I apologize for not responding yesterday to the comment made by Mr. Bracy. Settlement Quotes is working on several new projects to be released late next week, to help both clients and other structured settlement professionals understand discount rates and present value.
Here is the comment made by Mr. Bracy of Settlement Capital:
"I read Mr. Cravenho’s article this morning, and I think our disagreement, if it really exists, is based on some misunderstandings and imprecise uses of terminology. In the example Mr. Cravenho uses he says that “Peachtree was able to assign the rest of Sarah’s remaining payments to themselves [sic].” First, any assignment of rights would have been from Sarah to Peachtree – Peachtree could not “assign” anything to itself, it being a tried and true maxim of the law that one can only assign what one owns. Second, although I do not know of this transaction specifically, if there was an “assignment” then Peachtree bought all the payments (assignment = purchase). Indeed, Mr. Cravenho refers to factoring companies “owning” all the payment rights pursuant to a servicing agreement. We are clearly not talking about the same thing. If Peachtree owns the rights to the payments, then they cannot be sold again. Instead, I suspect Peachtree did exactly what I described in my article and agreed to service the payments. The abundant use of inaccurate terminology may also explain why New York Life in the example told Sarah (with Mr. Cravenho listening in) that she “no longer owned the (annuity) policy.” As you well know John, she NEVER owned the policy.
Although I am loath to defend a competitor on a specific transaction when I don’t know the details, I think Mr. Cravenho’s indefensible position is best exposed when you ask this question: What was Peachtree supposed to do? Sarah apparently contacted them and had a desire to sell some of her structured settlement payments (not all). The insurance company that issues the payments apparently refused to split them. What financially reasonable course should Peachtree have taken? Some insurers have “suggested” (demanded, actually) in these circumstances that the factoring company buy all the payments. Is that the best answer? How does that relate to meeting the statutorily mandated “best interests” standard? Should Peachtree now, when a subsequent purchasers comes along, take an inferior position? Maybe the best answer, and one we should all advocate, is for insurance companies to agree to split payments.
Although Mr. Cravenho calls my article “uninformative,” perhaps a little more time on the basics and lexicon of structured settlement factoring would be advised. I will continue to try to write more informative articles in the future."
Here is the response from Sovereign Funding Group
1. "No annuity issuer in the structured settlement writing business has ever refused to permit an annuitant to sell only a portion of periodic payments (ie 100 of 250 payments) or sell just lump sums or periodic payments in a mixed payment scenario."
2. "To our knowledge, only one annuity issuer out of approximately 39 issuers who write structured settlements refuses to “split” individual payments (ie refuses to cut two checks if the annuitant wishes to sell only $400.00 of a series of $1,000 monthly payments.) The other 38 annuity issuers permit such splitting."
Settlement Quotes Comments-
After reading the Sovereign Funding Group's blog post, there isn't much to be said. Why hasn't Mr. Bracy responded to SFG's comments?