My mom passed a couple of weeks ago and had been 3 different nursing homes over the last 2 years in New York, my father had a reverse mortgage on their home in New York which mom inherited after he passed 7 years ago, medicaid was needed to pay nursing home bills for mom, I am one of 4 children, my brother was living with mom the entire time before she went into nursing home [well over 15 years including when my father was still alive] and bother had DPOA for mom sinse fathers passing. Doing my best to supply most relevant info, there is much more details twists and turns, so what i have read on this site so far is that bank will go after repayment of RM within 30 days [RM for moms home is apprx. 340K. market value of home is apprx. 600K] and that medicaid will want repayment of 2 years when mom was in nursing homes apprx. 250K. My question is after bank recoups its 340K after it moves to foreclose on home there will still be 260K leftover if they get 600K for it, will bank have responsibility to repay medicaid or is it on executor of her estate to pay? remaining 3 siblings [myself included] have been kept in dark by brother as he had DPOA over the years, he also still is living in moms house and he may be disabled on SSI, so as I had been reading also on this site that because he had been living with mom for more than 2 years before she went to nursing home [I suppose he would have to prove he was "caregiver"] and he could be disabled [not sure] but if these 2 points are true, would either one of these points or both be under the "Exemptions" part of MERP in which the 2 years of nursing home payments would not be pursued which in turn after all other outstanding debts were paid would the 4 heirs [siblings] split the remaining amount? Or, is the point moot because those Exemptions would only be valid if 'reverse mortgage' did not exist and brother was living in home?
- there needs to be 1 person to be the point person in this. Whomever is named executor as per moms will ideally is that person. If they have issues (not competent, not interested), judge can appoint an administrator. Judges seem to prefer family but it can be an outside administrator & their fees & MIE paid from estate if no family step up.
- & they get probate opened ASAP. Why? Well probate provides for a legal codified system that EVERYBODY...family, estate recovery (MERP), banks, RM etc to have to file into and go through. I'd try to get a probate atty who does litigation if at all feasible, it may not come to that but keeps you from having to switch out attys. Later on if this gets super sticky.
- if this was a federally backed RM (like HUD or FHA), the rules for repayment have changed. The 30 day is moot. Family has 6ms to come up with repayment and it's NOT at full RM balance. google NYT reverse mortgage changes and articles on this will come up.
- RMs have dramatically changed. The bigger banks - BoA, Wells - have gotten out of RM biz as they were taking a beating on RM being overvalued.Feds have required changes in how federal RMs are done (Feds underwrite them ultimately). Leaving IMO more predatory RM underwriters who don't play fair. If you want the house, you are going to deal with RM very assertively and your atty will be invaluable. As a thought, there could be an issue with mom moving into a NH and the RM, as they are usually required to reside in their home - keep homestead-, moving into a NH could means RM agreement was out of compliance and RM should have been called. This could be an issue.
- find out the amount to payoff. There could be all sorts of fees, fines above the $ mom got. The line of credit RM costs are not quite as huge in settlement. Hopefully this was a line of credit RM.
- imo house is going to need to be appraised. You may find RM has house at one value & MERP at another. You get it appraised and this is the figure entered into probate & everbody had to live with this figure. If house has issues, you may need to get it inspected and a residential structural engineers report done first and provided to the appraiser.
- probate & appraisal is also important for dealing with MERP......If say appraisal comes in at 475k and RM payoff is 400k, that means only 75k available for MERP. So say there are 3 heirs to the estate, of which 1 will qualify for either caregiver or disabled exemption for his 1/3 but the other 2 have no MERP exemptions. So family need 50k to pay MERP to get claim or lien released. However, probate allows for executor expenses, probate costs, funeral costs to be paid before unsecured claims (merp is unsecured). If all that adds up to 20/30k, it could well be that the MERP claim is reduced to the point where it is easily affordable or does not meet the required cost-effectiveness to be done.
- RM is probably going to want brother out & want house sold asap as they are a secure creditor, they are ahead of MERP which is unsecured creditor. The atty can push back on this. Your brother will need to clearly establish his exemption or exclusion to MERP. MERP has caregiver & disabled exemptions but they have to be documented. MERP send out a " notice of intent" to file a claim or lien within 2-6 mos of death to whomever is on file as the contact person for Medicaid. If the NOI is not responded to, MERP assumes claim or lien can be placed by default. It will surface and be a problem when House is sold or to transfer to brother ( assuming bro /family pay off RM and house is to be kept) as neither can go through as there s a secondary claim or lien. It is a " cloud" on the title which is found when title co is doing its work for the mortgage underwriter.
Probate is going to be useful as the "we want this done in 30" comes to a screeching halt once probate opens. It enables time to work things out. At 600k+ the estate has value, atty can be assured of payment, brother -who sounds like has judgement issues - will have an advocate.
Think if bro will just ignore all this and it snowballs to be a sticky mess, what then? Really I'd get look for robare guy ASAP. Good lick and key us know what happens. We all lean from each other.
For MERP, your state's Medicaid website should have what are exemptions, exclusions and the cost-effectiveness minimum required for the estate recovery program and how all has to be documented. It's going to be very much interdependent on your state.
One important thing to keep in mind that each heir will need to do their own exemption or exclusion. It's just not simple.
I'd bet happens is that at the act of sale any proceeds left over (after RM is paid off) will either go into the estates account or an escrow-like account till it's determined if exemptions/exclusions are valid or proceeds left over all escheat to the state.
So your brother (who lives in the house, was caregiver and is executor) is planning on selling the house (600K value) to repay the RM (350K) and will have 250K left as proceeds from the sale, that's it, right? Medicaid paid 250K. 4 heirs of which 2 qualify for a Medicaid exemption and have done whatever documentation and filing within the time-frame in the NOI, right? What I'd bet happens is that those 2 heirs can get their 25% each of their proportional share of the final assets of the estate with the balance going to the state as it's a creditor of the estate which has 250K as assets.
Remember there will be all sorts of needed to be paid upfront costs of the estate…..probate atty fees, court costs, appraiser fees, funeral & burial costs, taxes, realtor commissions, property costs, etc. Executor brother could get executor fees paid as well. Whatever the case all that is established in probate as to who paid in what order. Atty will be busy & I hope they have experience in dealing with MERP.
Personally if I was a heir to an 250K valued estate with 250K Medicaid lien/claim & I had no exemptions or exclusions or no claims against the estate to submit to the court, I'd walk & not spend a penny on any aspect of the estate.
Disabled heir/sibling who lives in different state from executor/brother does that heir need to contact brother or brothers attorney in order to file disabled exemption? Disabled heir/sibling has trust issues with brother and attorney helping him, another words can disabled heir/sibling request the NOI letter/form (from Medicaid or some other entity other than brother/attorney) to file disabled exemption on their own without getting involved with brother or his attorney?
I seriously doubt if a person on disability can afford the upkeep of a $600K home. That presents a major obstacle for the brother. PLUS if he inherits a large sum, his SSI or Medicaid would stop cold. Putting any of the assets in his name could create more problems than it would solve. Personally, I would want a good lawyer to help me avoid the pitfalls.
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