My mother has had a Reverse Mortgage for a number of years on her house. Currently has about $50,000 in equity left in the home.We put RM payments on hold, but are finding we need to renew the payments to cover house expenses while she is in the nursing home and there is no expected chance of her returning to her home at this time. I am her only child and have a Deed transfer upon death for the real estate. How will Medicaid look at these funds depleting the equity that they will want to recover upon her death?
Would you be able to pay off the Reverse Mortgage loan? Or you obtain a new regular loan to pay off the RM?
Now, if Medicaid starts looking like it is heading your Mom's way, then Medicaid would probably put a lien on the house. I know, this becomes a crazy maze. You may want to chat with an "Elder Law Attorney" as they are highly knowledgeable about Medicaid.
Transferring to a spouse is fairly new within the past couple of years. In the past, if the person who took out the Reverse Mortgage [usually it is the oldest of the couple] and that signer goes into a nursing for a year or passes on.... then the remaining spouse had to pay off the Reverse Mortgage loan, the interest, and fees ASAP. Usually it is impossible for a remaining spouse to do. Thus, the house had to be sold.
My boss had to sell the family home. He couldn't refinance as the value of the home was out of his reach. It was sad. He quickly had to find an apartment, sell/auction off most of his furniture. Give away all the family treasurers. Like starting from scratch. And he was hounded by the bank asking if the house sold. Even months afterwards. Wasn't a pleasant experience.
You don’t have the $ to pay taxes, right? So I imagine you have no $ to cover any of the regular property costs as well..... Mom needs to unload house ASAP and keep costs at a minimum. She could default on RM and flat let them take over dealing with house.
If mom starts getting RM $ again, to me it poses 3 problems:
1 will it put her over the Medicaid limit for monthly income?
This is important! Remember IF she get RM $ again, it must be reported to Medicaid. All her monthly income must be paid to the NH as her copay or SOC (share of cost). & it must be under state limit. Your post kinda reads she can get 50k still from - I assume - a line of credit type of RM. if RM puts her over the Medicaid max, she’s ineligible.
2 if she’s already moved out of the her house & into a facility, I don’t think she can draw on the LOC anymore as the RM contract doesn’t allow for it. RM could look at doing this as fraud.
3. You cannot just on your own use her $ to pay property taxes, maintenance, whatever. All $ is copay or SOC $ once she’s in a facility & on Medicaid. This is what Joann is getting at. $ must go to facility.
Read the RM contract. They must be notified as to her change of address when it affects the terms of the contract. They can have a fee placed based on time added to compensate for her going outside of contract too.
If there should be any $ left (haha) after RM wrapped up, house sold, etc., it will take her over Medicaid’s 2k asset limits, so she’s private pay till impoverished again. Also your mom cannot reimbursement you for anything you’ve paid on that house either as it will be more than likely viewed as gifting by Medicaid if she ends up reapplying. Really she can flat turn this hot mess back over to RM & let them deal with it.
- RM that first must be cleared as it’s secured debt. If after house sold & RM paid off, should there actually be any $ left, then that $ becomes an cash asset of her estate.
- & Since she’s on Medicaid, Medicaid’s MERP system is required to attempt to recover any assets of her estate. If any $ left post RM payoff, $ going to Medicaid.
If I’m not mistaken a TOD works - to be outside of MERP- if there is a property that can bypass probate through a transfer. I think RMs have to be “sold” to get RM cancelled. Sold not transferred. So MERP can enter in as it’s a sale.