Settlement Quotes

Patriot Settlement appears to have been hacked over the weekend and is now spreading a series of malicious software from their website. From this author’s research, the Trojan virus that effects an individual’s computer when visiting the site, is not hosted on PatriotSettlement.com’s servers.

Google and the other search engines are providing warnings at this time when Patriot Settlement’s website shows up in the natural rankings, but Google is not currently showing a warning for Patriot Settlement’s Pay Per Click program which serves the same website as the natural rankings. This virus will most likely effect more than 300 individual’s computers today alone.

Update: Patriot Settlement has fixed the virus and is awaiting Google and the other search engines to update the changes.

DealFlow Media (DFM) wrote in their recent structured settlement wire that 321 Henderson, a J.G. Wentworth affiliate was denied a transaction in New York this past week. In their report DFM stated that a 90% discount was applied to the case. The report did not specify the exact payments that were being sold, but the article did provide a few numbers that we can run some calculations with.

It was reported that JG Wentworth was purchasing $102,948.57 of future payments for a net amount of $10,500. DFM states that this transaction has a rate of 10.2% which is false. Structured settlement factoring transactions are priced using discount rates. The rate of this transaction was 8.78%, which is actually a good rate. Even though this transaction had a good discount rate, the factoring transaction would not be in the best interest of the annuitant due to the reasoning for the transaction.

Settlement Quotes would have recommended that this individual try other resources to purchase a vehicle. Cashing out a structured settlement to purchase a vehicle is most of the time not in the best interest of an individual, especially with the rising costs of energy.

In the future, DealFlow Media needs to use correct verbiage when reporting structured settlement factoring cases. Settlement Quotes has built several calculators that are able to calculate the discount rate of all types of factoring transactions. JG Wentworth or any other company would not have tried to factor a transaction with a discount rate of 90%, which would have left the annuitant with a penny.

Other DealFlow Media Inaccuracies.

Guaranteed payments are payments that will be made for a guaranteed period of time to either the annuitant or to a beneficiary. Non-guaranteed payments or life contingent payments are payed out for a period of time that is dependent upon the annuitants vital status. In other words if the annuitant dies, so do the payments.

How does this effect a structured settlement factoring transaction?

Structured settlement factoring transactions are priced using many variables to determine the overall risk involved in the transaction (i.e. Insurance company rating–A- AAA, length of payment stream, and guaranteed vs. non-guaranteed payments). If a structured settlement factoring company purchases a life contingent payment stream and the annuitant dies a year later, the factoring company will never receive any money.

Life contingent payment streams are not impossible to accomplish, but are more expensive. Depending upon the annuitants age, health, driving record, medications, and other information a life insurance policy can be purchased with the factoring company as the beneficiary. The purpose of the life insurance policy is to ensure the factoring company that they will either receive all the life contingent payments that were originally purchased, or upon death of the annuitant, the factoring company will receive a payout from the life insurance policy.

Not only are non-guaranteed payments more expensive to sell, but the transactions take much longer to fund as well. If you would like more information on non-guaranteed payments vs. guaranteed payments please comment.

There seems to be a trend being set by certain structured settlement factoring companies to call an annuitant up to 10 times a day until they give in and accept a quote to sell their future structured settlement payments. This sales tactic is being used more and more to persuade (force) tort victims into a deal that is not in their best interest and inevitably hurts them in the long run.

Imagine that you have a structured settlement and you have been dealt a situation that calls for you to liquidate part of your future payments for a lump sum of money in 6- 8 weeks. You decide to go on the internet and complete a few contact forms to receive factoring quotes. Over the next few hours the companies start calling to provide quotes on your particular payment stream. You would think now that you have received your quotes you can finally make a decision whether this will be in your best interest, but many times this is NOT the case.

The next day you go about your normal day: dropping the kids off at school, going to work, picking up the kids from daycare, and finally heading home to the rest of your family. When you return to your house, you will find that your answering machine has reached its limit for excessive number of messages. The companies that provided quotes on your structured settlement payment stream from the day before have called you back and want a decision on whether you will accept their offer. This process will continue for weeks following the initial quote process.

Why do companies call repetitively?

The tendency and normality of certain companies in the structured settlement factoring industry is to low-ball the the initial quote and price match any higher quotes you have received. Lets say company A provides a quote for $130k and company B provides a quote for $133k, company A wants to know that they have been beat and will price match in order to stay in the running. This process can go on for weeks depending on the severity of the initial low-ball quote. In order for these companies to stay on top of the highest quote they need to call up to 10 times a day to price match your best quote, when the truth to the matter is that you should have received a legitimate quote of $180k right from the start.

Why is it worth a company’s time to call several times a day for weeks on end?

With the tactic of low-ball/ price match, it can take several weeks to receive a legitimate quote of $180k. If an annuitant decides to accept a quote of $150k instead of $180k, the difference in price is profit for the factoring company.

Settlement Quotes does not believe in this type of sales tactic and does not call our clients harassing them to accept an offer. WE LET OUR PRICING SPEAK FOR ITSELF!

West Virginia delegate Ron Walters appears to be tightening up the noose for structured settlement factoring companies once again in West Virginia. If your not going to do it right, DON’T do it at all! After the last round of legislation for factoring companies in the state of West Virginia not much was accomplished except mandating a guardian ad litem be appointed to every annuitant selling future payments.

In principal this may seem like a great idea, but over the long run this bill is taking money out of the annuitant’s hands. Every appointed guardian ad litem costs anywhere from $1,000- $2,000, payed for by the factoring company processing the transaction. This cost is deducted directly from the structured settlement recipient and is essentially a life altering amount of money.

With the deduction of funds going to the annuitant, the discount rate of the transaction sky rockets into territory where the transaction will most likely be denied in front of a judge. Lets use an example to demonstrate this scenario:

Suzy is receiving a $25,000 lump sum payment on 6/1/2010. With no court fee’s a company can complete this transaction at a discount rate of 7.6%- 8% which turns out to net the annuitant between $21k- $22k. With the reduction of the normal court fee’s of $3,500- $4,000, the net amount received by the annuitant is reduced to $17k- $18k (18% discount rate). With the appointment of the guardian ad litem, the costs of this transaction would make this payment stream too expensive to factor. The discount rate of this transaction exceeds 23% with no profits being earned by the factoring company.

This author believes that legislation is a good step forward for the structured settlement factoring industry, but there is a proper way to go about these measures. During the next round of legislation, Mr. Walters is expected to put a rate cap on factoring transactions in the state of West Virginia. With the past two bills combined, Mr. Walters will be eliminating the opportunity that many residents of West Virginia will have to factor future structured settlement payments.

The year is 2018 and Ford just released their new Taurus powered by a small nuclear reactor. Gas prices have just reached an all time high of $22 a gallon. The structured settlement factoring regulators have tightened the noose on the dinosaurs of the industry with a discount rate cap of 8%.

After the first rate cap dating back to 2010, several caps have followed resulting in many of the larger companies filing bankruptcy or exiting the industry all together. These days, it is survival of the fittest between the 56 companies that make up the industry. We will see another record breaking year of settlement factoring with over $20 billion of settlement payments factored.

A new educational upload package was released by the National Structured Settlement Factoring Association that is dispersed to all annuitants interested in selling their structured settlement payments. This package is uploaded through the Cerebellum into the memory controller provided by the United States Government. The new upload package includes state and federal laws regulating the industry, companies that are licensed by the FIB (Federal Insurance Board), and an overview of the pricing mechanism of structured settlement factoring transactions. These uploads help annuitants choose a reputable company with competitive pricing to factor their structured settlement payments.

Over the past ten years the average present value of a structured settlement has risen from $30,000 to over $200,000. This increase has occurred due to inflation caused by the current wars being fought in China, North Korea, Iran, Iraq, and Afghanistan. The increasing inflation rate has no end in sight and will continue to rise with the volatility in the East.

Following the addition of Puerto Rico as an official state in 2014, the government passed legislation allowing individuals the right to factor Social Security payments. This has created controversy in Congress over the past 5 years on many levels. When the original beneficiary of the Social Security payments chooses to factor their payments, a portion of the discounted price is taxed by the US Government to create a cash flow to fund wars being fought in the East. Senator Pedro Mendez of Puerto Rico is strongly against this bill and is fighting to amend it with the help of the Democratic party.

The facts, organizations, people, and information in this article are fictional. This article is a satire view of the future and was created to show the impact of how todays actions will mold the future. As companies continue to use pricing models dating back to the late 80’s, authorities and regulators are taking notice of these actions. These actions will have a consequence someday.

The following quote was authored by a client of Settlement Quotes earlier this morning.

“They have BULLIED me & tried to tell me I cannot speak to anyone else while trying to deal with them. An attorney told me that was WRONG–so that means Stonesreet lied to me.”

After speaking with this individual, she stated that a Stone Street representative told her that it was illegal for her to get quotes from any other company after Stone Street provides her a quote.

How can a company get away with straight out lying to a tort victim in desperate need of money? They apparently do not care for the well being of consumers.

This goes out to the upper management of Stone Street Capital: “As you get out of your Mercedes, BMW, or Jaguar tonight, remember that the lives you can effect everyday at work are trying to put food on the table for their families. You have a great opportunity to make a difference in their lives.” Its amazing to look at the greed and money hungry people that have such control over others.

This same company that lies to their clients has the audacity to create a blog post about how to choose a legitimate company when selling your structured settlement payments.

Here are their requirements:

• Make sure the company has been in business for at least 15 years
• Make sure the company has a Better Business Bureau record.
• Make sure the company has completed thousands of transactions.

How do any of these requirements have the best interest of the consumer in mind? Being in business for 15 years and completing 1000’s of transactions does not guarantee the consumer that they are going to get the best deal.

The requirements should be the following:

• Make sure the companies discount rates are between 8%- 11%.
• Make sure the company has a relatively low number of complaints compared to the number of transactions completed by the company.
• Make sure the company does not use skeptical sales tactics to close a structured settlement factoring transaction.
• Make sure the company does not lie on a daily basis to consumers.

An honest company with exceptional rates should not be penalized for not being in business for at least 15 years.

As repeated several times throughout this blog and the structured settlement secondary market, settlement factoring transactions are priced using discount rates. There are several variables that determine the overall discount rate a transaction receives, including time value of money, future value, court filing fee’s, payment stream, misc. costs, and salaries. All of the above variables increase the discount rate due to the expenses the factoring company incurs during the transaction process. Below, we will outline exactly how this effects the bottom line for the consumer.

Overview with example

Discount rates can be deceptive depending the length of time a payment may or may not continue for. Lets use an example to illustrate a few scenarios.

Payment Stream 1- 1 lump sum of $30,000 due on July 1st of 2010.

• At a discount rate of 8% the present value of the payment stream is $25,352.

At this point a company will have to deduct court filing fees, salaries, advertising costs, and other misc. fees. By subtracting just $3500 for court filing fees the discount rate balloons to 15.21%. By deducting any further money off of the present value for any other fees, the discount rate will continue to increase.

Payment Stream 2- 150 monthly payments of $3000 effective immediately

• At a discount rate of 8% the present value of this payment stream is $285,796.

Once again a company will deduct court filing fees, salaries, advertising costs, and other expenses. By just subtracting the $3500 for the court filing fees the discount rate is at a respectable 8.24%.

As you can see the longer and larger payment stream induces a lower discount rate due to the longevity and magnitude of the transaction, while a smaller lump sum payment can quickly see discount rates in the high teens.

We will continue to talk about pricing models of structured settlement factoring transactions over the next few weeks. If you have any questions, please comment and we will be sure to answer them asap.

Feel free to use our discount rate calculator to price your own structured settlement.

Created by- Settlement Quotes, LLC

Settlement Quotes released our discount rate and present value calculators for the public earlier this month. Now, we are providing a way that individuals can place our calculator on any website so consumers will be further educated about discount rates and pricing of structured settlement factoring transactions.

At this time there is not a reliable source for consumers to understand or price a structured settlement factoring transaction on their own. The only other known source by this author is TValue which costs in excess of $2k. Now, there is an opportunity for structured settlement brokers, judges, and attorneys to place these calculators on their websites, so tort victims will have the resources to price the present value or discount rate of their structured settlement.

Here is the page to obtain the code for the following calculators:

• Present Value Calculator
• Nominal Annual Discount Rate Calculator

If you would like an effective discount rate calculator, please email me at acravenho@structuredsettlement-quotes.com or call directly at (860)454-4179. Please note that there is a small bug if you place both calculators on the same page. Please only place 1 calculator on any given page, otherwise they will not function properly. This should be fixed by Saturday.

Matt Bracy of Settlement Capital was interviewed by Jan Schlichtmann in a recent Settlement Capital video series. There are a few points this author would like to open up for conversation.

It was stated in the interview by Mr. Schlichtmann that annuitants should stay away from factoring brokers due to a lack of skill sets. Mr. Bracy follows up by stating that you want to talk to a direct funder when factoring settlement payments.

Who is a legitimate direct funder in the structured settlement factoring industry?

There is not 1 company that funds their own accounts. Every company in the industry that calls itself a direct funder uses outside investors, equity firms, or sovereign accounts to fund their transactions (i.e. Credit Suisse or DZ Bank). How can a company call itself a direct funder when they don’t use their own money to fund their transactions? The so called direct funders of the industry are nothing more than glorified processing companies.

While Settlement Capital is a cash now pusher (http://settlementpurchasers.com) and apparently services payments needlessly, they are one of the more respectable companies in the industry. I would recommend this company over many others, but what is the difference between Settlement Capital and Settlement Quotes?

Funding Sources

• Settlement Quotes shops around for the best deals between our strict network of factoring companies and private investors.
• Settlement Capital has a single funding source

Experience

• Settlement Capital has been in the industry since the late 80’s and stresses structured settlement factoring education to annuitants and financial professionals through their website (2 thumbs up)
• Settlement Quotes has been in the industry since 2006 and has new innovative thinking, idea’s, and knowledge about the industry

Skill sets and expertise

• When an individual calls Settlement Capital, who do they speak with? Matt Bracy? No, they speak with a sales representative who most likely has very little experience in the insurance industry.
• When an individual calls Settlement Quotes, they will speak with James Spelling, an individual with 20 years of insurance and structured settlement experience.

Pricing

• There isn’t much of a discussion on this topic. Settlement Quotes delivers quotes with discount rates in the 7.5- 9.8% range on a consistent basis. Our goal throughout the next 12 months is to lower our average discount rate from 8.8% to under 8% per transaction.

The question was then asked by Mr. Schlichtmann, how an attorney should find an appropriate company to factor a client’s structured settlement payments. Mr. Bracy responded by stating that an attorney should shop around for the best price for their client’s settlement payments. Mr. Bracy continues on to separate the direct funders from the factoring brokers. “Sometimes they will in fact shop around and find you the best price, you can do that yourself.”

Settlement Quotes recommends to everyone to shop around for the best price, but there are a few problems with doing this process on your own. If you initially contact 5 or 6 companies to provide quotes on factoring your structured settlement payments, you will receive multiple calls from each one of these companies everyday. These calls will continue for several months. Feel free to test this out on your own. Click here to take out a free phone number and voice mail service. Fill out 5 or 6 quotes online and let us know how many messages you receive for the first couple of days and weeks.

Why not let Settlement Quotes do the work for you? Settlement Quotes has the expertise, knowledge, and pricing to complete your transaction.