by John Darer® CLU CHFC MSC RSP CLTC
As one of the first class of candidates closing in on the Registered Settlement Planner designation I would first like to reiterate the value of this credentialing program through Texas Tech and Registry of Settlement Planners Board.
The second course entitled "Settlement Planning Seminar" includes an educational module on factoring featuring Robert Ostrov , in-house counsel to "cash now pusher" Structured Asset Funding a/k/a 123 Lump Sum), formerly of "cash now pusher" Peachtree Settlement Funding and a former Assistant District Attorney for Orange County, New York AND who is running for a seat in the Florida state legislature (District 87).
Ostrov comes off as very knowledgeable in a 64 slide audio-visual presentation. Ostrov alleges the following reasons that people sell their rights to receive structured settlement payments:
- Pay off Debt
- Avoid Bankruptcy
- Avoid Foreclosure
- Avoid Eviction
- Medical Emergencies
- Pay Tuition
- Start a business
- Pay off tax liens
- Purchase a home or a car
- Hire Criminal Defense Counsel
- Pay Off Child Support
Seemingly honorable reasons for someone who has failed to plan for liquidity needs or to whom fate has dealt misfortune. I immediately became suspect when I discovered that Ostrov omitted that at the time of publication, Structured Asset Funding, the "cash now pusher" he is in house counsel for the advertises as a reason to sell your structure payment rights, and I quote, " (to) enjoy the thrill of your dream car or boat, or travel in style in a new RV. Turn the monotony of uninspired transportation into a distant memory". The ad includes a picture of what is believed to be a Ferrari. With some exceptions, this is unfortunately typical of the two faced baloney that we've come to expect from the leaders of the structured settlement factoring industry. In my opinion, the factoring industry will never achieve respect of the structured settlement industry and many lawyers as long as it has members that continue such whorish advertising and solicitation practices in times of economic uncertainty.
On the positive side Ostrov provides valuable insight into the factoring industry modus operandi from a marketing standpoint by comparing factoring effective discount rates to current credit card rates. Ostrov states that the factoring industry average effective discount rates are 16% compared to the average credit card rates of 21%. He then proceeds to show how Sears charges 23.4% and has a default rate of 28.4%; Exxon Mobil charges 21% and has a default rate of 24%, Lowes charges 21% and that JP Morgan, Citi and Bank of America each charge a penalty rate of 30%. In my opinion this is nothing but marketing spin, but I will leave it to a factoring industry though leader, Andrew Cravenho of the Settlement Quotes, LLC factoring exchange, to write a post to lay waste to Ostrov's message by telling us that far better than 16% rates can be found with a little effort.
Having recently arrived at Structured Asset Funding from Peachtree and having subsequently given this explanation, Ostrov is to be thanked for giving RSP candidates and "the world", thanks to this post, a window into how Peachtree Settlement Funding might attempt to justify its consistently out of touch effective discount rates. Ostrov also attempts to justify the high rates, reasoning that it's to "account for risk of default" citing Executive Life, Reliance and Confederation Life as examples. If so why are such rates being charged for transfers involving such companies as New York Life, Metropolitan Life and Pacific Life?