Some companies who offer to buy structured settlement payments on the secondary market (factoring companies) engage in the following practice:
1. Make a low ball offer and test whether the seller will accept or shop for a better price.
2. If the seller shops and receives a better offer they will make a counter offer higher than the highest offering price and drag the completion of the case out several months so as to recover the lost profits through interest drag.
Interest drag is the widening spread between the fixed purchase price payable to the seller and the floating sale price set at transaction completion with the investor or securitizer. This spread can be significant, and sometimes more than $100.00 per each day that the transaction remains uncompleted. If a case is dragged for an extra 2 months, that would amount to an extra profit of $6,000.00 due to the factoring company.
Unfortunately this tactic is employed by many structured settlement factoring companies. As a first line of defense make sure that the company that you are obtaining a quote from are members of the Better Business Bureau and have no complaints.
At Sovereign Funding Group we deplore such tactics. We not only offer the best price upfront to the seller but we also offer a Closing Guarantee* whereby if a transaction takes longer than 8 weeks to close we will guarantee the per diem interest drag by way of a additional payment due to the seller at completion of the transaction.
No comments:
Post a Comment