Petitioners' application to approve a transfer of structured settlement payments from Respondent, D.C., to SENECA ONE, LLC ("Seneca"), is GRANTED to the extent that this Court will approve a transaction that will cover three months of mortgage payments, which will [*2]allow D.C. to become current on her mortgage obligation and prevent her home from being foreclosed.

The Court is further granting renewal of the Petition upon papers confirming to this Decision.

The Petition

Seneca is seeking approval of the transfer of certain structured settlement payment rights due under a structured settlement payment agreement in accordance with 26 U.S.C. § 5891 et seq. and GOL § 5-1701 et seq., namely one hundred forty-six (146) monthly payments, each in the amount of $375.00, beginning with the payment due and payable on or about October 12, 2012 through to and including the payment due and payable on or about November 21, 2024, an aggregate total of $54,750.00,which has adiscounted present value of $47,709.64. ("Assigned Payments"). (Ver Pet at ¶¶ 11, 17-18.) After subtracting commissions, fees, costs, expenses and charges,D.C. will receive $18,552.32 in exchange for the $47,709.64 in Assigned Payments—which will eventually be worth $54,750.00 to Seneca. (Id. at ¶ 19.)

D.C. testified that she needs this transfer to save her home from foreclosure. She "ha[s] not paid [her] mortgage, due to a downturn in the economy, in many months now and [she is] in dire need of funds to save [her] home which has been her nest-egg for many years now." (D.C. Aff at ¶ 6.) The Court finds that it is in D.C.'s best interest to allow her funds to save her home. This finding is counterbalanced by the need to preserve as much of her future payments as possible.

General Obligations Law

The standard for approval of the above transaction is contained in GOL §5-1706, which states:

No direct or indirect transfer of structured settlement payment rights shall be effective and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to any transferee of structured settlement payment rights unless the transfer has been authorized in advance in a final order of a court of competent jurisdiction based upon express findings by such court that: . . .

the transfer is in the best interest of the payee, taking into account the welfare and support of the payee's dependants; and whether the transaction, including the discount rate used to determine the gross advance amount and the fees and expenses used to determine the net advance amount, are fair and reasonable. Provided the court makes the findings as outlined in this subdivision, there is no requirement for the court to find that an applicant is suffering from a hardship to approve the transfer of structured settlement payments under this subdivision;

GOL § 5-1706(b). [*3]

"It is assumed, therefore, that the payee's decision, even if freely entered into, is not always one a reasonable person might make, and the court is in effect asked to protect an individual from himself or herself." 321 Henderson Receivables Ltd. P'ship v. DeMallie, 2 Misc 3d 464. As such,

the court is required to conduct two distinct inquiries before a transfer of a structured settlement can be approved. The fairness and reasonableness of the transaction is to be weighed from the perspective of the overall market in loans, taking into account prevailing interest rates and the possibilities of alternative financing. The best interest standard, in contrast, considers the financial condition and needs of the specific payee who is proposing to sell his or her income stream.

Id. at 465.

This Court agrees, however, with the increasingly ubiquitous maxim "that all of these transactions are economically unwise, [thus], it would make no sense for any court to undertake a subjective analysis whether these transactions strike a particular judge as fair and reasonable' according to his or her own economic predisposition." Matter of 321 Henderson Receivables L.P., 819 NYS2d 826, 832. Ergo, regardless of whether the proposed transfer rate is within the range of the marketplace, "[t]he fair and reasonable test should . . . also [be] weighed against whether the transaction is in the best interest of the payee." Id. at 832-33.

The best interest standard under New York's Structured Settlement Protection Act requires a case-by-case analysis to determine whether the proposed transfer of structured settlement payments, which were 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 and dependents by the periodic payments. The best interest prong should give specific consideration to such factors as the payee's age; mental and physical capacity; maturity level; ability to show sufficient income that is independent of the payments sought for transfer; capacity to provide for the welfare and support of the payee's dependants; the need for medical treatment; the stated purpose for the transfer; and the demonstrated ability to appreciate the financial terms and consequences of the proposed transfer based upon truly independent legal and financial advice. Hardship is only one factor to be considered, based upon well-documented evidence that the payee or a payee's dependent is confronted with such economic hardship, desperate or dire straits or unanticipated family emergency that, in the absence of the proposed transfer, the payee would be subject to dire consequences, such as imminent loss of life, loss of a home or the financial collapse of the family.

In re Settlement Capital Corp., 1 Misc 3d 446, 455.

The statute was enacted because "factoring companies were using aggressive advertising, plus the allure of quick and easy cash, to induce settlement to cash out future payments, often at substantial discounts, depriving victims and their families of the long-term financial security their [*4]structured settlements were designed to provide." Matter of Settlement Funding of New York, LLC (Rahman), 31 Misc 3d 1229A (citations omitted). This paternalistic purpose is designed to prevent individuals from doing anything "foolish" with their money thereby leaving them without resources for the future. Matter of 321 Henderson Receivables Origination LLC v. Lugo, et al., 23 Misc 3d 1138A; Matter of Vandas Sanskrit, LLC, 2011 NY Slip Op 32041U, *5.

This is D.C.'s fourth request to transfer funds. Two petitions resulted in her transferring $84,400.00 for $43,000.00, while her third—seeking to transfer $124,653.20 for $26,780.00—was denied by this Court. She used the money she received for home improvements, dental work, and to pay down high interest rate debt. Yet, by the time of her third request, her debt had increased to include a student loan, a home equity mortgage, and outstanding credit card and utility bill balances. Now, she needs to save her home. Despite D.C.'s repeated claims that she "do[es] not depend on the payments [she is] selling to pay for the necessities of life (food, clothing, shelter, medical care)," it appears from the record that she does.

D.C. has not proffered any documentary evidence of an imminent foreclosure. See In re Settlement Funding Corp, LLC, 24 Misc 3d 1201A, *3 (lamenting that "the paucity of information and/or documentation included with structured settlementpetitions such as this continues to amaze this court"). However, the Court cannot ignore such a request if it will in fact prevent such a calamity. See, e.g., Settlement Funding of NY, LLC. v. Brown, 11 Misc 3d 1059A; Matter of Settlement Capital Corp. v. Yates, 12 Misc 3d 1198A; Matter of 321 Henderson Receivables Origination LLC, 2008 NY Slip Op 51351U, *3. The Court is also motivated by the desire to ensure that D.C. has funds to live on in the future, given the precarious state of the economy and her ever-increasing debt. See In re Settlement Funding of NY LLC, 2006 NY Misc LEXIS 2777, *13-14 (finding that the high cost of living in New York City may result in payee's "future ability to support himself . . . actually be[ing] dependent on his receipt of the structured settlement payments in full").

The foregoing shall constitute the decision and order of this Court.