My mom had gotten a mortgage on her house after it had been paid off. I learned about this after I became her caregiver. I am an only child. There is stress trying to sell her house which is in need of repairs. I was told that it would be good to keep the house, but I really don't want to keep it nor do I want to go through the hassle of selling. Would I be able to just sign the house over to the mortgage company without getting penalized by Medicaid? I have Dural POA

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Chick - spoke with my Realtor, his take is doing a DIL will be hard. Your mom will have to show to the lender with documentation why a DIL is better than a foreclosure for them. If mom has income (likeSS) and can pay her mortgage, they won't agree to a DIL. You kinda need to be at bankruptcy for a DIL to be a better move for the lender. DIL are somewhat like a short sale in that the lender just doesn't have to agree to allow it.

If you both really are over the house, you personally have another home to go back to, you have your own income & credit apart from mom, and moms credit doesn't ever matter anymore, then mom can walk on the mortgage and let a foreclosure happen and deal with the 1099-C the next tax year. House is now the problem if the lender. People walk on homes everyday & homes goes to foreclosure. Just like people file for bankruptcy. Both are the nuclear option, that wrecks your credit and employment for ages. Might not matter for mom.

Also realize that if you have siblings or other family who have a problem with this, they can ask for an elder financial abuse be looked into on you for not doing your proper fiduciary duty as moms DPOA and allowing house to default.
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Rent it out.
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Turning it over as you described would be a Deed In Lieu of Forclosure action. Your mom -as she is the mortgage holder - would need to contact the lender to see if they would be agreeable to it. Lender has to agree to it. I doubt that the lender would agree it; they probably prefer a foreclosure & it's fees to happen. They probably also will not be inclined to accept your POA. They are going to want to speak & deal with her.

Now mom can stop paying the note and the lender will start a foreclosure. Will be the same dreadful result of loosing the house with no equity. Either way mortgage holder can issue mom a 1099-C Cancellation of Debt for the written off balance & this is phantom but taxable income for IRS that could have consequences for Medicaid.

What about speaking with a Realtor to see if they have any investment buyers who will buy the house? The price will be low but could pay off the mortgage; and no more house to deal with. & maybe mom has some $ left for her needs. I assume you have a home to go back to & you have your own source of income?
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