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The original POA has been lost and it will take at least $3000 and 2 months to have a Declatory Judgment made. If the nursing home ends up with her house eventually, what's the difference?

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Faith, your profile selections haven't enabled your answers and a search didn't reveal what I was looking for, so can you refresh my memory? Was this the situation in which the home was sold but discovery was made at closing that the original DPOA had been lost or destroyed, attempts were made to resolve the issue, the title company refused to accept a copy, and the purchasers walked?

I wondered at the time why it would take so long to get a Declaratory Judgment. If I recall correctly, the hearing would be motioned up, the Judge would hear it on a regular motion day and make a decision. It's not a contested motion, so I didn't understand the long delay, unless in that jurisdiction the judges only hear those kinds of applications on specific dates.

Regardless, I also don't recall whether Medicaid was involved. I think that would be the whole issue of letting the house go to foreclosure, especially since it would reflect that your mother, or you as proxy, weren't making the efforts to maintain the house for Medicaid seizure later.

That issue is complicated enough, but adding foreclosure to the mix might tip the scales the wrong way. I just don't know as it relates to Medicaid, but I'm also not sure how the nursing home would end up with the house "eventually" if it's foreclosed - it won't. Whatever entity holds the mortgage will end up with the house. And if Medicaid's filed a lien, that mortgagee may not even purchase the home at a foreclosure sale because it would be in the position of trying to dispose of an asset subject to a Medicaid lien. No one would buy a house under those conditions, and it may also be a breach of some level of Medicaid conditions.

This gets too complicated - I think the first issue is what's the status with Medicaid? Is it involved? Have you filed for it on behalf of your mother?

Next, research your state's statues to determine if foreclosure would be in equity (through a lawsuit) or by advertisement. If in equity, that could be several months since it requires litigation to foreclose the mortgage. Foreclosure by advertisement requires advertisement in a local paper (usually a legal newspaper) for a specified time (something like 5 or 6 weeks), a sheriff's sale, and then a redemption period, if the state statute allows it.

In Michigan, the redemption period is shortened to one month if the house is abandoned. I don't know about the state in which your mother's house is located.

But given the time for advertisement, setting of the sheriff's sale, and possible redemption period, the total time could exceed 3 months. So it's not that great of an alternative.
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Yes this is the same issue. Her house is in Maryland and we don't meet about filing for Medicaid until Jan 26. She is not mobil now and may never leave this nursing home.
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As a foreigner I'm not sure if this would work, but have you thought of ringing the Medicaid people in advance and asking them what the correct thing to do is?

Is your MIL able to express any wishes or is her dementia too far advanced?

I can understand why you would feel that it hardly makes any difference whether the mortgage company forecloses or the assets all go to the Nursing Home. But at least the NH would be giving your MIL care in exchange for the money they charge. I wouldn't have similarly fuzzy feelings towards the mortgage provider, who's charged her interest for all those years and now walks off with the house too.
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There's another concern I have about allowing the house to go to foreclosure. If eventually Faith's mother does apply for Medicaid, and it's within the lookback period, the loss of the house to foreclosure will be reflected. I don't know whether or not it would be construed as a voluntary release of assets, or a mismanagement of assets potentially available for Medicaid recovery, especially since a voluntary decision would have been made to let the house go. It would minimize the assets against which Medicaid could recover.

And if there were options other than allowing the house to go into foreclosure....well, I don't know what position Medicaid would take, but I think it's always best to examine all these options well ahead of time, especially since the foreclosure time.


Just did a quick search on MD foreclosure laws; the MD bar provides a very good synopsis: http://www.msba.org/publications/brochures/foreclosure.aspx.

(If part of the link is deleted, google Maryland foreclosure process and click on the second hit).

First step is sending of the notice by the mortgagee, minimum of 45 days after default. You'd need to check the mortgage itself to determine when a default can be declared, i.e., how many payments must have been missed.

Second step occurs after 90 days of existing default(s).

So far that's 4.5 months of mandatory procedures, and that doesn't even reach the sale stage yet.

The Judgment would have been up for hearing by then, so allowing the home to go to foreclosure would take longer than resolving the issue of the missing DPOA. The hearing would be held well before the second phase of the foreclosure process could be started.

So allowing the house to fall into foreclosure will be the longer option.
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My apologies; just realized that you're referring to your MIL, not your mother. My eyes aren't working properly today.
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Ok. 3K and two more mortgage payments - surely that is a lot less than the equity in the house?

Once you get the POA, and the incapacity letters, you should be able to sell and use money for her care. You could use some of that money to do things besides pay the nursing home bills as long as they are totally legitimate needs of hers, e.g. clothing, favorite foods, a piece of equipment that the skilled care facility would not provide, or maybe even a modification of her vehicle, etc. (If we had ever needed Medicaid, and we came close but didn't, I was told there could have been a penalty period because we modified a vehicle owned by our daughter instead, but it was worth it...we would have and could have paid the difference between Mom's income and her care costs for those 2-3 months. That vehicle then sold for very slightly less than what was owed on it, so you should actually not expect that modifying a vehicle adds value, it actually limits the pool of potential buyers!) Keep records, because you would probably have to document that for Medicaid purposes once it is spent down. You need an eldercare law consultation at the very least to help you set up a separate account correctly, and a good one will run the numbers for you and make sure that this is the best course of action. In most states, as long as MIL says she intends to return home, the house is not a countable asset and you would have the option to keep it, but you would still have all the maintenance and mortgage expenses, Medicaid does get any funds from rental, and insurers may refuse to continue to insure an unused and uninhabited home if they find out.

All that said, it can be complicated, and deciding first what you need to do to make sure MIL gets care however long she may live, and then which option is actually the least costly, is not at all inappropriate.
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And something else to think about (& plan for) in this mucho complicated mix...the 1099 -C that the mortgage holder will issue eventually to MIL.

Let's say the entire mortgage balance is 50k plus ..& 4K interest ...& 6k fees ends up at 60K that is written off. MIL will more than likely get a 1099-C cancellation of debt for 60K at some pony in time. The 1099-C could have a delay to be in the year after the foreclosure too. It is income reported to the IRS. And fully taxable income. MIL owes taxes on 60k income.

For those on Medicaid, this poses issues.....the 60K although somewhat "phantom income", it is taxable and owed to IRS. 1. If they don't file & settle with IRS, that poses a problem, as IRS as a supercreditor can attach their SS or other retirement monthly income. 2. Which is a cluster for those on Medicaid, as they HAVE TO pay the NH a copay or their SOC (share of cost) of their monthly income to the NH. If their income is being attached by IRS, they can't pay the SOC, so are not keeping up their eligibility requirements for Medicaid and can be removed from Medicaid for noncompliance. 3. the "phantom income" on the 1099-C can appear as income if your state does an IRS match up, and will take MIL over 2K in assets/income allowed by the states for Medicaid eligibility.

Someone will need to do MIL taxes to offset the 1099-C income fir the year its done. It's probably going to need a tax pro or CPA to do. Not a DIY turbo tax or Quicken type project IMHO. You need to keep all MILs receipts, etc. on the property & any medical expenses as well to give to the CPA to do taxes to get the write off It will be a IRS 982 - reduction of tax attributes due to discharge of debts that will be needed to get this done. The info on 982 is not an easy read.....

Good luck in all this btw.
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igloo, I actually know a guy who lost his house, but when the bank sold it, they got more than he owed. He got a check for $1000. So it is possible. If the bank sells the house, they have revenue from the sale, so it is not a total loss.
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Thank you all for your insights. Our current decision is to go through court for Declaratory Judgement ruling on POA then put the house back on the market if possible.
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