I just got done viewing a house that a guy is selling. He is selling it for his mom who is in the nursing home. He/they are definitely motivated sellers who need to unload this property. He told me he would sell it to me for 25k if the mortgage company would accept it.
Problems are that he said his mom owes $80k on the reverse mortgage which is more than I would pay. But I might look into short sale scenario.
And he also says that he signed something with Medicare saying that he would sell the house for “Fair Market Value” to pay off her medical bills.
Can Medicare dictate if an offer is accepted to sell, or can they come back to him if he doesn’t sell for “enough” and they don’t get any cash? He is worried that if he doesn’t go to Medicare and ask if he can sell for x amount, they will come after him for not selling for “FMV.”
I am not aware of any issue with Medicare concerning a primary residence.
Could you be thinking about Medicaid instead? If the guy’s mother is planning to apply for Medicaid assistance there is an issue with divesting assets, and there is a five year lookback for any transfers of capital assets.
Your seller’s best source of advice will be an eldercare attorney.
Disclaimers: Recently went thru this with Mom. This isn’t “book learnin” but picked up from meeting with elder attys. I’m not an expert in this in any way.
Medicaid requires you to be broke. $2,000 max in the bank and no house, no income.
Any transfers made in the 60 months prior to applying for medicaid will be “disregarded” meaning that you are “penalized” by having no coverage for how ever many months it takes to “recover” the transfer. Note that they can’t/don’t prohibit the transfer and cannot force you to not sell, repay the transfer of any of those things. It’s a penalty in time only. this is why everyone, and I mean EVERYONE with elderly parents needs to plan NOW for how they will be cared for in their final years. Transfer those assets NOW. Put them in trust, whatever. NOW. Start that 60 month clock running asap.
If you still own a house, they will allow you to keep it, but will take a lien against it so that after death, the house must be sold and the proceeds repaid to Medicaid up to whatever they paid.
If your income is too high, you’ll need to set up a “Miller Trust” that basically diverts part of your income into a trust that must be used for care, leaving you the rest to spend at your discretion. Income limits vary by state. This effectively “gets around” the monthly income limits by taking income over the limit and forcing it to be spent on care. After death Medicaid gets whatever’s left in the trust.
Questions? spend the $$ to meet with an atty who specialized in elder issues.
This is exactly what the homeowner in my situation attempted to do. He told me he tried to get his mom to transfer the home into his name years ago and she wouldn’t do it because she thought he was trying to screw her over. Now she is stuck, and he is screwed too. He’s stuck trying to sell this house for her that needs repairs and will get nothing from the sale after the mortgage company and Medicaid take their share.
The “good” thought here is that mom never intended to “give” her son the property, taking out a reverse mortgage practically guaranteed it. The son is not “screwed” by the system, simply disinherited by mom.
I would agree Dave. My thought by “screwed” is that he is the one stuck dealing with his mother’s problems and trying to sell her home and coordinate problems with the mortgage company and medicaid. And he at the same time, wants to get Medicaid’s approval before he sells to make sure they don’t come for him in the event that they don’t like the sale price.