in accordance with the relevant State statute.

The information provided above is for education purposes only and should not be taken as legal advice.

Here is a summarized list:

1. Is the company you are working with a broker or direct funder?
2. How long has the company been in business?
3. Is the company you are working with a member of the Better Business Bureau? If so, what is their rating?

In the article written by Stone Street Capital, the author expressed his opinion that the best deal an annuitant can receive is by completing a transaction with a “direct funder”. The knowledge behind such an argument is that a “broker” would take a commission which would be subtracted from the annuitant’s lump sum payment.

The above statement would be correct, if, and only if the funding sources of both the “direct funder” and the “broker” were identical. If the funding source of either party were different, it could sway the annuitant’s lump sum payment by thousands, if not tens of thousands of dollars.

Here is an example:

Payment Stream:

• 100 payments of $1000 per month starting January 1st, 2010
• Allstate Insurance Company

• Settlement Quotes- $67,665 (9.2% rate)
• Other Company- $61,684 (11.6%)

Settlement Quotes is not a direct funder, but our funding sources are different from any company in the industry. These varying funding sources provide us with exceptional rates that are difficult to match by any company.

Settlement Quotes, LLC is a marketplace where we provide multiple competing quotes from several funding sources. This competition creates the maximum value for the annuitant and you can be sure that you will receive the best price for your structured settlement.

Other sources:

• Brokers versus Direct Funders in Structured Settlement Factoring Transactions
• When Selling Your Structured Settlement

Now that JG Wentworth’s bankruptcy plan was accepted, they have zero debt and enough cash to operate for the foreseeable future.

If you have any questions about this matter, please feel free to contact us with any questions.

JG Wentworth, in a press release today claimed that this filing would not impact customers completing a transaction with the company.

Yes, JG Wentworth is still airing their “cash now” commercials and will continue airing them due to the financial relief  this filing has provided the company.

Please feel free to comment below if you have any questions on this matter.

Here are a few of the blog comments that Settlement Quotes has received in the past few months:

“JASON JAMERSON- I began the sell of an annuity payment with Stone Street Capital on Aug. 5th 2008 because they promised to meet my simple demands that I be funded by NOV.15 2008.Well it is Feb.18 2009 and I have received a very small advance they are calling a loan and more excuses about the economy being the reason for me not being funded yet.They are pulling excuses from a hat telling asking if my name is my real name and is it legal and so on when they have all documentations ,court approval cooperation the insurance company,and all notarized so-called legal papers obtained by them(Stone Street Capital)provide to be necessary to be funded by them. Stone Street Capital,INC. has breached everything they had told me in early AUGUST OF 2008 to make me decide to go with them to purchase a future annuity payment of mine to receive a lump sum within 30 days ,my reason for selling the payment early to simply get my license back pay some collections and open a business and purchase equipment .Since August they have done nothing advance my funds and even just recently fired the person I Have been speaking to for the last seven months.”

“Mike (regarding Stone Street post)- I’ve been waiting two months since we went to court to recieve my cash and I started this process back in October with them because they promised fast result.”

“Lynda Reilly- I started this contract with Seneca One in August 29 2008. I was quoted several dollar amounts which were nothing of the dollar amounts that the phone sales person first quoted me. After paperwork was started the quote went from a large dollar amount down to a very low dollar amount. They said, at first they would be getting the money from my former investors at the time of the transaction. So when the court date was over on 10/10/08, they told me they would not get the money from my investors until 2010. Also at this time they would not advance me the dollar amount on the contract, they did advance me small dollar amounts at my request. But they said they were waiting for my former investor to sign papers. I called my former investors and they said, they had signed off the agreement in Oct 14,2008 when I went back to my rep. he told me that there was nothing down as of November the 19th 2008. With follow up to my original investor they couldn’t understand why I did not have the money yet, this was in December 20th 2008. I was told by Seneca One that the reason for the delay was because of the stock market, and several more reasons. I have not receive the full dollar amount as of yet it is Feb.-05 2009, they did how ever advance me money to cover my bills. But the money I was suppose to be getting should have been in a bank with interest I would receive. They final sent me the finalized paperwork to sign off with the rest of the dollar amount without interest. I feel I have been treated unfairly by this company at my own expense. I tried one more time today February 05,2009, to retrieve my money that they did not even agree to advance me and they have not even called or email me when the money would be with in my procession, they keep on avoiding me and telling me the stock market is down. Which as a consumer it makes me think that they have no money to fund me at is time and I should have been directed to another company to sell my investment. I did get finally a letter from Structured Asset Funding L.L.C, which is going to fund the money. But this process has added another 30 days already. Which was on January 7th 2009, I will never go threw this company again and please advice others not too either.”

“Wayne Allen- I am in the process of trying to receive the funds promised me by J.G.Wentworth. It had now been 30 days since the judge signed the paperwork. After many, many, many phone calls to different people and many, many lies, they will no longer take my phone calls and I STILL have no answer or monies that I desperately am in need of! Thanks J.G. Wentworth. I will tell EVERYONE that this is the worst company I have ever dealt with. Especially for the amount of monies they are receiving!”

Some of these companies may be experiencing pressure from their investors which has most likely caused rates to increase. A rate increase usually means that they cannot fund your transaction at the agreed upon price. This leaves you with a few options.

1. Cancel the transaction.
2. Continue to contact the structured settlement factoring company until your transaction is paid in full.
3. Find out how much they would be willing to pay now for your transaction.
4. Contact an attorney to find other legal options.

It is important to remember that you cannot enter into a structured settlement factoring transaction with another company until you have received a cancellation letter from the original structured settlement factoring company.

Please contact us if you have any further questions on this matter.

In Stone Street’s defense, this author understands that receiving your money in 6 weeks compared to years from now can be construed as “cash now,” but how does Stone Street defend allegations of false advertising? Technically speaking, an annuitant cannot receive “cash now” when involved in a structured settlement factoring transaction. These types of transactions need to be court approved which takes an average of 6-8 weeks and in some states longer.

The primary market’s main concern of the secondary market is the advertising practices that some companies in the secondary market continue to use. If companies in the secondary market can clean up some of these problems, the primary market may look upon the secondary market with a brighter light.

In the article published by Mr. Green, he explained the concept of an annuity’s present value. I would like to provide a few examples on the concept.

“In order to place a present value on an annuity’s payments, a discount rate must be applied to account for the decreased value of those future dollars. The higher the rate, the lower the present value. The lower the rate, the higher the present value.”

Example A: Discount Rate= 20% and Present Value= $40,000

Example B: Discount Rate= 10% and Present Value= $100,000

As you can see, the higher the rate, the lower the present value, thus the lower the rate, the higher the present value of the annuity. Feel free to use our present value calculator below to calculate the present value of your annuity.

Created by- Settlement Quotes, LLC

IRS Discount Rate

The IRS discount rate is present in documents received by the annuitant when transferring the rights to their structured settlement payments. This rate is artificially low and confuses the annuitant because the annuitant compares the IRS rate to the rate offered by the structured settlement factoring company purchasing the rights to the payments.

Every structured settlement factoring company “borrows” money in order to purchase the rights to an annuity. There is no way for any company to borrow money at a 4% rate to match the rate listed by the IRS. When an annuitant views the effective discount rate associated with the transaction and then views the IRS rate, many annuitants question the overall validity of the transaction.

The IRS’s rate of 4.2% is artificially low to increase the present value, which in turn will increase taxable revenue. With this said, what is the rate to be used by a state’s Guarantee Association to calculate the present value of an annuity if an insurance company defaults? Currently there is no listed rate by any Guarantee Association.

High Discount Rates

There are certain transactions where the discount rate of a transfer can exceed 20%. This does not necessarily mean that the annuitant is receiving a “bad” deal. The circumstances that create a discount rate which exceed 20% are usually caused by one of two reasons:

1. The payments being transferred are in the very near future, usually within a year or two.
2. The present value of the annuity is near or under $10,000.

Transactions that exceed the 20% threshold will become more prevalent in the near future due to the increase in inflation caused by the downturn in the economy. I believe that if a judge thinks an annuitant can receive a better deal by going elsewhere, the judge has an obligation to require the annuitant to obtain quotes from other companies before approving the transaction. It should not be a judge’s responsibility to know the overhead of a company when approving a transaction. If a different company can complete the transaction at a cheaper rate, then they should have the opportunity to provide the annuitant with the increased funds.

Created by- Settlement Quotes, LLC

Within a period of 12 hours, JG Wentworth’s rating went from unsatisfactory to satisfactory. J.G Wentworth’s BBB profile was under review for a three week period throughout September. Once their profile came back online on October 3rd, 2008 their profile was stripped of the satisfactory rating.

This author has a call into Maria Sivalac, JG Wentworth’s BBB representative who stated to Richard M. Connelly, General Counsel of J.G. Wentworth that it was a mistake that their Better Business Bureau profile was without the satisfactory rating.

In my opinion it is unusual that an individual at the Better Business Bureau removed this rating after weeks of review but within about 12 hours after our last Blog entry the rating returns to “satisfactory” with no explanation. Persons who would consider doing business with JG Wentworth may want to enquire further with the Better Business Bureau.