Will Medicaid seize a home with liens against it?

There two quite different but intersecting issues, the reverse mortgage (RM) and then the recovery aspect (aka MERP) of the LTC Medicaid program (long term custodial care medicaid).

1st of all Medicaid isn’t going to come out and seize a farm… not pulling up a trailer and loading in goats. So…not…happening.

So is this is a currently working farm owned by your grandparents?
this is mucho importante because “working farms or ranches” are excluded from recovery actions by MERP. You will imho have to- HAVE TO - not DIY this, but get a probate attorney who is experiencing with Medicaid estate recovery to deal with this when your grandparents both finally finally die. MERP is an after death action. You don’t deal with it anytime now. But that farm will have costs continue for it to stay to be a working farm and documented legitimately as such till beyond the grave. But it has to be “working”…. It can be huge too… like sections, not 100 acres, but could be 100 sections huge and be excluded from recovery as it’s a working ranch. Ya need a lot of land for cattle to graze. Realize most attorneys don’t deal with stuff like this so you need to find one who does deal with farm real estate issues and Medicaid. But its something for that eventuality. It’s a back burner issue imo.

LSS keep it working and keep all that documented. The bigger issue to me will be the RM.

Hang with me on this as it’s not straightforward…
- do you have the RM agreement?
- Is it purely the home?
- Or is it the home and the land that makes up the farm?
If I were you I’d get a real estate attorney to review the document and in detail. Not only for the RM but also to know what it is asset wise cause when they file for LTC Medicaid - whether it’s just grandpa or grandpa and grandma- it needs to be considered part of their joint exempt asset as it’s a part of their homestead. AND NOT A SEPARATE ASSET. If they currently have the farmland in with their homestead exemption that is good, like very very good.
- in the RM, what are the repayment terms? Usually it’s the amt due plus it’s interest and fees once the last spouse has moved out permanently at 90% of the total within - I think - 30 day at 90% of the in full if it’s a HCEM / HUD funded RM.
- if it’s not HUD those can be way predatory. no idea how those run
whatever the case, you & mom have to have your funds ready.

I’m not sure if you’ve bought property before, I’m guessing maybe not?? If so dealing with RM is not like buying a house and getting a regular mortgage where there’s a back & forth and expected delays before you actually go to closing built into the deal. RM want it done and have a clock ticking and if you don’t get the $ in, they foreclose and have subs at the ready to enter property change locks and get it ready to put up for sale. Yeah, horrors! So, if the RM is 321K, you have be able to have 321K cash in some way. Most banks won’t do a fresh mortgage on a reverse mortgage property or a property in an estate because there is not clear title. So what may need to happen is that whichever grandparent is still ok to stay at the farm and be cared for at home by you & your mom & other family, continues to live there. Only the grandparent who really really needs 24/7 oversight goes into skilled nursing care aka a NH. And y’all save as much $ as you can to be able to deal with the RM pay off eventually.

please realize that your grandparent will need to be able to show they are “at need” both medically and financially for LTC Medicaid in order to be in a Nh and have Medicaid pay for it . But that a whole other set of Q & A’s!

Shad, also please realize that RM is securitized lending, BUT any lein by Medicaid is NOT. Big difference. On that RM, Your grandparents placed their property as collateral for the RM. And was owned outright by them for the RM to happen. As it’s securitized lending, mortgage holder has a lot of power as to what they (RM) can do and the time frame for their actions and what your grands are required to do to keep the RM in force (like grands must pay taxes, insurance and maintain property). It is all in the mortgage agreement. If it is a HECM type of RM, so the RM is guaranteed by HUD (federal government), then there are some safeguards that are more consumer friendly. Like if family want to buy the property after both elders die, they can at at reduction (I think 90%) and gives them a period of time to declare that and then get the $. Anyone who holds a securitization on a property is in first place / top position as to what happens to a property.

Please look at the mortgage agreement and clearly. See what the payback $ amount is likely to be and if you and your mom can come up with the cash. If you do not understand what the agreement means, talk to a mortgage broker. Also ask them if they can shed some light as to what you might or might not be able to do to get lending in your area to buy the property as to how lending goes for your neck of the woods. Personally I think it’s going to be hard to get lending from a regular bank (they aren’t going to accept it as collateral) because it’s not at all like buying a standard house with a clear title via a Realtor with a MLS listing. It’s a house with a farm attached that has a outstanding reverse mortgage owed so no clear title, not going to be allowed as collateral. Your going to have to either have the cash in full or have something else to use as collateral to get loan which you then use to pay off the RM.

For Medicaid estate recovery program, that’s run by each State but under overall federal guidelines. Not done till after death. Feds have exemptions and exclusions and properties that are family business such as family farm or ranch can be excluded from recovery. But it’s on heirs / family to seek this out and provide whatever documentation your State requires after death of the final grandparent. But if you & your mom cannot buy out the RM, dealing with Medicaid estate recovery doesn’t matter. The RM will use their securitized position to foreclose on the property; acquire it and sell it. They have no concerns or need to bother with Medicaid.

If y’all are using grandparents social security income to keep the farm going, please realize that monthly income will not be there should they go into a NH and be on the LTC Medicaid program. LTC Medicaid requires a resident once in a NH to do a copay of basically almost all their monthly income (like their SS) as a copay to the facility. This tends to come as a total surprise to family.

Now if grandpa goes to the NH but grandma stays at the farm she can file for a community spouse waiver to have some of his income to go to her rather than go to the Nh. It’s called CSRA or MMNA. But she will have to show documentation as to why & personally imo not ever a DIY ya need a CELA level of elder law atty when dealing with anything then it’s couples filing for Medicaid plus they have the complications of house, farm and RM. If anyone needs an experienced attorney it’s yiur grandparents. We can give you insight but they need legal in their state.

No Medicaid does not seize assets or homes. Spending down is all on the family. Whatever financial assets there are need to be spent down usually on the persons care. The home can be considered an exempt asset but the Medicaid recipient's SS and any pension will go towards their care so someone needs to pay taxes, utilities and upkeep unless there is a Community Spouse which means that person can remain in the home and receive enough or all of the monthly income to live on. If no CS then best to just sell the house and use the proceeds for the persons care in LTC.

When I applied to Medicaid for Mom, I was told that Wills really meant nothing. Will are for "just in case". Just in case you die before needing care. Once a person needs care all their assets are used to pay for that care, so there is nothing left for the beneficiaries. In my situation, Moms house did not sell till after her passing. Medicaid placed a lien on it because once she passed, it was not an exempt asset it was an asset. I sold the house. I was there for closing. A check was written for the tax lien and the Medicaid lien. The proceeds were split between the children. I sold the house for 40k. I owed Medicaid for 3 months Mom received it so 6k. When everything, lawyer ect, was done we got 10k. But if Medicaid had been higher we may have gotten nothing. I was ready to walk away from the house when I got the offer. I was going to allow it to eventually go to sheriffs sale. Medicaid would have just let it sit and rot because they are not in the real estate business.

Your grandparents have really made things hard having a RM. Not really sure how they work other than its based on the equity. Is that the equity at the time RM is taken or as the equity rises you can borrow more? If the later, than your grandparents really don't own the farm, the RM does. Unless the house is the only thing mortgaged as Igloo says.

I agree with Igloo and that you need lawyers well versed in Medicaid law and Realestate law to figure this out. IMO, having a RM longterm means when u pass there is no house for someone to inherit.

Medicaid is involved that will seek recovery after that last owner's death. Forget about inheritance unless any money is left after grandparents have deceased.

I see so much TV advertising for RM's who are in business for one thing: Money. Not a good idea. RM will take the property and sell it unless the residents or their loved ones can come up with hard cash to pay it back.

Your grandparents' estate being a house on a farm instesd of just a house alone complicates things more.

We just went through a similar thing. My mother had life time use of her parents home and then shared in the proceeds of that and the tree farm land around it with her siblings. The house was loosing value because she couldn’t afford the upkeep and the property was loosing value and simply costing them money in taxes. My brother eventually purchased the house and land. Shortly after that we applied for Medicaid for Mom and all we needed to do (as far as the house or profit income) was show them the appraisal and purchase agreement to prove it was sold for a fair value. We were up front about it all and they were fine with the whole thing. My mother still lives in the house with my brother so there was that confusion too, her address didn’t change but they don’t really care who rent is being paid to just that it’s happening. Unless your grandparents farm is worth and could sell for a lot more than the cost of paying off the reverse mortgage I don’t think there will be a problem and if you purchase the home, are the only one on the deed they can’t come after you or the property the only thing they could do is require your grandparents pay out of pocket until the difference in value (the gift to you portion) is paid off but in my experience that would only happen if there were a glaring and large gift like they sell it to you for 10,000 and it’s worth 50,000 so they gifted you 40,000 worth of property. In this case they will payoff the mortgage which is about the value of the home. They don’t mind you getting a good deal they care about your grandparents trying to hide an early inheritance.