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There are many kinds of payment streams, "receivables", that can be turned
into immediate cash. These receivables might be a payments now being received
by the beneficiary or they could be available sometime in the future. There
might be hundreds of payments due or only one payment due.
Pricing and discounts on these receivables will depend on the time value of
money, the creditworthiness of the payer, "seasoning" of the payments, and the
collateral involved if any.
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Mortgage Notes: The holder (beneficiary)
of a real estate Mortgage Note (Trust Deed and Note in some states) is the
holder of a receivable that can often be turned into a lump sum of cash.
The holder might sell all or part of the mortgage to a note buyer. The amount
received is based on the time value of money and the lenders evaluation
of the risk.
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- Business Notes: As with mortgage notes, Business
Notes are often sellable in part or in full. The collateral is usually not
as strong as with residential real estate notes and thus the pricing may be
a little weaker.
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Commissions: Commission agreements promising
payment now or later for services may also be sold as a "receivable".
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Prizes and Awards: A prize or award that is
a cash receivable can be sold for cash now rather than having to wait until
later. These are usually limited to government prizes such as a lottery payment
stream.
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Vehicle, Aircraft & Boat Notes: These kinds
of notes are also sellable for cash. The collateral is not as stable as with
real estate and thus the discounts tend to be higher that with well secured
notes.
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Structured Settlements: These are legal
payment settlements as the result of a legal proceeding. They are sellable
payment streams. Their value will depend significantly on the credit worthiness
of the payer. However, these payers are often insurance companies or governments
so they can be quite creditworthy.
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Judgments: Judgments can occasionally be
sold, but, usually with great difficulty. Often the reason that they are being
sold is that they are known to be a collection problem. Therefore, they are
priced very aggressively.
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Annuities: Annuities that are cash payments
are just another form of a receivable. In many cases the beneficiary may sell
his rights to all or part the income stream for a lump sum of cash now.
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Disability Payments: In some cases these
can be exchanged for lump sum cash.
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