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My parents are both in late 80s. Their house is not paid for because of refinancing and not planning well for retirement.

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Need a lot more information. Was your father a veteran? She might qualify for Aid & Attendance.
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Not that I have ever heard of.

Aid and Attendence is based on care needed not financial help to pay mortgages. The Vet needs to have served during Wartime.

This is such a shame. If Dad dies, she will probably need to sell the house to pay it off. Hopefully they don't owe that much and she will make a profit. The house will have to be sold at Market Value if Medicaid will ever be needed.

If in her late 80s she probably will not be able to keep the house up anyway. Would probably be better to downsize and get herself a nice little apt.
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Contact the local County or state office for elder care and ask for references on entities that could help.   Back in 2008, there were some nonprofit organizations that also helped.  Lighthouse was one, but I don't know if it still does or if there are any in your area (your profile doesn't provide that information).

If you have any authority under a DPOA, you could contact the mortgagee (lender) and ask to speak with someone who can handle potential mortgage defaults.   Even if you're not a proxy pursuant  to a POA, you can at least call agencies and determine which if any might be of assistance.

A "workout agreement" might be available, but when it was used back in 2008 going forward, for some reason that term wasn't palatable.  I don't know what they're called now.

But a workout agreement could restructure the loan, for example, by lowering the payments and extending the termination date.   Banks would I think be more sophisticated in handling this kind of arrangement than other commercial companies, such as the fly-by-night lenders.  

In the meantime, prepare an inventory of your mother's income, assets, and obligations, as a bank would likely want to see it before making a decision to restructure the loan.

I saw a lot of this restructuring during economic downturns, when I worked for law firms which represented mortgagees (lenders).    The flexibility allowed mortgagors (borrowers) to extend the loan maturity date, make payments and keep the property.  Mortgages were amended and recorded.

These were all commercial loans though, so a lot more money was involved.    I do recall that some banks which lent extensively to individuals adopted similar practices of restructuring the loan terms to help the borrower.

Another benefit for the lender is that the loan remains positive on its "books".   Loans in default don't look good on annual reports.
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Youngest, did your parents refinance to take cash out to pay bills? And did they extend the term?

In general, this is an indication that your parents can't afford the home they are in even with TWO income streams.

Do you have a full picture of their finances?
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There is an expensive tool that is sometimes appropriate for people who want to stay in their homes as long as possible and don’t mind refinancing or care about making an especially good financial plan.

It is a reverse mortgage.

Just keep in mind that the best case scenario is that the reverse mortgage would financially allow her to stay in the home until all equity is long gone. It is unlikely to support much in the way of caregiving. It only makes the mortgage payments go away.

I haven’t heard of any low income program that will assist with ongoing house payments. Depending on what is available in her area, she, or someone else on her behalf may be able to patch together other government or charitable support. It will involve some effort to see if there are programs for property tax deferment, food stamps, food banks, volunteers that perform handyman tasks, grants for accessibility projects, durable medical supply “closets” and so on.
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