Mom in nursing home---need to sell house?

by Kristi
(Morrison, IL, USA)

My 63-year old mother fell ill in April. She is now in a nursing home--medicaid is still pending at this point, but we see no reason she wouldn't be accepted.

She has a house with two mortgages and a vehicle which she paid off with the money from the second mortgage. I was told from DHS that her house would need to be sold within 6 months or a lien would be put on it. Her "boyfriend" would like to buy the house...which is what Mom wants.

I understand I need to get "fair market value" for the house and that any proceeds (after pre-paid funeral and attorney costs) would be paid to the nursing home. But what happens if the remainder of the mortgage amount is near or in excess of fair market value. How would we pay for her anticipated funeral costs and/or any attorney fees for the sale of her house?

p.s. My mom has no life insurance or any will/trust set up.

~Overwhelmed in Illinois

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Nov 04, 2010
House Sale Options
by: Gabriel Heiser

If the house is sold to the boyfriend for its fair market value, the proceeds would virtually all go to the bank that made the loan. As such, your mom would receive little or nothing from the sale. If that is the case, then the funeral costs and attorney fees would have to be paid by other family members.

An alternative is to let the state place its lien on the house, and to stop paying the mortgage. The bank will then foreclose on the house and the state will lose its interest. In any event, then, your mother should thus qualify for Medicaid.

Even if your mother sold the house today, she would not receive enough from the sale to repay the bank the full outstanding balance. Assuming the mortgage is a "non-recourse" loan the bank cannot look to any other assets of your mother to fund the shortfall it has after the sale of the house, and even if the bank was able to do so, your mother apparently has no other assets.

You can read more about this issue and others at

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