My sisters and I, non-stellar credit and zero capital, want to buy a house

[Bertha Venation]

We want to buy our grandmother's house before our dad sells it, so that one sister and her kids can continue to live there.

Sounds hopeless. I'm desperate for ideas. Got any?

[Midlodemocrat]

1. Does your dad need to sell it?

He could just put your sister's name on the deed. That way, when he does pass, she would continue to live there.

[Bertha Venation]

5. He needs it as rental income to pay for grandma's care at the

nursing home. If he were to sell it he'd have cash enough to last her lifetime. So he won't merely put my sister's name on the deed. Good idea, though.

[candle_bright]

8. Could your sister rent it

for the duration of your grandmother's life, and then take over the deed?

[Bertha Venation]

17. Well, she's renting it now, but he feels he could get a lot more in rent

than she can afford. So he will eventually either sell it out from under her or evict her in favor of a tenant with more money.

[Jersey Devil]

28. Yes, if all other heirs agree, but subject to a medicaid lien

for any money that is paid by medicaid over and above the rental profits used for her care. Then the owner would either have to pay off the medicaid lien (with a mortgage probably) or sell the house to do so.

[Midlodemocrat]

10. Let me suggest something to you.

If he puts the house in your sister's name, your grandmother would be eligble for Medicaid. Medicaid is among the best insurance available. My own dad was on it for three years before he died after going through almost $800,000 in cash to pay for his health care. This on top of private insurance.

If your grandmother goes to the nursing home, all the equity in that house will go for her care. What I am suggesting is not illegal, or frankly unethical. Most nursing home residents are on Medicaid.

Now, of course, this has to be done rather quickly so that it doesn't look as though you are trying to get out of paying for your grandmother.

What you need to do is have your doctor admit your grandmother to the hospital for some testing, preferably over the weekend. A three day stay in the hospital allows for Medicare to pay for 100 days of nursing home care.

PM me if you want additional info. Unfortunately, I almost have a degree in this crap.

[Jersey Devil]

26. What you are suggesting is illegal

Medicaid laws provide for a 3 year "look back" so that if any property is sold or given away for less than fair market value within 3 years of a Medicaid application the transaction is considered a "fraudulent conveyance" under the law and can be declared null and void for the purposes of the state obtaining medicaid reimbursement.

It is not only unethical but illegal and a lawyer who takes part in such a transaction can also be charged as a felon under federal law.

The reasoning is this: Why should the taxpayers of a state be saddled with paying for someone's nursing home costs out of their taxes when that person had adequate resources to pay for it themself? Indeed, why? So that surviviors can inherit as much as possible?

[Midlodemocrat]

37. No, it is not illegal if done in that time frame

and the reason this law exists is to provide for people like Bertha Venation's sister. We had a similar circumstance in my husband's family. His sister never left the parental home, had no money, no assets, etc. Her mother put her name on the deed so that she would continue to have a place to live in the event of nursing home care. It never happened, because both parents passed while still at home, but it did give the sister some peace of mind that she would not be on the street.

Additionally, when my father was still at home, CT Medicaid paid for 3 hours of companion assistance a day. That is someone to sit with him, not cook, not get a glass of water. This was a man who paid the maximum into the system his entire life. When my mother passed, we hired private care nurses to the tune of $9,000 per month to care for him until we were able to get him into a nursing home. How many people do you know that have that kind of money?

The care of the elderly in this country is a disgrace, and if Bertha's father could make things a little easier for her sister by not putting her out, I have no problem with that.

I think this point is moot however, because in reading her additional posts, I believe her grandmother is already in a nursing home.

[salin]

30. Guess the question really comes down to

the ability to meet her bills. Are his worries reasonable (e.g., her costs really are running through resources at a rate that there will soon be no money for her care?), or are his worries escalated (e.g., the stress of the concern has inflated the issue in his mind and spurred premature action.)

If it is the former (that the need for more income to pay for care is a realistic not an inflated need), then I think that the solution to that problem has to be addressed first - and if one can do so in a way that keeps your sister in the home - fantastic. I am guessing that what you are seeking (from what I read in the thread) is that instead of the financial burden falling solely on your sister as I presume is now the case per her paying rent, that you are suggesting that the other two sisters (including yourself) would share the burden - and the ownership of the home. Thus the payments would be higher (per the cost of the house), and the costs/needs of your grandmother would be met, while keeping your sister in the house and keeping the house in the family.

You say that two of you are already home owners... that would suggest there is some equity that could be used (or mortgaged in a manner of speaking) as collateral for the financing for buying the house. If that is the case, than I would consult a realestate lawyer to learn one's options in terms of leveraging financing to make such a deal possible.

If on the other hand the attempt is to get the house - but not pay anymore - but that more is needed to provide for your grandmother's care, then the issue really is about pitting the needs of one generation within the family against another. That would be a real shame. Were that the case I would have to sadly side with the taking care of your grandmother's needs (paying her bills so that she can be adequately cared for.)

Or if it is the case that your father has escalated the urgency of the need in his mind (that is, there is enough money for your grandmother's care) - then probably this will have to be solved by alleviating his anxiety per meeting her bills. Perhaps enlist the help of financial counselors/planners who have experience with situations like those of your grandmother.

[yellowdogintexas]

34. If he sells the house, he is then obligated to spend down all

her resources before she can become eligible for Medicaid, if indeed the possibility that she could live long enough to need Medicaid exists. If he sells now, and then she spends out all her resources, including the proceeds from the house, then Medicaid would not have anything to place a lien against. If he waits to sell, and depletes all her cash assets, then he would be required to sell the house and spend down that asset before any Medicaid dollars could become available.

Does she have monthly income, besides Social Security? If so, then her base assets will only be depleted monthly by the difference between her living expenses and her income. If she has a really good nest egg, it will take longer than he thinks to deplete her reserve.

If she is relatively healthy, deeds the house now to whomever she chooses, and then does not need extensive care until several years down the road, then no lookback on the lien.


State laws do vary, as to lookback time. You can google Medicaid and get links to the laws for your state.

Sounds like Dad is wanting to be sure he liquidates all her assets so he can have his hands on all of it while she is still living.

Can she handle her own affairs still? If so she could have some very important opinions to add.

If she is in a nursing home already, what is her long term prognosis. We put our mom in a home thinking it could be anywhere from 6 months to 5 years residence; it was from March to October as it turned out. We sold her house and land, sold her car, divided up what furniture etc we wanted or our kids wanted etc in preparation for the Medicaid need when her resources were exhausted. Another thing we did that helped out enormously was use her Medicare Supplement to supply as many of her medications to the nursing home as possible. She had the retired government employees insurance as a benefit because my dad was a career postal worker, and it rolled over as her supplement when she got on Medicare. This insurance has a very excellent drug purchase through mail program. Their rep got on the stick with the nursing home rep and saved my mom a ton of money on medication. The point of this is to be certain every single little pebble that could help with her expenses is turned over...does she have a mail order RX option in her insurance? Is it being used. Tons of savings, right there, even if she is not in a nursing home.

We never needed Medicaid but it was getting close there at the end.

[tk2kewl]

2. Dad is uncooperative?

What is the price tag? Your dad could hold the mortgage if he were so inclined.

[Bertha Venation]

7. Yes, he is.

Houses on her block are going for $425k -- we're talking about Orange County, CA. In my neighborhood those houses would sell for $150-200k.

"Dad could hold the mortgage" -- what does that mean? Does that mean, he'd sell it to her as a private party? I am SO ignorant....

[tk2kewl]

20. He can act as the bank.

You write up a mortgage and pay him the monthly payment. That's a pretty big payment on 425Gs though. $ 2,827.54/month (at 7% over 30 years), and that is excluding property tax and insurance. I don't know what taxes on a place like that would run, but in my area you would pay at least another $500/mo in taxes and $500-$1000/yr in insurance. That brings the total monthly nut to around $3,400/month.

You could play with this idea and the mortgage calculator at http://www.mortgage-calc.com/mortgage/simple.php and maybe back into a number you can afford, if you think your dad would come down in price for the right monthly payment.

You would probably need lawyers to write up the mortgage docs, and your dad could foreclose and sell the house at a later date if you fail to pay. Maybe getting the monthly payments and having the ability to sell if you default could sway him.

[SW FL Dem]

25. Or as an alternative

You could try to get an 80% mortgage from a bank and have your dad carry a 20% second. That way the bank isn't financing the whole thing and your dad gets 80% of his money up front. There are many lenders out there that will make 80% loans to people without perfect credit. Indy Mac Bank http://indymacmortgage.com supposedly gives its best interest rates to anyone with a 620 composite FICO score. You could structure it so that the 2nd is interest only for a few years, until the house appreciates and then it is due in a balloon payment or just amortize it over 20-30 years.

[Jersey Devil]

27. No he cannot since grandma owns the house

unless he has been appointed as grandma's guardian after an incompetency proceeding or under a power of attorney. Most states also require court approval for the sale or transfer or any real property owned by an incompetent. A court would never approve a sale for less than market value.

[tk2kewl]

31. she could deed it to him

[Jersey Devil]

32. Yes, but if she goes on medicaid within 3 years of deeding it

then medicaid will still have a lien on the house - unless they lie on the medicaid applications about her ever owning it. Trouble is, medicaid will also ask for her income tax returns and will quickly discover she owned and gave away the house in violation of federal law.

[salin]

33. question

if the house is sold - and the proceeds go back to her estate to pay her bills, then there isn't any problem is there? From my read of the situation - dad wants the property to be sold in order to be able to pay bills, not to do a medicaid cheat thing (that was injected by folks on the thread)... in which case there isn't a problem per medicaid. Or am I missing something?

[Jersey Devil]

35. Nope - you got it

It is illegal to give your property away in order to avoid paying your bills.

[tk2kewl]

24. BTW ... after some time

I think he could potentially sell the mortgage to a bank. After it is clear that payments are being made on time. So he would get mothly payments for a few years and then sell the note and get his big cash payoff.

[Droopy]

3. I bought my house with zero money down

And I got the seller to pay for all but $500 in closing costs by not asking them to come down too much on the price. I think you have to have decent credit to do the zero money down thing, though. You may be able to pull it off if you have several people willing to sign on to the loan.

It sounds like your dad is being a hard ass. What's up with that?

[Bertha Venation]

11. "dad is being a hard ass. What's up with that?"

He's terrified that my grandmother will outlive her savings. He canot see beyond that to the needs of his children -- whom he has never done much to care for, ever, anyway.

[Droopy]

15. That's too bad

It seems like something could be worked out like a rental agreement at least. Does your sister have enough income to pay him a fair rent price?

[Bertha Venation]

18. She pays $1200 in rent. He thinks he could get $2000 -- but

that's just the going rate. The shape that house is in, he should be ashamed of himself for thinking of gouging someone for 2k/mo.

[blondeatlast]

4. Is it your first home? At least for one of you?

Much easier to get financing with <perfect credit on a first one.

[Bertha Venation]

12. Two of us own homes; the one who lives in Grandma's does not.

None of us has perfect credit. :(

[ikojo]

36. Is this true? That it is easier to get a house loan for a first time

homebuyer with less than perfect credit? I currently live in an efficiency apartment but would like to buy a condo (I don't want the responsbility of a yard)

[lastknowngood]

6. Is anyone a vet is so they can use their va guarentee to help

also check for local self help programs.

[lojasmo]

9. I Got my house with marginal credit and nothing down....

I went through MHFA. FHA is another option.

[Bertha Venation]

14. Good suggestions. Thanks, lojasmo. eom

[MidwestMomma]

13. How about a rent to own kind of deal?

I have zero real estate knowledge but have you checked into that? I think it gives you time to come up with a down payment or something. I'm sure somebody here knows how that works.

Good luck...Hope it all works out for you.

[Bertha Venation]

16. Thanks, MM. eom

[madrchsod]

19. my suggestion is to find a decent

real estate and estate lawyer. have your sisters and your dad sit down and explore options and what would be the best for everyone involved.it may cost money but it just may make everyone clear about all the different angles of such a deal. just may help in the relations among the family

[Nikia]

21. It's bad that he isn't being more cooperative

In many cases, there are things that the seller can do to help you out. It is bad that he is treating his children like they are just any other potential buyers. I don't know all the options, but there is no reason that it would even have to go through a bank.

[Groggy]

22. Land contract?

We entered into a land contact with my Dad to buy my parents house. It was less for us than going through the bank and having a regular mortage. Ask him if he's willing to sell it to you on a land contract. Granted, he wouldn't get the full amount right away, but in a few years you could always refinance with the bank and buy it in full from him.

[bratcatinok]

23. You'll run into a problem getting any type of

mortgage/bank financing if you and the sister who are on the Note aren't buying this home as your personal residence. Banks and mortgage companies have more strident qualifications for non-owner occupied lending than they do for buying a home one of you is going to live in. It would have to be considered a rental property and down payment, income and credit become more important.

[Jersey Devil]

29. Do yourself a favor and get professional advice

Most of the advice you have gotten here is wrong from a legal point of view. You (or your Dad) should get legal advice concerning medicaid law and reimbursement. As I said here in another reply, there is a 3 year "look back" for medicaid and unless grandma has enough other assets to pay for three years before applying for medicaid, the house must be used to pay for her care or at least a lien put on it to do so.

I will not attempt to give legal advice on a forum like this but I can tell you I am a lawyer who has dealt with these situations many times and you or your father should definitely NOT proceed to to anything without good advice from a lawyer who is well versed in elder law in your state (since medicaid laws vary somewhat from state to state).