If someone is by necessity having to go into assisted living/nursing home and has to spend down to qualify for Medicaid, does this spend down include his reverse mortgage? Or is this amount exempt and he is able to keep this amount or even consign to his son?
I think you have to be VERY careful with RM. Under FHA backed RM, if the owner moves from the house or other reasons below, the reverse mortgage is out of compliance on the agreement and will be due in full. Please go over the agreement to see what the policy reads.
If you do a RM there are 4 things that can be a problem for compliance and cause the RM to be due:
1. FAILURE TO PAY - property taxes, homeowners/flood/wind insurance. One issue with RM is that instead of the homeowner selecting their own insurer, the insurance is folded into the RM and uses insurers that the RM selects and the costs will be more that the homeowner is used to paying. Also if they go onto Medicaid, they are fully expected to do a co-pay of the monthly income to the NH, so there may not be the $$ to may for their house costs the RM expects them to pay. (Like their property taxes).
2. MOVING TO A NEW RESIDENCE- if reverse mortgage property stops being your primary, you are out of compliance with loan. So if you move into a NH, you are required to pay your loan.
3. BEING OUT OF THE HOME FOR MORE THAN 1 Yr - the loan will come due. Most policies have this.
4. ALLOWING THE PROPERTY TO DETERIORATE - being away for a while, like a trip or cruise is allowed but if the property gets run down while you are away, the loan could be called in. After Hurricane Katrina, some homeowners who had RM, got letters w/detailed questionnaire as to the status of the home, how it was being secured, status of repairs, utility information - this was all about calling in loans that were in areas with uncertainty. And Katrina was in 2005 before the real estate market tanked. If dad is now in a NH, who is going to be there to take care of the details on keeping the house in tippy top condition?
really read the contract. Good luck.
The lump sum has to be spent in the month received, or it will be counted, they say.