My mother is in a memory care facility on Medicaid since early Nov 2019. My father passed away 13 months ago. They had a home on a reverse mortgage sinice 2009 and it is completely underwater. I sent the amount owed and the current market value to Medicaid showing how underwater this home is. It is in default now. The lender says they will accept a Deed in Lieu of Foreclosure. The lender put a lock on the house and the homeowners insurance was cancelled.
your Mom could be held in default on the loans...but....so what. Deed in lieu of foreclosure? Why bother? She isn’t going to be ever in a position to have any assets attached by a lender. She isn’t going to ever need a loan again, so her credit rating is meaningless. Basically, she is totally collection proof. Medicaid can try to collect, but that is between the mortgage holders and Medicaid, not you. I fact, you probably cannot sign off on Medicaid’s lien on the house....but, that is between the mortgage holder and Medicaid.
remember, unless you signed any or these loan documents...you are not liable for any of it.
so, I recommend you write a nice letter to these lenders and explain that there is no way your Mom will ever pay this and she will leave no estate.
if I were you, I would not do anything beyond a letter. I would not hire an attorney. Why throw money out the window. Unless of course, you signed personally for any of these loans.
The RM is secured lending with the property listed & beholden as collateral on the RM. As such it is the superior lien to anything else & controls whatever happens with the property; both physical control - like they locked it up - and all legal control. RM pretty well are designed to have as the end game any & all $ coming from sale of property is theirs. Between balance on RM, fees, interest and whatever else they can tack on (appraisal, locksmith, cleaning crew), it’s gonna be way way more than property is worth.
Medicaid is not a secured debt. What Medicaid might can do (& this very much depends on your states laws on property rights & probate) is either place a predeath lien or after death claim on the estate which has the property as an asset of the estate. Even if yours is a state (TIFRA) that allows a actual predeath lien placed, it’s still unsecured. The lien might be there; it’ll be kinda subterranean and found if a mortgage lender type of title search is done. But it’s a not secured debt. RM doesn’t give a fig about Medicaid.
RM probably wants mom to do a Deed in Lieu as it will make their eventual selling of the house so so so much easier as they get possession sooner and don’t have to go thru the legal requirements of a foreclosure (like the notices in the paper, posting at courthouse, serving the owner, etc.). Foreclosure takes t...I...m...e..... so Unless RM is going to do all the DIL paperwork for mom/you at all their costs including them sending a notary to the NH, and with a bow on it for you, I’m with KK that it’s not your or mom’s problem.
also RM wants DIL done ASAP as they don’t want extra complications should mom die before the RM is able to get all paperwork done.
if you should not already have DPOA that allows for doing full financial and selling of real estate, this will get complicated unless mom is pretty competent. If she’s got dementia and it’s kinda obvious and you don’t have full DPOA, I’d totally have all this as not your problem. Ever.
let us know what happens, thanks!
Merp not a issue till after death.
For your mom, this is a current eligibility for Medicaid issue instead.
Why? Cause if they sell / transfer an asset of theirs or get an asset while alive (usually this is cause they inherited $ or property or life insurance proceeds from someone else who died & named them beneficiary), that is an issue for their current Medicaid eligibility. The new $ or new ownership of a property changes their eligibility. They probably won’t be low income enough for how LTC Medicaid works. They become ineligible for Medicaid.
It’s not a MERP issue. Any changes in assets is supposed to be reported to the state in a timely manner. Just what the timeframe is depends on how your state runs it’s MedicAID program. The requirements would have been in the application. Also states can do a annual recertification as to eligibility. Changes have to be reported. State can do a search thru state database to see stuff too. Medicaid runs the new numbers to see if still eligible or need to go to private pay.
They can get suspended from Medicaid if renewal paperwork not submitted or there’s a discrepancy.
if Sissys concerns are kinda last couple of months, I’ll bet that the costs on the house are more than she can afford. Property taxes are due most places by end of January. If moms old homestead exemption was removed by tax assessor cause it’s not exactly her home anymore, it could be a huge, HUGE increase that is due by end of this month. Like $$$ 3x 5x the old tax bill. There’s gotta be something that sparked Sissy on “selling” & “now”. Go on line and look at tax bill and also if it’s been at all delinquent or late for last couple of years.
Ask Medicaid how they deal with it and if it doesn't disqualify her from benefits then it would be the generous thing to do. Foreclosure costs thousands of dollars and a deed can be done for a couple of hundred.
Realize that no insurance could cause problems if something were to happen, so the sooner it is transferred the better. It is a good thing to get it out of moms name sooner.
Neither the mortgage or property can be financially maintained, and your mother has no income outside of SS. Medicaid is aware of the situation.
But your concern is that your mother would be disqualified "when they find out." I assume you're referring to discovering that a Deed in Lieu will actually have been recorded?
I understand and think it's wise to ensure that your mother will still be covered by Medicaid, and that's the critical issue, so I would focus on that. Since I've never been involved with Medicaid, I can't make suggestions on how to confirm their knowledge and continued coverage. I'm sure others here can, and I would follow those recommendations.
Or contact Medicaid directly. Or perhaps the SW or Admin of the memory care facility can help you with this; it's a beneficiary of Medicaid's funds so it too has a vested interest in ensuring continued funding.
Once you have that assurance, if it's possible (and again I have no Medicaid experience so I have no insight into how to obtain their response in writing), then deliver the Deed in Lieu.
You mentioned that the RM mortgagee is the primary lien holder. Are there other recorded liens against the property, such as delinquent taxes?
The landmine is the reverse of what you think it is. If this is treated as a forgiveness of debt (the amount underwater), then that will become "income" for her that could put her over limits. (I can't ask the bank to cancel my mom's credit card debt for that reason.)