Who is Really Buying My Structured Settlement Annuity Payments?
Learn what really happens when you sell a structured settlement annuity.
Understand who is buying your structured settlement annuity. Do you know who is really buying your structured settlement annuity? Many Annuitants seem to be left in the dark when it comes to the actual process of selling structured settlement annuity payments. After speaking to hundreds and hundreds of annuitants over the years it dawned on us that the individual selling structured settlement annuity payments truly had no idea what goes on behind the scenes. We don’t believe it should be some big secret and would like to educate the annuitant as to what actually transpires should they decide to sell structured settlement annuity payments.
We feel it’s about time to bring some transparency to the process of selling a structured settlement annuity. Just to be clear we’re not referring to the court process. Many annuitants, especially those that have sold part of their annuities, are quite familiar with the court procedure of selling structured settlement annuity payments. It is quite obvious, however, that many factoring companies don’t bother to educate the annuitant as to who actually winds up buying their annuity payments. We’re referring to the actual assignment or sale of the annuity payments and to whom it is actually sold to.
The majority of smaller factoring companies tend to sell or assign their interest in the structured settlement annuity payments they buy to individual investors. These individuals are people, just like the annuitant, that want to invest in secondary market annuities. Their name and address will go directly in the court order that approves the transfer. These payments may be directed to the investor’s name or perhaps jointly with a spouse with Joint Tenancy with Right of Survivorship (JTWROS) or maybe even a Self Directed IRA account (SDIRA). It’s important for both the annuitant and the investor to know that there is another person at the other end of the transaction. Why is this important? It’s important for two reasons. The annuitant must be willing to help provide the necessary documents in order for the transaction to close promptly and satisfy the investor. Conversely, the investor needs to understand that the annuitant is selling structured settlement annuity payments because they need money as soon as possible. Therefore, once all proper closing documents are in order it’s imperative that the investor fund the transaction promptly so the annuitant can get the money they’ve been patiently waiting for. As is, structured settlement annuity transfers typically take two months or more to complete regardless of what some factoring companies may tell the annuitant at the onset. As a general rule, individual investors are less strict when it comes to funding compliance as opposed to institutional investors. Using individual investors may speed up the time it takes to fund the transaction. Many individual investors will fund the transaction simply with a copy of the court order approving the transfer and a copy of the annuity policy.
Many of the large factoring companies sell or assign their interest in the structured settlement annuity payments to institutional investors. They may initially have these payments transferred to their company address but will later securitize these pools of loans to institutions. These companies have funds set up to buy these debt obligations from the factoring company. What does this mean for the annuitant? It simply means that institutional investors will have stricter compliance guidelines that require more documentation than perhaps an individual investor.
Acknowledgment Letter Recognizing the Court Ordered Transfer of Payment Rights (post hearing)
Child Support Payoff (if applicable)
Collateral Assignment Fully Executed (if life contingent payments)
Contract Package Fully Executed
Divorce Decree (if applicable)
Driver’s License or State Identification Card
Life Insurance Policy (if life contingent payments)
Life Insurance Policy Receipt (if life contingent payments)
Release & Settlement Agreement from the Original Lawsuit
Social Security Card
Stipulation Among All Parties (if applicable)
Uniform Qualified Assignment
Listed above are examples of documents that will typically be required by institutional investors. This could delay the time it takes for the transaction to be funded. If the factoring company is on the ball they will assist the annuitant in acquiring all the necessary documents prior to the court hearing (with the exception of the acknowledgement letter). Scrambling around to get documents after the hearing takes place will inevitably delay the closing and frustrate the annuitant.
Rarely will a factoring company buy structured settlement annuity payments on their own behalf and actually wait for the payments as if they were the annuitant. Some companies may occasionally buy an annuity if they can’t find an investor or if the discount rate on the transfer is extremely generous and the annuity payments aren’t due too far in the future. Still most don’t buy them for themselves. There is a big misconception among most annuitants that think the factoring company is actually the entity that winds up buying their annuity payments. The truth is almost all factoring companies are middle men one way or another. As for the annuitant this doesn’t mean that one way is necessarily better than the other. The annuitant just needs to make sure they get all required documents to the factoring company quickly in order to speed up the closing process. To learn more about the process of how to sell structured settlement annuity payments visit our page How to Sell Structured Settlement Annuity Payments.
Corona Capital Buys Structured Settlement Annuity Payments