Medicaid Adult Child Caregiver Exemption: Parent must transfer home to adult child but Reverse mortgage prohibits transfer. Now what?
My mom passed away during COVID. Her "prominent" diagnosis was Alzheimer's. I'd cared for her at home for several years. The home we lived in was purchased with a reverse mortgage. I always knew I had to aim for being able to purchase the house/pay off the reverse mortgage in order to stay in the home and preserve any "security" moving forward. Nobody discussed the caregiver exemption during the course of applying for MA for mom when I had to move her to memory care. They just scare the crap out of you with combing thru financial records looking for violations that may have occurred during the look-back period.
Fast forward, thru COVID, and mom passed away in January 2021. From the time mom was admitted to memory care until she passed away, I feverishly tried to get back into the labor market in order to purchase the home before she passed. I'd learned at one point MA couldn't "claim" the value of the house if ownership was transferred to me before she passed. Only I knew ownership couldn't be transferred to me due to fed regulations w/ age restrictions and revere mortgages. Of my best attempts were thwarted by being in the middle of a pandemic. Then when mom passed, the clock stopped.
I applied for an Undue Hardship Waiver, which was denied because I didn't have ownership interest in the home. My argument that she couldn't "transfer" to me because of the reverse mortgage fell on deaf ears. Before anyone advises I should have spoken to an attorney - I couldn't. I was barely getting by check to check; yet my "earnings" were too high for free legal advice.
I finally found the light at the end of the tunnel 6 months ago. My dumb luck, the reverse mortgage actions were deferred because of COVID, but I now have a small window of opportunity to obtain financing for the home, which I have initiated.
What I cannot reconcile is the "conflicting laws" of A.) Federal law sets forth the home must be transferred to a legitimate adult child caregiver in order to qualify for the exemption. (The county admits this "status" is not in dispute.) B.) Inability to "transfer" the home due to the Federal law sets forth for reverse mortgages. Which law supersedes the other?
From my deep dive into laws (as non-attorney), the legislative intent for the exemption was to provide "a pass"' to adult-child caregivers who cared for their parent for a minimum of two years...yada, yada, yada...and as a result of that care delayed the need for entry into a care facility. That would be me.
When being a caregiver prevents my having the financial means to hire an attorney and after the spend down to qualify for MA had cleared any of my mom's funds, and no one is required to tell you about the exemption to begin with, and despite the measures taken to secure a decent paying job after being out of the competitive work force BECAUSE you were caregiving, and then a Pandemic sweeps thru. My claim for Undue Hardship was denied, BECAUSE I DIDN'T HAVE OWNERSHIP INTEREST IN THE HOUSE. It has been nothing short of a nightmare and the County has gone to great lengths to "guard" the value of the home.
Regardless of the outcome, I can "live" in the house if I can secure the financing to keep it from going into foreclosure. However, I am not ready to capitulate to the "claim" against the estate which will be due when/if I ever sell, two laws in conflict with the other. Suggesting I should have hired an attorney - when for all the above reasons was not possible.
The law requires "transfer" of the home to the adult child caregiver. "Transfer" is not defined (denial of Undue Hardship was based on no ownership interest.) Transfer, as it relates to reverse mortgage, is clear: It's a no-go due to age restrictions. So, I can't acquire ownership interest - either way. But, by god, I am still viewed as "the adult child caregiver" by the county.
Now what?
Not to be harsh but the RM DNGAF as to any family or caregivers or pets or whatever who may be living there. Once the owner dies or moves out or is out of compliance on the contract, and no surviving spouse, the RM will foreclosure.
She has to be able to buy out the RM to ever own the home. So if she can’t do that, RM will foreclose & sell it. The issue imo then becomes that if moms old house sells for over the total RM owed including its interest and whatever fees on foreclosure and to sell it, well if that should actually happen*, RM normally pay the heirs the overage. But if that MERP lien is there, I image they can try to acquire it.
(* it’s crazy time for property values, normally RM go negative. But if it’s an older RM, maybe based on 100K home which now can sell for 300K. A home like that is going to have $ coming back after RM sells it. State may try to get the $ to repay Medicaid costs. Let’s say it’s 150K excess RM recovers its loan. If Medicaid was 100K, then heirs get the final left over 50K. OP has to keep on top of all this just in case that happens)
She imo is best off doing whatever to be able to have an exemption / exclusion to estate recovery to keep MERP from possibly placing their claim or lein on the property to begin with just in case she can buy it or can get any excess $ should RM foreclosure & sell it.
Personally to me unless she has the $ to buy it and be able to do this like asap, OR the current clause of the house is way way WAAAY over the RM loan, getting involved in all this is a total waste of emotion and time. It’s not like the house is owned outright so an asset of an estate and she as per her moms will can enter probate and move all this to the probate court. RM isn’t going to and does not have to cut her any slack once the federal Covid moratorium is lifted. Their contract was with her mom, not her. RM are ruthless.
Also so when did it happen on AC that we cannot attach an answer to under a post?
Heather, has Medicaid placed a lien on the house yet because that is how it works. You can remain in the house because you were her caregiver. If you were allowed to remain in the home while Mom was on Medicaid, then you should still be allowed to. The lien remains on the house till you sell the house and it gets satisfied, or you die. I have heard it being transferred but I have no idea how that works.
I don't know how RMs work. I do know I don't want one with all the trouble they cause when it comes to Medicaid. Your Mom was on Medicaid for Memory Care? Thats unusual in most states unless u pay privately for 2 yrs. How long was she on Medicaid?
For RMs, it’s my understanding, only way heirs can acquire home is to repay RM. If it’s FHA/HUD backed RM - a HECM - those r required by Federal Govt to have a period of time for family or heirs to get $ to repay RM and at less than 100% of loan & interest. I think it’s 90% & 30 day period to send Letter of Intent with 60-90 day window for financing. You have started this, right? Is this likely to happen? I ask as this will make a huge difference as to next steps. If not feasible, it’s going to foreclosure.
It sounds like due to Covid, RMs had a “hold” on after death actions. If Covid “hold” period has ended, and you pay the RM, you use the caregiver exemption to get past Medicaid recovery. If you cannot pay the $, the RM will foreclose. RMs will have a contractor who deals with clearing it, etc. & will be put up for sale. RM loan amount, interest, fees and others costs that are supposedly repaid from sale and if it’s less then FHA/HUD deals with the shortfall.
Medicaid has no securitization on the property. Medicaid has no control on RM timeframe. Agencies, like Medicaid, have regulations done by administrative code, not statutory law, and each State has its own spin on all this. Its things like this is why you need an attorney. Folks can give you ideas or insight on forums, but you have to have an attorney.
If you don’t have $ to buy it and your moms house should actually sell for more than all RM costs, overage $ normally goes to heirs. This could be important for you. You need to speak with your attorney as to how to use the CG exemption to keep Medicaid from a recoup attempt.