Do you mean the state's recovery program from someone on Medicaid?
The mortgage holder would get paid out of the proceeds of the house sale, and that state could take the remainder, up to the amount they've paid for the nursing home (typically all of it.)
Yes MERP will go after the house, but they stand in line behind the bank. An attorney can tell you what order the bills are paid in, or you can look up the probate laws for your state.
Mortgage holder is a secured creditor so it would be paid before other creditors. this is a traditional mortgage & not a reverse mortgage, right?
If your ? is about an elder who is moving into a NH or is in a NH and sells their home, then at the act of sale the mortgage would be paid off from the proceeds of the sale paid by the buyer to release& cancel the mortgage. If there is any $ left over, it becomes income /assets for the seller and will probably take them into a spend down period to re qualify for Medicaid.
If your question is what happens if they keep their home for the rest of their life and they are now living in a NH on Medicaid, that IMHO is stickier to deal with. Medicaid requires them to pay almost all their monthly income to the NH as their copay. So that mortgage....well someone in the family will need to pay the mortgage due every month or the house will go into foreclosure. Plus family will need to pay all other costs like taxes, insurance, etc on the house. When they finally die, if the house still has a mortgage, it will need to be paid off within probate system in order for it to sell or transfer ownership. So family will still need to pay mortgage to keep this from happening. Mortgage holder is a secured creditor so will be paid off before MERP as MERP is an unsecured creditor for probate.
Keeping a home with a mortgage when they are in a NH will require family to pay the mortgage and whatever else on the house each & every month on a property that neither you or the elder actually owns. Mortgages require insurance to be done too. Moms old homeowners policy will be invalid & she will need to get a vacant dwelling policy & these are pricey.
Please do the math to figure out if this at all could make sense.
Some Medicaid programs have paperwork which rlder can do for a diversion of their required copay for a limited period (like 6 mos) to pay the mortgage and utilities (usually not taxes or insurance) while the house is on the market & listed with a Realtor.
Also I'd like to suggest that if your elder or parent in a NH & on medicaid wants to keep their home and family has decided to go along with this & will be paying house costs from day 1 till after they die, you really need to keep very detailed documentation on all costs you are or will be fronting. All costs too!... taxes paid even light bulbs for front porch for $8.64...it will add up! Most states have it in law that the usual & normal costs paid on the empty house -like insurance, utilities, maintenance, taxes - can be an exclusion to the MERP tally against the elders estate. I'd also suggest that you do some sort of agreement or perhaps even a promissory note between whomever will be paying the mortgage, etc and your parent (the property owner) in advance of your paying for house stuff as to how you are to be repaid upon sale or upon death. If you have a business and the biz pays for house costs, it can place a lien on the property. All this just allows you to be a placeholder to be repaid or have your own claim or lien when the house is sold or transfers ownership.
Your personal time to deal with the house well all that you probably really can't be compensate for - that you just do cause its your good daughter/son, family responsibility to help & do - but if your elder keeps the house & dies, then the executor can file for MIE (miles and incidental expenses) with documentation as a claim against the estate in probate. None of this is simple or casual.
The mortgage holder would get paid out of the proceeds of the house sale, and that state could take the remainder, up to the amount they've paid for the nursing home (typically all of it.)
Does that answer your question?
If your ? is about an elder who is moving into a NH or is in a NH and sells their home, then at the act of sale the mortgage would be paid off from the proceeds of the sale paid by the buyer to release& cancel the mortgage. If there is any $ left over, it becomes income /assets for the seller and will probably take them into a spend down period to re qualify for Medicaid.
If your question is what happens if they keep their home for the rest of their life and they are now living in a NH on Medicaid, that IMHO is stickier to deal with. Medicaid requires them to pay almost all their monthly income to the NH as their copay. So that mortgage....well someone in the family will need to pay the mortgage due every month or the house will go into foreclosure. Plus family will need to pay all other costs like taxes, insurance, etc on the house. When they finally die, if the house still has a mortgage, it will need to be paid off within probate system in order for it to sell or transfer ownership. So family will still need to pay mortgage to keep this from happening. Mortgage holder is a secured creditor so will be paid off before MERP as MERP is an unsecured creditor for probate.
Keeping a home with a mortgage when they are in a NH will require family to pay the mortgage and whatever else on the house each & every month on a property that neither you or the elder actually owns. Mortgages require insurance to be done too. Moms old homeowners policy will be invalid & she will need to get a vacant dwelling policy & these are pricey.
Please do the math to figure out if this at all could make sense.
Some Medicaid programs have paperwork which rlder can do for a diversion of their required copay for a limited period (like 6 mos) to pay the mortgage and utilities (usually not taxes or insurance) while the house is on the market & listed with a Realtor.
Your personal time to deal with the house well all that you probably really can't be compensate for - that you just do cause its your good daughter/son, family responsibility to help & do - but if your elder keeps the house & dies, then the executor can file for MIE (miles and incidental expenses) with documentation as a claim against the estate in probate. None of this is simple or casual.