Part 5 – Due Diligence
Now that all of the required documentation is signed, it is time to make sure that we have everything needed in order to file the Court case. 
This stage is generally called the Due Diligence phase, wherein we will review the transaction for accuracy and compliance with our underwriting guidelines.
There are potentially countless scenarios that have to be dealt with when underwriting a file, so unfortunately I can not list every possible situation. However, below I will list a few of the more common items that we would look at while underwriting the file. In later posts, we will talk about each item specifically and their impact on a transaction, but for now, here are some generalities:
[1] Settlement and Annuity Paperwork - In order to purchase an asset, it is important to know the details and history of the product. We would want to review the entire original settlement document package, which could include the Settlement Agreement, the Qualified Assignment, the Order Approving Minor’s Claim and/or the Annuity Policy. These documents tell us what originally happened, what was agreed upon, and under what conditions the settlement was made.
[2] Credit Report - The credit report is one of a few methods used to obtain information like Child Support Obligations, Bankruptcy’s, and Federal or State Tax Liens. The existence of any of these items can affect the type of transaction completed or in the worst case scenario, make it impossible to purchase your payments.
[3] Tax Returns and Income Verification - These items are needed in order to verify marital status and monthly/yearly income. If you rely on the monthly payments to pay your existing monthly debt, it would not be prudent for a funding company to purchase your entire monthly income from the annuity. This could have the potential of effectively putting you out on the street with no income to support yourself.
[4] Spousal Consent or Beneficial Interest Waivers -State laws require notice for any beneficiary with a possible interest in your annuity payments. It is always a good bet to obtain consents or waivers from spouses or dependents to eliminate any possible future claim on the payments being sold.
Again, the above items are just a few things that can affect a potential transaction, but once everything has been cleared up and all of the due diligence items are obtained, then it is time to file the court action. In the next blog, we will talk about adding in prior deal information into the affidavit, and then filing of the court case.
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