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Katiemygirl, it depends if you see Medicaid in the future, within the next 5 years. If Medicaid finds that you had placed your son on your deed, Medicaid might deduct half the equity for your care.... you would have to come up with the difference. Best bet is to contact Medicaid as each State has their own rules and regulations.
Another draw back of placing a grown child on a Deed depending on how much equity is in the house. If you have a lot of equity and the house is upscale, then placing a grown child on a Deed creates a capital gains tax issue, as the basis of the house would be from the day you had bought the house. If your son inherits the house via a Will/Trust, then the basis for taxes becomes the day he inherits the house. This is some to discuss further with either a CPA or an Elder Law Attorney.
another thought….do you know what the compliance is on the RM? Look over the agreement to see what is required and if some of these items are going to be an issue in the near future…..Please go over the agreement to see what the policy reads.
If you do a RM there are 4 things that can be a problem for compliance and cause the RM to be due:
1. FAILURE TO PAY - property taxes, homeowners/flood/wind insurance. One issue with RM is that instead of the homeowner selecting their own insurer, the insurance is folded into the RM and uses insurers that the RM selects which is often at higher rates. Also if the elder has owned the home for a long time and paid off in full, they probably have a pretty low cheap homeowner insurance policy, well now that there is a new mortgage, they need to have bigger $$ policies for all peril's (homeowners, fire, flood, earthquake, windstorm) plus mortgage insurance for the new debt. Could be very very expensive & not affordable. 2. MOVING TO A NEW RESIDENCE- if reverse mortgage property stops being your primary residence, you are out of compliance with loan. So if you move into a NH, you are required to pay your loan.
3. BEING OUT OF THE HOME FOR MORE THAN 1 Yr - the loan will come due. Most policies have this.
4. ALLOWING THE PROPERTY TO DETERIORATE - being away for a while, like a trip or cruise is allowed but if the property gets run down while you are away, the loan could be called in. After Hurricane Katrina, some homeowners who had RM, got letters w/detailed questionnaire as to the status of the home, how it was being secured, status of repairs, utility information - this was all about calling in loans that were in areas with uncertainty. And Katrina was in 2005 before the real estate market tanked.
Two of the big reverse mortgage players, Bank of America & Wells Fargo, got out of the new RM business in 2012. They were like 50% of the market too - they still service & honor the old loans but do not write any new ones. They did it because many of the homes with RM now are negative-equity so they were taking losses on those RM's (done in the go-go real estate years of the 1990's – 2005). What is left in the RM market in some regions are smaller mortgage companies, many of which did subprime mortgages before moving into going into RM selling. Realize that Mortgage loan officers and brokers are paid commissions-usually, 100% of their pay is commissions, so the incentive for them is to encourage people to borrow loans that are not always in the consumer's best interest.
Not to be all Nancy Negative on RM's, I do think that RM can work for younger seniors. For a couple in which they are 62 & 66 and in good health and have a home that is fully paid off and worth over 300K & in a neighborhood in which property values are going to go up over time, then a RM that is a line of credit with a variable interest rate can make sense. They are likely to have the retirement income to pay for whatever on the house for the life of the loan and can live in the house another 10 -20 years with the house increased in value so that 10 -20 years from now it is worth more than enough to pay off the RM with $$ left over to them. But that is not who gets's RM's (those folks don't need to do a RM they can just go to the bank & get a HELOC), it is the advanced elderly in their 80's who live in modest homes in areas where house values will never go up enough in their lifetime to be able to pay off the RM with $$ left over and they go into a NH a couple of years after the RM is done and lose the house to forced sale or a foreclosure.
Anne1958 comments are important to read & re-read. Her mom was great with her RM, but mom died while still living in her home so there was no NH issues. But Anne & her family had to then deal with stressful situation on the RM. The RM wants the house to go into foreclosure too as then FHA pays them for all.
If mom had gone into a NH and needed to apply for Medicaid, the situation would have been even mores stressful for family doing her application because she would have all kinds of issues on just what her assets are and any income from the RM and proceeds from the sale on the home.
Did your mom fully understand what the RM is? RM is debt. RM is a debt that has to be paid back in full PLUS whatever fees and costs are added for the life of the loan in order for the house to be released from the RM and then transferred to family (if in mom's will it states that) OR sold. If Mom is was the sole owner of the home at the time she did the RM, then you are viewed as a tenant and have no rights or ownership in the home.
RM's for those who need to pass down a home to family (so that family has a roof over their heads) are a bad, bad deal as they do not have the funds to come up with all the money to repay RM & fees to get the house released from the RM.
Because of situation like this and many more issues, the fed's recently changed the rules on RM so that those getting them more fully understand what RM debt is and changed the level of approval for RM. Now you have to be able to show (& for some place $$ in an "escrow" type of account) the ability to pay for all the costs you as the property owner HAVE to continue to pay on the house (like taxes, utilities, insurance, etc) for many years of the loan. For many who have their home paid off, well they often are underinsured and have small policies they can afford. But once the RM happens, they now have to have whatever full peril for their area (homeowners, fire, flood, windstorm, earthquake) PLUS pay mortgage insurance. This can be very expensive and out of reach to pay for those on modest SS income. Many will not be able to do this and the RM comes due as they are out of compliance with the RM contract.
I would suggest you look into going the route that mom did not understand what the RM is and try to get the RM cancelled. There are many state's AG's that have taken RM sellers to court to get contracts cancelled. I would send letters to your state's Dept of Consumer Affairs, Dept of Banking and the Attorney General's office. Also to your local state rep's & state senators.
Do you know what type of RM mom got? Is it a FHA backed RM? if it is FHA backed you are going to have a better chance of getting it struck.
The amount of issues with RM is significant. For more reading on this you can google an article from the New York Times, October 14, 2012 by Jessica Silver Greenberg: “Reverse Mortgages Costing American Their Homes”. Another article on RM and subprime lenders is from the National Consumer Law Center, called “Subprime Revisted: How RM Lenders Put Older Homeovers” Equity at Risk” www.nclc.org/images/pdf/pr.../report-reverse-mortgages-2009.pdf.
************** another thought…..if your state allows for a "usufruct" to be done, then you might have mom do a codicil to her will to give you a usufruct on the house. You get this notarized and keep it with her will. In my state (Louisiana) usufruct are pretty common and a great simple way to enable a family member to continue to live in or use property that is going to be inherited by another family member.
Webster, it's too late to be on the deed, the house belongs to the mortgage company. You can try to buy it back, but you would need a lawyer who can negotiate the settlement amount.
Make sure her wishes are in a will, get a warranty deed if possible. Even a handwritten will can be filed or some counties call will for safekeeping. Do your research makes sure it is filed of record with true names. I know nothing about reverse mort. But I deal with deeds a lot and wills. Do not wait go to your county clerks office, and do your own research, if you are able to do those things a attorney will not be necessary. Of course unless you have the funds:)
While you may be able to get your name on the deed in certain circumstances your name will not be on the reverse mortgage loan or deeds recorded at closing. So the lender always has 1st beneficiary interest before you even with your name on the deed. You need to know your rights and options now and after your mom passes in order to make informed choices. I speak with borrowers and their family members all the time.
My guess is that you can't. They gave the mortgage based on your mother's age. The house will no longer belong to you when she dies. It will belong to the bank. Just my guess, though.
I am not sure about reverse mortgages, someone with more expertise can help and there are a lot of people who know on this site, I'd guess. For me, what I did was when my mother was able the lawyer said to instead of all the process and expense of being but on the deed as an owner to placed on the deed as having a "right of residence for life." If someone wanted to sell her home the person buying it would have to provide me residence, don't think that would happen do you? Only unless I gave my right of residence up, and I am NOT doing that now, who knows what the future holds, but I do know that they can't throw me out on the street, because I have a legal right to reside. Less expensive than owner on deed, but it cost me money, hopefully it was a good decision on my choice. I just knew I was not getting thrown out because in her dementia induced anger she said she wanted me out of here, only to beg to have me returned. You just have to cover yourself however you can. Don't fight a demon playing hard ball, get your own bat and glove.
You also need to consider tax basis questions if you get put on the deed. If you do some googling, you can find out what that means. I'd write it on here, but I'm not up on it enough to be able to explain it to you. Just inheriting the house might be a better way to go (tax-wise). You should talk to an attorney and just ask the questions.
Reverse mortgages can be a huge relief to those that need the money. My mother in law took out a reverse mortgage on her property about eight years before she died. She was very, very happy with it. She said it made her feel like a rich woman. She was not a big spender, but she really needed money for necessities, and she no longer had to worry about paying her bills, and she could give money to her church (which she had always wanted to do), and to a charity that was dear to her heart. That said, she put about 200,000 dollars on the reverse mortgage before she passed. That's fine, it was her money to enjoy. But it does make it difficult after they pass or leave the home. It is then that the payment comes due. We had to sell the house to pay back the reverse mortgage, and had to be in touch with the lender on a regular basis. It was an annoyance as they kept threatening to foreclose and we had to keep proving that we were making an honest effort to repay the loan. You get 90 days to pay it back, then you must file for an extension if the house isn't sold by then, which hers wasn't. We did finally manage to sell the house before it ran into foreclosure. Is there a reason you want to be on the deed? Can you afford to pay back the loan when it comes due? So many things are uncertain. We never know how long the borrower will live, how much money they will need, or where they'll end up. If my MIL had ended up in a NH, the house would have to have been sold to pay off the loan with the rest going to the NH. This doesn't exactly answer your question, but hopefully gives you a better understanding of how the reverse mortgage works.
Would it be possible? I figured with the reverse mortgage that the house would belong to the lender when you mother left the property and the terms of the reverse mortgage were met. Reverse mortgages are a mystery to me, though. It will be interesting to read what others have to say.
By proceeding, I agree that I understand the following disclosures:
I. How We Work in Washington.
Based on your preferences, we provide you with information about one or more of our contracted senior living providers ("Participating Communities") and provide your Senior Living Care Information to Participating Communities. The Participating Communities may contact you directly regarding their services.
APFM does not endorse or recommend any provider. It is your sole responsibility to select the appropriate care for yourself or your loved one. We work with both you and the Participating Communities in your search. We do not permit our Advisors to have an ownership interest in Participating Communities.
II. How We Are Paid.
We do not charge you any fee – we are paid by the Participating Communities. Some Participating Communities pay us a percentage of the first month's standard rate for the rent and care services you select. We invoice these fees after the senior moves in.
III. When We Tour.
APFM tours certain Participating Communities in Washington (typically more in metropolitan areas than in rural areas.) During the 12 month period prior to December 31, 2017, we toured 86.2% of Participating Communities with capacity for 20 or more residents.
IV. No Obligation or Commitment.
You have no obligation to use or to continue to use our services. Because you pay no fee to us, you will never need to ask for a refund.
V. Complaints.
Please contact our Family Feedback Line at (866) 584-7340 or ConsumerFeedback@aplaceformom.com to report any complaint. Consumers have many avenues to address a dispute with any referral service company, including the right to file a complaint with the Attorney General's office at: Consumer Protection Division, 800 5th Avenue, Ste. 2000, Seattle, 98104 or 800-551-4636.
VI. No Waiver of Your Rights.
APFM does not (and may not) require or even ask consumers seeking senior housing or care services in Washington State to sign waivers of liability for losses of personal property or injury or to sign waivers of any rights established under law.
I agree that:
A.
I authorize A Place For Mom ("APFM") to collect certain personal and contact detail information, as well as relevant health care information about me or from me about the senior family member or relative I am assisting ("Senior Living Care Information").
B.
APFM may provide information to me electronically. My electronic signature on agreements and documents has the same effect as if I signed them in ink.
C.
APFM may send all communications to me electronically via e-mail or by access to an APFM web site.
D.
If I want a paper copy, I can print a copy of the Disclosures or download the Disclosures for my records.
E.
This E-Sign Acknowledgement and Authorization applies to these Disclosures and all future Disclosures related to APFM's services, unless I revoke my authorization. You may revoke this authorization in writing at any time (except where we have already disclosed information before receiving your revocation.) This authorization will expire after one year.
F.
You consent to APFM's reaching out to you using a phone system than can auto-dial numbers (we miss rotary phones, too!), but this consent is not required to use our service.
Another draw back of placing a grown child on a Deed depending on how much equity is in the house. If you have a lot of equity and the house is upscale, then placing a grown child on a Deed creates a capital gains tax issue, as the basis of the house would be from the day you had bought the house. If your son inherits the house via a Will/Trust, then the basis for taxes becomes the day he inherits the house. This is some to discuss further with either a CPA or an Elder Law Attorney.
If you do a RM there are 4 things that can be a problem for compliance and cause the RM to be due:
1. FAILURE TO PAY - property taxes, homeowners/flood/wind insurance. One issue with RM is that instead of the homeowner selecting their own insurer, the insurance is folded into the RM and uses insurers that the RM selects which is often at higher rates. Also if the elder has owned the home for a long time and paid off in full, they probably have a pretty low cheap homeowner insurance policy, well now that there is a new mortgage, they need to have bigger $$ policies for all peril's (homeowners, fire, flood, earthquake, windstorm) plus mortgage insurance for the new debt. Could be very very expensive & not affordable.
2. MOVING TO A NEW RESIDENCE- if reverse mortgage property stops being your primary residence, you are out of compliance with loan. So if you move into a NH, you are required to pay your loan.
3. BEING OUT OF THE HOME FOR MORE THAN 1 Yr - the loan will come due. Most policies have this.
4. ALLOWING THE PROPERTY TO DETERIORATE - being away for a while, like a trip or cruise is allowed but if the property gets run down while you are away, the loan could be called in. After Hurricane Katrina, some homeowners who had RM, got letters w/detailed questionnaire as to the status of the home, how it was being secured, status of repairs, utility information - this was all about calling in loans that were in areas with uncertainty. And Katrina was in 2005 before the real estate market tanked.
Two of the big reverse mortgage players, Bank of America & Wells Fargo, got out of the new RM business in 2012. They were like 50% of the market too - they still service & honor the old loans but do not write any new ones. They did it because many of the homes with RM now are negative-equity so they were taking losses on those RM's (done in the go-go real estate years of the 1990's – 2005). What is left in the RM market in some regions are smaller mortgage companies, many of which did subprime mortgages before moving into going into RM selling. Realize that Mortgage loan officers and brokers are paid commissions-usually, 100% of their pay is commissions, so the incentive for them is to encourage people to borrow loans that are not always in the consumer's best interest.
Not to be all Nancy Negative on RM's, I do think that RM can work for younger seniors. For a couple in which they are 62 & 66 and in good health and have a home that is fully paid off and worth over 300K & in a neighborhood in which property values are going to go up over time, then a RM that is a line of credit with a variable interest rate can make sense. They are likely to have the retirement income to pay for whatever on the house for the life of the loan and can live in the house another 10 -20 years with the house increased in value so that 10 -20 years from now it is worth more than enough to pay off the RM with $$ left over to them.
But that is not who gets's RM's (those folks don't need to do a RM they can just go to the bank & get a HELOC), it is the advanced elderly in their 80's who live in modest homes in areas where house values will never go up enough in their lifetime to be able to pay off the RM with $$ left over and they go into a NH a couple of years after the RM is done and lose the house to forced sale or a foreclosure.
Anne1958 comments are important to read & re-read. Her mom was great with her RM, but mom died while still living in her home so there was no NH issues. But Anne & her family had to then deal with stressful situation on the RM. The RM wants the house to go into foreclosure too as then FHA pays them for all.
If mom had gone into a NH and needed to apply for Medicaid, the situation would have been even mores stressful for family doing her application because she would have all kinds of issues on just what her assets are and any income from the RM and proceeds from the sale on the home.
RM's for those who need to pass down a home to family (so that family has a roof over their heads) are a bad, bad deal as they do not have the funds to come up with all the money to repay RM & fees to get the house released from the RM.
Because of situation like this and many more issues, the fed's recently changed the rules on RM so that those getting them more fully understand what RM debt is and changed the level of approval for RM. Now you have to be able to show (& for some place $$ in an "escrow" type of account) the ability to pay for all the costs you as the property owner HAVE to continue to pay on the house (like taxes, utilities, insurance, etc) for many years of the loan. For many who have their home paid off, well they often are underinsured and have small policies they can afford. But once the RM happens, they now have to have whatever full peril for their area (homeowners, fire, flood, windstorm, earthquake) PLUS pay mortgage insurance. This can be very expensive and out of reach to pay for those on modest SS income. Many will not be able to do this and the RM comes due as they are out of compliance with the RM contract.
I would suggest you look into going the route that mom did not understand what the RM is and try to get the RM cancelled. There are many state's AG's that have taken RM sellers to court to get contracts cancelled. I would send letters to your state's Dept of Consumer Affairs, Dept of Banking and the Attorney General's office. Also to your local state rep's & state senators.
Do you know what type of RM mom got? Is it a FHA backed RM? if it is FHA backed you are going to have a better chance of getting it struck.
The amount of issues with RM is significant. For more reading on this you can google an article from the New York Times, October 14, 2012 by Jessica Silver Greenberg: “Reverse Mortgages Costing American Their Homes”. Another article on RM and subprime lenders is from the National Consumer Law Center, called “Subprime Revisted: How RM Lenders Put Older Homeovers” Equity at Risk” www.nclc.org/images/pdf/pr.../report-reverse-mortgages-2009.pdf.
**************
another thought…..if your state allows for a "usufruct" to be done, then you might have mom do a codicil to her will to give you a usufruct on the house. You get this notarized and keep it with her will. In my state (Louisiana) usufruct are pretty common and a great simple way to enable a family member to continue to live in or use property that is going to be inherited by another family member.