Is selling home in need of repairs under market to pay for nursing home, avoid forclosure, later applying for Medicaid fraud?

Sounds like your Dad has very little equity on the house, or is it a Reverse Mortgage and after everything is paid back, plus interest, and fees, there would be $5k to use for your Dad's care? I would chat with Medicaid or with an Elder Law Attorney to see what are the correct steps when it comes to a house that will be going into foreclosure.

If the house is going into foreclosure I don't know if the bank would let you sell the house below market value. Who has decided on the market value of this house? If you can afford to do so [or your Dad pays] get a licensed Appraiser to give you a written report on the worth of the house. I did that when I sold my Dad's house and I didn't have the time or energy to make repairs/updates. The house was listed with a Realtor a tad above the Appraised value, and sold just a tad below value.

Also when my dad sold his house, it was "as is"....meaning anything found on inspection would just be informative.

As long as the house doesn't sell the first day on the market they are probably not going to question you. Use a realtor if you can, and keep the comps in a file. Ask for a copy of the home inspection (write it in the contract) so that if anyone says anything you can say but this or that needed to be done. You should be fine.

You don't have to sell the house to get Medicaid to pay for the nursing home. Please sit down with the financial aid person at the nursing home and bring the notice of foreclosure with you.

If a buyer has been located, even if the buyer has offered substantially below market value (for whatever the reason), you having POA have the ability to represent him in that sale. The Medicaid (not Medicare) authorities have up to 5 years of the sale to inspect the home's sale documents if your father requires Medicaid assistance. It is not fraud to sell your father's home below its assessed value. It may be deemed fraud if the sale benefits yourself or other family members, such as buying it yourself or selling it to a family member without an appraisal at a price far below assessed value.

Use an attorney - worth every cent spent! We did an "AS IS" Auction. Based on the advice of the attorney, the auctioneer provided a written letter that in their professional opinion and the condition of the home, it sold for "fair market value".

Check with ur local Medicaid office. I am selling Moms house as is. Called Medicaid and was told they r aware of the housing problem in my county. As
long as I don't sell it for a dollar or to a relative too cheaply they understand I have to get what I have to get.

Selling a distressed property below market value is not fraud in and of itself. It can be deemed fraudulent if the right procedures are not followed. I would suggest, as others did, that you get the home appraised by a legitimate company in your area. That way you have proof of what the homes top sale price would be. As others also said if mortgages and or loans are owing on the home the lien holders would have a say in the sale of the home. Good luck on getting it all straightened out.

Wendy - you might want to give some thought as to what kind of costs there will be on dealing with your dad's house before you get too too deep into this.

So at best if dad's house sold and the mortgage satisfied, all that could be left is 5K? $ 5,000.00 - is that right? that is very little money for a lot of time & energy both for dealing with the house and then dealing with ineligibility & re-eligibility application with Medicaid. If things drag on and there are surprises in getting closing done, there may not even be 5K.

Placing a home on the market has costs. Utilities, taxes, insurance, maintenance. So right now just who is paying all these costs? Buyers can place a lot of the house sale costs onto the seller, especially if its a distressed motivated seller situation. Taxes have to be current in order for closing to be done; if he's at all delinquent, there will be interest and fees as well as the past due. For most places taxes are due in full by end of January unless there are existing exemptions/waivers, so someone is going to need to pay those taxes if the house isn't sold & gone asap. Dad is on Medicaid and so all his income less a smallish personal needs allowance must be paid to the NH under Medicaid's copay / SOC (share of cost) requirement. So who is paying house costs; Or are all of these being walked on like like the mortgage is?

Are you or other family paying for any of the house costs and needing to be repaid? If so, you are likely not to ever get reimbursed. Medicaid really tends to view any $ spent by family on their parents to be done under a sense of familial duty so not to be reimbursed, you'd need to have some sort of pre-existing note or agreement to do this and Medicaid would have to allow. It's the sort of issue that holds up a closing and can kill a sale.

If the property could take months to go to a closing and you are finding that you personally are having to front all sorts of $ and you don't really have the $ or the energy & time to deal with the house, it may be best to just let the foreclosure happen. Dad walks on the house. It's not like he needs a good credit score. You send the keys certified mail with the return registered receipt to the mortgage holder to the address in the foreclosure notice. Medicaid could care less if his house is in foreclosure; as long as dad meets the medical and financial "at need" criteria for Medicaid, he's good. Mortgage companies have a whole established system for dealing with abandoned blighted PIA properties. None of this is your problem. You just mail the keys. The only blowback will be if & when dad gets a 1099-C Cancellation of Debt for the foreclosure amount but that's a pretty straightforward CPA tax filing for dad for whatever tax year the 1099-C comes for.

Keeping a on-Medicaid & in a NH parents homestead can be done. But keeping it and fronting costs on it, just to end up having Medicaid get all the proceeds from a sale, may not be the best financial strategy.

Pamstgma, no you don't have to sell to get Medicaid. But with my Mom it takes all her SS to pay the taxes and utilities. Can't rent because wouldn't get a CO. I don't have the money to bring it up to specs. I could use that SS to help pay for Moms AL. Having another home to worry about is overwhelming. Always something.