by Structured Settlement Watchdog®
I hope Tom Kaiser, the Genworth Financial fraud analyst, pays more attention to his day job, because he doesn't know much about structured settlements or basic finance, judging by this social media road kill Kaiser uses in a feckless attempt to explain a structured settlement factoring transaction.
"So as an example a SS is to pay you $300,000, in monthly $1,000 payments for 25 years. So let’s say after 5 years you decide to sell the whole payment. You will have received $60,000 of the payment and the current value of the rest is $240,000. A factoring company offers 12% discount rate: $240,000 x 12% = $28,800.00. Most people see this huge lump sum and quickly sign on the dotted line. Unfortunately many are unable to handle such large sums of money and simply run out of funds. Again the above is only an example and your situation may vary".
- If you are due $1,000 per month ( $12,000 per year) for 25 years and you've already received 60 payments of $60,000, your current value is not $240,000! The $240,000 represents the remaining future payments
- Tom Kaiser's application of discount rate is a joke. The discount rate is the rate used to discount future cash flows. Finance 101.
Then there's this from Der Kaiser "For example if you are owed $100,000 in 20 years versus the same $100,000 due in 10 years you might be able to get a higher discount rate".
- If there is a higher discount rate you get less. Duh!
I think it's time Tom Kaiser "Bow-ied" out and left structured settlement commentary to the structured settlement experts.
Tom Kaiser's quote is from a Word Press blog called Learn About Fraud as appeared May 13, 2015 at 946pm EDT.