by Structured Settlement Watchdog
New York judges are some of the best in the country at snuffing out the subtle blend of baloney and brined BS on rye served in structured settlement factoring deli.
The New York Structured Settlement Protection Act requires that "not less than ten days prior to the date on which the payee signs a transfer agreement, the transferee shall provide to the payee by first class mail and certified mail, return receipt requested or United States postal service priority mail, a separate disclosure statement, in bold type no smaller than fourteen points, setting forth:
(a) the amounts and due dates of the structured settlement payments to be transferred;
(b) the aggregate amount of such payments;
(c) the discounted present value of the payments to be transferred, which shall be identified as the "calculation of current value of the transferred structured settlement payments under federal standards for valuing annuities", and the amount of the applicable federal rate used in calculating such discounted present value;
(d) the price quote from the original annuity issuer or, if such price quote is not readily available from the original annuity issuer, then a price quote from two other annuity issuers that reflects the current cost of purchasing a comparable annuity for the aggregate amount of payments to be transferred;
(e) the gross advance amount and the annual discount rate, compounded monthly, used to determine such figure;
(f) an itemized listing of all commissions, fees, costs, expenses and charges payable by the payee or deductible from the gross amount otherwise payable to the payee and the total amount of such fees;
(g) the net advance amount including the statement: "The net cash payment you receive in this transaction from the buyer was determined by applying the specified discount rate to the amount of future payments received by the buyer, less the total amount of commissions, fees, costs, expenses and charges payable by you";
(h) the amount of any penalties or liquidated damages payable by the payee in the event of any breach of the transfer agreement by the payee; and
(i) a statement that the payee has the right to cancel the transfer agreement, without penalty or further obligation, not later than the third business day after the date the agreement is signed by the payee.
Let's look at couple of cases where the factoring company was represented by the same New York City law firm. The first two were pending at the time of posting.
Peachtree Settlement Funding, LLC v Nelson, Derrick et al. NY Supreme Ct. County Orange index EF002393-2020. Hon. Catherine > Bartlett AJSC . Disclosure refers to a 24.99% specified discount rate for the sale of 156 life contingent Prudential monthly payments of $500 each from July 9, 2020 ending on June 9, 2033 Offer of $24,027 for $78,000 in payments. According to the Payee's affidavit he is 56 years old, unemployed, divorced with no dependents and receives monthly disability checks of $900 per month. Plans to use the sale proceeds for a down payment on a home. Nelson was due $1,500/month for life from 12/9/1988 (period certain ended in 1998). As the result of the proposed sale, if approved by AJSC Bartlett, Nelson will get a net of $500 per month from his annuity through May 9, 2030, if still living, and then $1,000 per month thereafter, if living. Adding in the $900 he receives from disability he will have to live on $1,400/month through May 9, 2030. Assuming he can find a suitable residence and obtain a mortgage he will have to make mortgage payments, pay for telephone, cable, electric, transportation, food, clothing and taxes. Does the math add up? Court submission notably does not redact Derrick Nelson's Prudential annuity contract number. UGH! An Order to Cause has an Appearance date of July 28, 2020 at 10am. Jones and the attorney for Petitioner (i.e. not Jones' attorney, the attorney for Peachtree) are required to attend via Skype.
Peachtree Settlement Funding, LLC v Christopher Freeman NY Supreme Ct. Cayuga County Index E2020-0273. Disclosure refers to an equivalent discount rate of 15.23% per year, for the sale of A) 12 monthly payments of $820.00 each, beginning on January 1, 2035 and ending on
December 1, 2035 B) 240 monthly Life Contingent payments of $820.00 each, beginning on January 1, 2036 and ending on December 1, 2055. $8,000 was offered for $206,640 in future payments. number Dealing directly with Berkshire Hathaway and its Hardship Exchange program would likely result in a much lower discount rate. Berkshire Hathaway's Hardship Exchange program has been well publicized.
See my two posts
Berkshire Hathaway Hardship Exchange Program | Secondary Market Urban Legend Debunked August 18, 2018
The Peachtree Petition in Freeman is disingenuous in that the Peachtree disclosure uses New York Life and MetLife Investors for comparable quotes. Judge Mark H. Fandrich AND Christopher Freeman should be fully informed of Berkshire Hathaway's program and if Peachtree wants to keep the business it should come in under the Berkshire Hathaway number, in my opinion. Download 2020_0273_Peachtree_Settlement_F_v_Peachtree_Settlement_F_EXHIBIT_S__4. With the Court hearing being adjourned to September 1, 2020 at 1145am there is plenty of time to get a more competitive offer on the table. How about it Peachtree?
In another recent decision that may be of interest to judges reviewing structured settlement transfer petitions, as well as CBC Settlement Funding and its Queens lawyers with an apparent penchant for citing cases from 12-17 years ago in transfer petitions [ see July 16, 2020 prior post]
In the Matter of the Application of J.G. Wentworth Originations, LLC, Petitioner, v. Pamela McDonald, UTICA MUTUAL INSURANCE COMPANY and UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK, as Interested Persons pursuant to General Obligations Law § 5-1701 (f)., Respondent. Supreme Court, New York, Warren County. Index EF2020-67893 decided July 8, 2020
The fourth application — also filed in Warren County — sought to transfer Ms. McDonald’s right to 180 monthly payments of $1,500.00 beginning on December 22, 2020 and ending on November 22, 2035 — for an aggregate sum of $144,000.00 — to petitioner for a lump sum of $52,800.00. Ms. McDonald — who was then 44 years old, married and had no minor dependents — indicated that she planned to use the money to purchase the 2002 double-wide trailer that she and her husband had been renting. The Court approved this application by Order dated December 10, 2019.
The Court then reviewed a fifth application — filed on May 26, 2020 — which sought to transfer $850.00 of each $1,500.00 monthly payment to which Ms. McDonald is entitled from December 22, 2035 to November 22, 2050 — for an aggregate sum of $153,000.00 — to petitioner for a lump sum of $2,500.00. Ms. McDonald now describes herself as “45 years old, widowed and with no minor children.” She intends to use the funds to purchase a new kitchen stove.
The Court in McDonald observes that petitioner technically complies with NY State General Obligations Law 5-1705 by including a copy of the transfer agreement, a copy of the disclosure statement and proof of service upon all interested parties, including the party currently receiving the structured settlement payments and the obligor responsible for making the payments
That being said, in enacting the SSPA the Legislature “ did not intend for the courts to be mere rubber stamps’ for the proposed sale” Matter of 321 Henderson Receivables L.P. v Martinez 11 Misc 3d at 895, quoting Matter of Settlement Capital Corp [Ballos} 1 Misc 3d 446, 461 ( Sup Ct Queens County 2003); accord (the 2018 decision) in the Matter of JG Wentworth Originations , LLC [Allstate Life insurance Company of NY-Kwant case 61 Misc 3d 1224[A] Rather, “the courts are intended to examine the various statutory criteria and determine whether the proposed sale will truly serve the ‘best interest’ of the payee”
Application of this best interest standard “ ‘requires a case-by-case analysis to determine whether the proposed transfer of structured settlement payments, . . . designed to preserve the injured person’s long-term financial security, will provide needed financial rescue without jeopardizing or irreparably impairing the financial security afforded to the payee
Considering the history of these several applications and Ms. McDonald’s expressed desire to relinquish the aggregate amount of $153,000.00 in exchange for a $2,500.00 kitchen appliance, the Court specifically finds that the proposed transfer is not in her best interest.
A) 2 quarterly Life Contingent payments of $1,197.66 each, beginning on January 2, 2038 and ending on April 2, 2038 B) 2 quarterly Life Contingent payments of $1,203.77 each, beginning on July 2, 2038 and ending on October 2, 2038 C) 20 quarterly Life Contingent payments of $1,198.88 each, increasing at 3% annually, beginning on January 2, 2039 and ending on October 2, 2043 D) 42 quarterly Life Contingent payments of $4,155.29 each, increasing at 3% annually, beginning on January 2, 2044 and ending on April 2, 2054