Follow
Share

My father recently passed and my mom lives with my sister. The house is only worth what is still owed to the bank. If we sell it and pay back the mortgage Medicaid will not get anything. There is no other money. Is this OK?

This question has been closed for answers. Ask a New Question.
Duplicate post--couldn't delete
Helpful Answer (0)
Report

I'm not a legal expert, but am pretty sure the mortgage holder (bank) always gets paid first. If anything is left from the sale after paying off the mortage and closing costs, the State's Medicaid program would want to try to recover $$ through their estate recovery program. You need to try make sure the house sells at or near its current fair market value. The realtor should do a market analysis before recommending what the listing price should be and what you might expect to get based on sales of comparable properties recently. You might also want to pay for an outside professional appraisal. Also, be aware that Medicaid tries not to impoverish the community spouse. I'm not quite sure what the policy is with regard to estate recovery of there's a surviving spouse but the spouse no longer lives in the home.
Helpful Answer (2)
Report

WendyLisa
Your mom is entitled to her portion of the home sale.
All of the profit isn’t owed to Medicaid. Of course the mortgage must be paid but even that debt might be split before Medicaid’s portion is determined.
It will be important how the paperwork is submitted. Make sure the proper professional is consulted prior to listing. An experienced title agency might be able to tell you what documents you need. Of course mom will need to watch how she spends her share in case she needs Medicaid in the future. She can pay your sister for her care etc and that is allowed but needs to be documented properly so it doesn’t appear as gifting.

Watch for Igloos reply.
Helpful Answer (1)
Report
worriedinCali Dec 2020
There is no profit for mom though. The house is only worth what they owe on the mortgage.
(1)
Report
Mortgage is secured lending. Secured lending means that the lender has controlling interest in the property and that stays in effect until the mortgage is fully paid off and a Release of the Deed of Trust is filed.
Yeah as Newbie posted, mortgage gets paid first. It’s the superior position as it’s attached onto the property.

Medicaid is an unsecured lein on the property or claim (against the Estate of the deceased person who was on Medicaid after age 55). Medicaid, under federal rules, has to attempt a recovery attempt. But just what medicaid can or cannot do and when; and whether or not recovery is actually done depends on a whole bunch of factors. Since dad has died, figuring out the laws on all this is something to discuss with a probate atty and one who has experience with Medicaid and MERP (estate recovery program).

State cannot force mom to sell her mortgaged home.
BUT
That mortgage co can foreclose on your mom & have her evicted if she does not keep that mortgage current. Now mortgage co may not know that dad has died. But eventually they will. They may want to have the mortgage reissued or some type of paperwork to have it go into just moms name. This sort of stuff is fairly routine for mortgages held by couples. But, and imo this is important, your mom needs to be all totally current on her mortgage payments, so there’s nothing amiss that might have the mortgage co want to “call in the loan”. She need to pay in full each mo and not be at all late. So they are all happy with her.
My point is mortgage more important than Medicaid as mom needs to have a home to live in.

You mention “medicaid will not get anything”..... do you mean that the house is “under water”, like the balance on the mortgage still due is more than the house could realistically sell for? If that’s what’s happening, there may be no equity in the home & so there will be no equity that could become dads estate on his 50% ownership. If that’s kinda it, there’s nothing Medicaid can recover from dads share in the home..... there’s not equity. Do you kinda understand what I’m getting at?

Now if dad had life insurance policy that named his estate as the beneficiary then his estate would have assets from that.
Or if he owned a car, that could be an asset of his estate.
But a house w/mortgage that’s more than house is worth, no asset.

A probate atty who understands Medicaid MERP can explain just how this runs for your state.
Helpful Answer (4)
Report

Wendy, ?’s for you? You wrote that mom lives with your sister.
so is it that they (mom and sissy) live in the home that your parents bought and it still has a mortgage?
OR
is it that mom now lives in a home owned by Sissy, and mom & dads home is vacant but still has a mortgage payment due each month?

I’m assuming that dad became too ill to be able to stay living at home with Mom as caregiver, so he moved into a NH and applied for LTC Medicaid to pay for his NH stay. If this is what happened, did your mom get a “waiver”from Medicaid to have a % of dads monthly Social Security income diverted (or “waived”) to go to her rather than becoming a copay to the NH each month? I’m just trying to figure out if the CS / community spouse protections (your mom is the community spouse) that Medicaid is supposed to do was in fact done. I’ve been on this forum quite a long time & it’s amazing how often it doesn’t happen.
Was moms costs of living taken into consideration by the state for when dad did his Medicaid application?
Helpful Answer (0)
Report

This question has been closed for answers. Ask a New Question.
Ask a Question
Subscribe to
Our Newsletter