by Structured Settlement Watchdog®
The Connecticut Woman's torment and sequelae continues.
Less than a year ago an NSSTA member acting as financial adviser to the Connecticut woman placed her into a very large structured annuity with American International Life Assurance Company of New York. As far as this author can tell from interviewing the woman, an inadequate amount of up front cash was considered in the final settlement plan, because less than a month later the woman sought cash to make a home modification.
The NSSTA member referred the CT woman to a representative of Structured Asset Funding.
The CT woman agreed to factor a portion ($1,600/month) of her structured settlement payment rights.
Structured Asset Funding did not "deliver the goods" to the CT woman in timely fashion despite the representation by its representative that it was "business as usual" in September 2008, when the financial world was falling part. Structured Asset Funding (a/k/a 123 Lump Sum), ultimately paid the woman in May 2009 after 6 months and, among other things, she had to hire a lawyer, she contacted this author and this author subsequently interceded on her behalf to expose the poor lady's situation to the structured settlement industry and public and put pressure on Structured Asset Funding to act.
This was not the first substantial delay during this period involving a deal referred to Structured Asset Funding.
Our investigation into the CT woman's problem in April revealed that Structured Asset Funding is "servicing" the CT Woman's structured settlement payments. This means that they receive all of the woman's payments from American International Life Assurance Company of New York, take their cut and then pass through the difference to the CT woman.
When the CT woman was dealing directly with American International Life Assurance Company of New York she maintains that she received payments on time via direct deposit. Now she is receiving checks and the July payment, due July 1, 2009 was not received after the middle of the month. Purportedly American International Life Assurance Company of New York mailed the check to Structured Asset Funding on June 26, 2009. Mailing a structured settlement check 5 days in advance of a due date is common procedure.
The Structured Asset Funding delay caused the woman to miss her mortgage payment and her health insurance payment. Audrey Nadler, the Structured Asset Funding representative now dealing with the CT woman purportedly cannot give the CT woman a definitive date when payments will arrive each month.
Purportedly under servicing arrangements American International Life Assurance Company of New York will not make a direct deposit of structured annuity payments to the factoring company. This author is not aware of how other annuity issuers deal payment delivery under servicing arrangements.
I am not a fan of servicing arrangements. People depend on their settlement checks and if they cannot be "on time every time®" then cash now pusher "servicing" does not serve a purpose.
Furthermore, in my opinion those life insurance companies who will not split annuity payments to those who factor structured settlement payment rights are sending the annuitants to the wolves. At the very least people who sell their structured settlement payment rights, where there is going to be a servicing arrangement need to be given a written disclosure PRIOR TO signing an absolute assignment or transfer of structured settlement payment rights that payments may be delayed.
Message to the settlement industry
- Don't over structure! Ask the right questions. Employ the approach of a settlement planner not a short order chef!
- NSSTA MUST tackle the issue of structured settlement servicing by factoring companies to assure that its life company members are not contributing to the problem. For all the good the structured settlement industry does it can easily be tainted by unreliable or ineffective solutions that affect timing of payments to structured settlement payees.
- Are commutation riders a possible solution, where the liquidity is provided in-house and there is no need to split payments? A good industry resource would be Dan Durbin, the NSSTA President who is with Allstate Life Insurance Company, an annuity issuer that has had its Advanced Funding Exchange Notice (AFEN) in place for some time.
Message to the factoring industry
- Come out and say something about servicing NASP members. If you have some procedures in place to assure that what is happening to the Connecticut woman does not happen with your company when payments are being "serviced", tell us what you are doing!
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