by Structured Settlement Watchdog®
On the warpath since the Washington Post broke the story of Baltimore's lead paint poisoned blacks with structured settlements being allegedly exploited by Chevy Chase cash now pusher, Access Funding, Elijah Cummings said "I want to get more information. want to dig deeper, and once I’ve found out what’s going on, then we need to look at the laws that are out there, both state and federal, and try to come up with some reforms to protect these folks.”
Elijah Cummings has expanded his probe. The Baltimore Maryland Democrat and top-ranking Democrat on the House Oversight and Government Reform Committee sent letters to two companies seeking more information about the practice, Massachusetts-based Bulbrook/Drislane Brokerage and Oregon-based Somerset Wealth Strategies.
The Baltimore Sun reports November 2, 2015 that "experts (including this author), have questioned how informed settlement sellers are about the transactions they are agreeing to. Sellers are required to receive independent financial counseling before signing an agreement, but in many cases the counseling sessions are perfunctory and are completed in less than a minute"
Somerset Wealth Strategies and Bulbrook-Drislane run distribution channels for structured settlement payments rights in the tertiary market, however unlike JG Wentworth and certain others which package together and securitize structured settlement payment rights for institutional investors, Somerset and Bulbrook-Drislane make the cash flows available to individual investors. Below is my March 2010 interview of John Bulbrook for Legal Broadcast Network during which he describes his operation and the process. It should be noted that while there was and still is no licensing standard for structured settlement factoring, Bulbrook indicated that he required anyone who distributed the product to hold a life insurance license due to (his presumption of ) their knowledge and ability to explain annuities.
With every structured settlement factoring transaction, there is a buyer, a seller and possibly an assignee. According to the Baltimore Sun article, Elijah Cummings is interested in how many of the deals that involved Somerset and Bulbrook-Drislane involved structured settlements of Maryland residents.
With both of these entities the question becomes who is the source of the deals that they market to individual investors? Are these entities canvassing lead paint victims or are they merely intermediaries moving deals where others have solicited these people and underwritten the deals. My "money" is on the latter. How big of a back hoe is Elijah Cummings driving? We'll see.
The marketing of structured settlement payment rights to individual investors, borne from the 2008-2009 financial crisis when institutional capital was scarce, and when discount rates were typically in the high teens, helped drive down discount rates which was a good thing for sellers who had no alternative but to sell.
The lack of regulation of sale practices and business conduct for the entire structured settlement secondary market stifles the legitimacy of the structured settlement payment rights purchasing profession and places it into cross hairs of state and federal legislators.
Comments and Trackback Policy