Does anyone know about assumed loans by taking over a parent's home?

Many helpful answer and suggestions but in actuality the answer/advice is dependent on which state you live in as every state has different eligibility and estate recovery rules.

For instance, Florida does not place Medicaid liens and will not recover from non-probate assets nor will they recover a property ordered a homestead at probate if the heir is a family member (this homestead determination is different than that for property tax or ad valorem tax purposes).

I don't understand what you mean that your mother's name "goes on [your] checks". Are you saying you have a joint checking account, or that you write your mother's name on your checks as an identification method since she's presumably still the mortgagor?

Are you staying in the house now or is it vacant?

The mortgage company is doing you absolutely no favors by suggesting you assume the mortgage. It's looking out for its own interests.

If you stop making the payments, legally it only has recourse against the individual who's named as the mortgagor (and any co-mortgagor or guarantor-someone who guarantees repayment of the mortgage). Based on what you've written, and to the best of my knowledge, it has no legal recourse against you at this time. If you assume the mortgage, it does.

Given that your mother is in an AL facility, assuming that she won't be returning to the home, and if you're not living in the home and it's vacant, there's a question in my mind why you would be continuing the mortgage and not selling the property. Even if for whatever reasons you don't want to sell the property, it's really not wise to assume the indebtedness of the mortgage and become fully liable for it.

I'm not trying to muddy the waters, but think twice, three and four times about assuming a mortgage. There's nothing for you to gain and everything to be gained by the mortgage company as it will then "have its hooks into you" for the mortgage liability.

Baretta - please, please read & re-read what Garden Artists has posted. Terrific advice. The mortgage company is doing whatever to look out for their interest NOT yours. An elderly mom in a facility who is on Medicaid (which has a claim or lien ability on her assets) & defaults on her home & goes into foreclosure has lots of complications for the mortgage holder while if it's you - who I imagine is still of working age and with income - is much better for their mortgage liability.

My experience is that when a mortgage company transfers a mortgage it is not just a simple - almost always there are costs associated with it. You may have to qualify for the assumption too; have mortgage insurance on the property and perhaps have the note increased and insurance increased. They don't care if you have been paying it for all these months too - the note is in your mom's name and you basically are keeping her credit current not yours.

You also will have a couple of other issues to consider since mom is on Medicaid.
1. possible transfer penalty by Medicaid if you become the "owner"
2. the existing MERP claim or lien ability by the state as mom is on Medicaid.

Although the elder who has a home can keep their home as an exempt-asset under Medicaid rules (in most states), if they sell or transfer the home there will be a $value placed on that. I'd bet that if you "assumed" the mortgage and the house has like 50K in equity, that the state Medicaid program would view the 50K in equity as gifting and place a 50K transfer penalty on mom. Transfer penalty means that mom will have to private pay the 50K before Medicaid will go pay to paying for her care. The facility will get the letter from Medicaid that this is happening too so either you private pay till the transfer is done or take mom back home. Can you afford to private pay for mom?

Then about MERP- Medicaid Estate Recovery. Although they can keep their home, there is none of their $ to pay for the whatevers on the house as they are required to do a co-pay or "SOC" to the facility of their monthly income. You well know that as you have been paying mom's mortgage and other things on the house. By & large if there is a mortgage plus all the other reasonable home expenses, it is just not feasible for family to pay the expenses for an empty house for the possibly many months or many years that is the rest of mom's life.Family sells mom's house and the proceeds have to be used for mom's spend-down for her to stay on Medicaid. If you do this, please, please, PLEASE see an attorney before the house goes on the market so that you can come up with a plan to be reimbursed from the proceeds of the sale for every penny you have spent on mom's house - otherwise all will have to go towards mom's spend-down for her to stay on Medicaid. Start to do a ledger of all you have paid to date too.

If mom's house is empty & paid for & minimal upkeep & great neighbors to look out for the house then maybe if you think you will have enough exclusions, etc. so that MERP is not an issue, then continuing to keep the home can make sense. But for most of us, having a 2nd home with no immediate benefit is just not feasible financially for the possible many years that our parents could be with us.

It's all a lot to think about and really finding a good elder law person to help guide you thought all this will be invaluable. Also remember mortgage company is probably not ever going to be your friend……. Good luck.

Igloo, I knew someone knowledgeable about Medicaid recovery would come along and round out the total picture of the effect of a mortgage assumption for an asset Medicaid might go after.

Thanks for adding what I couldn't because I'm just not that knowledgeable about Medicaid.

i am still living in the house and paying all the bills, my mom pays for herself to live in the ALF, and she really has nothing in her bank account,so she really does not have to worry about spending her money down,when i write out the checks for the mortgage and the water bill my moms name goes on my checks because i am paying for her, everything else is under my name and my husbands name. so i just thought about the assumed loan for the mortgage to be under my name instead of my moms name but everyone i asked said that she would loose her medicaid if i did that, i know that when she does die the house goes over to me because that is how she put it into her will.

Baretta - about your saying …"i know that when she does die the house goes over to me because that is how she put it into her will…" please realize that if any of mom's care is paid by Medicaid - whether now or in the future - then Medicaid has a requirement that they have to try to be repayment of any & all costs that Medicaid paid for your mom's care from her estate after mom dies. This is known as MERP - Medicaid estate recovery and is required to be done. Usually the only asset that they have and still be on Medicaid is their home, and the home then becomes an asset of her estate & subject to recovery. MERP can place a lien or a claim on mom's property as an asset of her estate after death - just how MERP runs is very dependent on your states laws on probate, death, property rights.

You need to be aware that if MERP does a claim or lien on mom's house, it will need to be dealt with BEFORE you can inherit the house as per your mom's will. Just because she wills the house to you, doesn't mean that you will get to inherit it if MERP is involved. Really try to speak with an elder law attorney to see what is the best situation for you, the mortgage and mom & any potential MERP situation (& MERP exemptions) before this goes on too long. Good luck.

Igloo makes a good point, one which is certainly an important factor in your consideration of assuming the mortgage.

If you assume the mortgage, make the payments, and assume all the liability that accompanies that mortgage assumption, and if Medicaid attempts and is successful in recovering the house, you could lose not only what interest you might have been willed in the house but all the equity you build up as well, up to the value of whatever Medicaid is attempting to recover for its payments on your mother's behalf.

So making the payments on the mortgage doesn't mean you're investing in a house which will eventually become yours.
If Medicaid seizes it to recoup its investment in your mother's care, you've lost all that money, which you could have been applying toward a house of your own.

Assuming the mortgage is just a very bad idea.

I'm still not clear on the Medicaid issue relative to your mother's care though.

You wrote that:

"...my mom pays for herself to live in the ALF

"...but everyone i asked said that she would loose her medicaid if i..." assumed the mortgage.

Is Medicaid or is it not now paying for her ALF care? If it's not, then it's the possibility of Medicaid payments in the future that concerns you, right?

GardenArtist - I was assuming that Baretta's mom was in AL but on some sort of Medicaid waiver and that her monthly income was being paid by mom to the AL as mom's co-pay (her SOC in Medicaid-speak). As really all mom's income goes to the facility, that is why Baretta's is paying & dealing with the mortgage & utilities.

But whatever the case, mom is at the point that she needs care and her options as what to do with the house without Medicaid being involved in is very limited. Really my suggestion is that she should gather up all the paperwork on the house; do a ledger of all the costs on the house for the past couple of years; look at her own finances to see if paying for all on the house is feasible; speak carefully with mom's MD & the AL staff to see what they anticipate mom's needs to be in the foreseeable future and go see elder lawyer.

If Baretta is living at the house, then she is getting a direct benefit of mom's ownership on the house & Medicaid seems to expect that if you are living there then you should pay for whatever on the occupied home. Some of the exclusions to MERP cannot be done (maintenance costs on empty house) as she gets a direct benefit by living in the house owned by mom. If she had been a caregiver for mom for 2 years prior (and can document it) then she could get that exemption from MERP. But the mortgage still exists & has to be paid off before Baretta could ever fully own the home.

But what sadly often happens is that the caregiver has spent X # of years taking care of mom/dad at parents house and really it is having their parents income (SS & retirement) that keeps the household afloat. Caregiver wasn't getting paid by parents and they themselves have very limited funds. Once mom goes into NH, they find themselves almost penniless. Yeah they can get the MERP caregiver exemption on the home but what frickin' good does that do if they can't afford the home! To me this is the biggest tragedy in the whole caring for elders.

Very simple. She dies. MERP will take the house. You will still have the liability of the mortgage. You been had. Now go see a lawyer for help.