My mother is 72 and in frail heath. In the past year, her memory has slowly gone downhill. She has had financial issues for a couple of years, but now she is 4 months behind on her house payment. My husband and I have helped through the years, but cannot now. She refuses to think about bankruptcy or selling the house. I simply don't know what to do. I don't have POA or any other designations to make decisions for her. What can I do?
I think she's probably overwhelmed with what's happening to her health wise and just isn't able to extend her thoughts to concern about the mortgage. Sometimes our minds can only handle a limited amount of stress and everything else gets pushed aside.
If I were you, I'd approach the situation as wanting to relieve her of the burden of worrying about the house, and ask if she'll execute a DPOA (one that's not dependent on declaration of an incompetency state) so that you can help her work out a solution. Tell her you'll find out what options are available then you, she, and your husband can discuss solutions.
Don't use a downloadable form; it's worth it to hire an estate planning or elder law attorney to ensure that you have authority to negotiate on her behalf to address the defaulted mortgage situation.
Has she received a demand or acceleration letter from the mortgagee? If so, she'll need to act before the deadline to avoid institution of foreclosure proceedings. Inquire of the mortgagee if it's amenable to a workout solution; these are done at commercial levels, not as often for residential mortgages, but workouts are a possibility. The terms of the mortgage would be changed and a more affordable payment could be offered.
However, if she doesn't have the money at all to bring the mortgage current, then sale is a consideration.
Disposition of the house raises another issue and that's whether she's on Medicaid and/or is likely to request it in the future. Given her declining health, do you feel that she can continue to live alone?
I would also consult a bankruptcy attorney. There were a number of changes made to the bankruptcy statute during the real estate crisis, so I don't know what her options might be.
Either way, she's going to be facing some emotional upset, so I would think about how to address that to help her through this next phase of financial challenge.
If she won't grant proxy under a DPOA, contact the mortgagee anyway. Present your mother's situation as a hypothetical one and ask what the options are. As a hypothetical situation, reps of the mortgagee can advise what solutions/choices are available without specifically discussing her situation.
To save on legal costs, contact local senior centers and ask if they have free attorney consultations. These are held in our area, sometimes weekly, sometimes biweekly. You might be able to get enough information to help format solutions for the mortgage default issue.
Another option is to contact the local attorney bar association and ask about pro bono help.
One thing I would worry about, and the attorney could answer this for you, if the house goes into foreclosure, would the forgiven loan be considered "income" even though it isn't in Mom's pocket. You don't want any red flags if down the road Mom needs to apply for Medicaid.
I made an appointment for Dad & I with legal aid. We went there and legal aid handled the process of dad giving me his Durable POA. There was no charge.
Then I contacted the mortgage company, Wells Fargo. They were able to do a mortgage modification for my dad. Even though dad was behind on the mortgage, Wells Fargo was able to modify his mortgage. The payments even dropped by $50/month. Once again, there was no charge.