Any of you with reverse mortgage or have experience?

nrowles

Member
Long story short, great gram has a $11,000 nursing home bill every month and she's out of cash. Her farm is supposed to be worth about $1.2M. The family would like to retain as much of the farm as possible. I mentioned to them about doing a reverse mortgage line of credit and draw on it as needed each month to pay the nursing home. Then when she passes on sell as much of the farm as needed to pay off the mortgage. Nobody in my family can afford this kind of coin to take the farm on themselves.

Do any of you have experience with these?
 
Neighbor looked into a reverse mortgage on his
farm. Only him and his wife, so no kids to want the
place after they are gone. Their thought was they
can have their money and still live on and continue
to farm the place. They were told that reverse
mortgages are only offered to residential property,
not to farm or commercial property. So they ended
up selling the farm to my brother, and rent the
house back from him, as he has no need of another
house. And they just retired.
 
Never heard anything good about reverse mortgage except on their commercials.

With this kind of money on the line, I would advise hiring a local real estate attorney before signing anything!
 
Sounds like your best bet at this point, but you may have trouble finding anyone who will do one on farm property.
 
The extended family wants whats best.
Perhaps what's best is let the lawyers take it for the nursing home.


Bring her flowers and let her express those joyous moments of her memory there.
 
Did she not want to implement a trust to preserve the farm? I hope all who are here that are facing old age take heed. If you want to preserve the farm the time is now and
set the egos aside. If you want to see how close you can skate to the edge and not go into the water that is your business. Just don't cry when the time comes when the
nursing home wants their money and you or your family have to call the neighbor or realtor to sell.
 
Your parents and/or grand parents have probably been working on financing the nursing home since your great gram entered the nursing home. Your great gram could always use the farm as collateral for a loan. As time goes by the interest charges could grow to be a good portion of the income generated from the farm. If no one in the family can afford to take over the farm that may just put off the inevitable: selling the farm.

If you would like to buy a portion of the farm or the farmstead, get your finances in order and make an offer to your family, maybe it can be worked into a long term plan.
 
When it comes to family financial and legal matters, I always take the advice of tractor lovers.

And when my tractor acts up, my lawyer is my source of knowledge to make it run better.
LA in WI
 
The idea of a reverse mortgage is legit.
But they are not yet widespread or standardized like forward mortgages.
So it comes down to the terms of the individual contract.
As others have said, not all banks etc. will write them, particularly on farmland.
So you need to find a banker whose willing to write a contract. Then go over it with a lawyer
and a fine tooth comb.
If you don't like it or don't understand it, don't sign.
Good luck.
 
(quoted from post at 06:41:35 06/11/19) Did she not want to implement a trust to preserve the farm? I hope all who are here that are facing old age take heed. If you want to preserve the farm the time is now and
set the egos aside. If you want to see how close you can skate to the edge and not go into the water that is your business. Just don't cry when the time comes when the
nursing home wants their money and you or your family have to call the neighbor or realtor to sell.

My thoughts exactly. When the farm is gone, it is gone. You'll never get it back, and they ain't making anymore farms.
 
Honestly I think they are grasping at straws to try and keep it. She is 96, she's not doing well, and she's ready to move on to a better place with her husband she was married to for 50+ years. That's why they are trying to delay the sale. I also have a hard time trying to get them to act on anything. I am a great grandson and am not involved but they do talk to me about it here and there. I'm just trying to give some direction. If it were me I would have reached out to multiple sources to see what my options are.

I'm not specifically taking advice on a tractor forum as opposed to a lawyer but I just wanted to know experiences from people that have likely been in or heard of similar scenarios.

This property originated to my family in the 70's when my grandfather inherited 2 farms and 1000 acres from the man he worked for night and day on the farms, sawmills, orchards, etc. A large part of my family lives on the outer edges of what is left of the farm and ideally they would like to retain it and not have it get developed for example.
 
Hi, I think nursing homes are terribly expensive and not
a nice place for old people to live their last days. I
would bring grandma home and hire people to care for her
with your help. That way the farm stays intact. Reverse
mtg is not good unless you dont have any family. ed Will
Oliver BC
 
Learn about reverse mortgages. They are not likely to be the thing you & family believe them to be. My friend did one and in a few years, when he died, it was found that due to the high interest rates he was being charged, the amount owed was more that the market value of the real estate. I'm not at all sure that these things shouldn't be labeled a 'scam', myself. Just my opinion.
 
(quoted from post at 07:11:30 06/11/19) Hi, I think nursing homes are terribly expensive and not
a nice place for old people to live their last days. I
would bring grandma home and hire people to care for her
with your help.

I second this as a possible idea. Have yet to see a nursing home that was all it claimed to be. Far too many residents get dumped off where they simply wait to die.

Sounds like there are quite a few folks in the family. Any of them unemployed at the moment? Let family members take care of Grams and keep the money in the family. If no money available to pay, then maybe pay by shares of the property.
 
Like cookie cutter mortgage loans, these reverse mortgages you see advertised are also cookie cutter,... every one the same, rubber stamp the same exact thing.

If you come with Ag land, it will not fit their rubber stamp.

Then, I really like Tom Selick, but I do believe most of these reverse mortgage companies are preying upon people, and their simple program is a way to make gobs of
money for the company. They are banking on people with few options but hope coming tot gem and signing anything.....

Families that plan 5 years ahead can get around the old home scam, which is what the govt has going on. It?s their game, their rules, you play their game or pay all the
money.

Your family chose not to play the tax shelter/ trust game, and so now grandma gets to pay away the farm.

I think your grandma would be better off with a conventional loan, structured through a regular bank familiar with farm properties, than to go to one of these nationally
advertised reverse mortgage places.

A loan is a loan, the local one you pay the local bank, the big national deal you pay for lots of advertising?

Paul
 

Why would you even ask that here? It makes no sense whatsoever to take random advice from random tractor fans when the stakes are so high. For the sake of your entire family please seek counsel from an experienced lawyer.
 
Also have to check state law. Some states a nursing home can look back several years for assets. You really need to talk to a lawyer.

That being said the wife's uncle did a reverse mortgage. He's still alive. But he'll tell you it was a huge mistake. He said he'd of been better off remortgaging his home and paying the mortgage to pay the wife's medical bills than taking the reverse mortgage.

Rick
 
I don't think that anybody here is discouraging the OP from seeking appropriate legal counsel. Every thread of this nature has someone reinforce the notion and this time it
happened to be you. Nothing wrong with seeking advice here as long as you take it with a grain of salt.
 
Doesn't sound like their 'plan' is possible anyway.
To qualify for the HECM reverse mortgage in the United States, borrowers generally must be at least 62 years of age and the home must be their primary residence (second homes and investment properties do not qualify).
 
I agree. People mean well but when it comes to legal matters. You need to be asking someone in your state. That knows the law. Not
people that are trying to help.
 
Are there any mineral rights you could sell and still keep the property? That might be enough to get you thru to the end.


Beagle
 
Reverse mortgages sound like a scam to me. They appear to be a way for banks to obtain properties from the elderly to sell later at a profit.

Don't think that those reverse mortgages are not full of hidden fees and expenses that will suddenly come out of the woodwork as soon as gram passes. Then nobody in the family will be able to redeem the property.

Having said all of that, I will say that the family needs to seek legal help from a qualified estate attorney. There is no substitute for an experienced representative to guide the family through the financial jungle. This forum is the last place I would look for that kind of advice.
 
(quoted from post at 08:38:34 06/11/19)
Why would you even ask that here? It makes no sense whatsoever to take random advice from random tractor fans when the stakes are so high. For the sake of your entire family please seek counsel from an experienced lawyer.

My mistake on not putting OT at the beginning. I asked for opinions and experiences with reverse mortgages and some here have provided that.

_______________________________________

I don't know why they never did estate preservation. I'm too far down the lineage line to have been involved in those conversations.

My aunt did take care of her for a couple years. Then they hired in home care. Then she got moved to a nursing home. She is in really bad shape but keeps hanging on and that's why she's in a nursing home. From what I hear it is a really good home as far as that goes and that's why they keep her there and pay what they do.

It sounds like there are a lot of things working against the reverse mortgage and a conventional mortgage is not an option because she has very little income to support the payment.

They timbered a few years ago so that's not an option at this time.
 
(quoted from post at 09:56:01 06/11/19)
(quoted from post at 08:38:34 06/11/19)
Why would you even ask that here? It makes no sense whatsoever to take random advice from random tractor fans when the stakes are so high. For the sake of your entire family please seek counsel from an experienced lawyer.

My mistake on not putting OT at the beginning. I asked for opinions and experiences with reverse mortgages and some here have provided that.

_______________________________________

I don't know why they never did estate preservation. I'm too far down the lineage line to have been involved in those conversations.

My aunt did take care of her for a couple years. Then they hired in home care. Then she got moved to a nursing home. She is in really bad shape but keeps hanging on and that's why she's in a nursing home. From what I hear it is a really good home as far as that goes and that's why they keep her there and pay what they do.

It sounds like there are a lot of things working against the reverse mortgage and a conventional mortgage is not an option because she has very little income to support the payment.

They timbered a few years ago so that's not an option at this time.

Exactly. Some people don't take into account that sometimes the person's health or care requirements are beyond what a family is capable of giving or requirements exceed what will be provided in home. My Wife's grandmother was like that. 99 years old. Blind as a bat. Refused to eat right. Wound up where she needed someone there 24/7. Just no one in the family could meet those demands.

Rick
 
Up front I don't have direct experience with reverse mortgages nor ever will have.
Now that being said--Let's look at it the banks are in this to make money so how do they make money on a reverse mortgage and how do they maximize the profit? While I was still working one of my coworkers and his friends were helping another friend who had taken a reverse mortgage. Now this older fellow had lived the length of the reverse mortgage and the bank wanted him to either pay back the money or leave. Of course he didn't want to leave and couldn't pay the bank the money so this group of friends paid pay-off amount and the old fellow lived there till he died. When I heard the story the group of friends were in the process of fixing the place for sale and wondering if they were going to make any money.
So here is my take on reverse mortgages. The Bank (which ever one you choose) will give what they think they sell for--a much reduced evaluation from the appraise value--and when you have to pay the bank off it will be at the THEN appraised value Or get out. You are better off giving the place to the heirs, wait the five year look back period and then allowing Social Security pay the nursing home bill.
Once you are in the home it too late to give the place away--you will have to pay death taxes, income taxes and I don't know how many other taxes I.E. the government is going to take your asset!

Much as you don't want to hear it your Grand Gram make a mistake common to her generation the result of which is that either the government takes the place of she sells it and pays all the taxes or she gives it to the heirs and they pay the taxes Or the home bill.
BTW why is it costing 11K a month--that seem excessive. Did she or relatives/heirs pick the most luxurious home you could? Maybe she moves?

Sounds like you all have some serious soul searching and some real tough decisions to make.
 
YES I have some experience in this area. Although I'm "mostly retired" I still practice law in the areas of Elder Law, Probate and Estate/Financial Planning, so will voice my thoughts regarding the situation.

Reverse Mortgages are NOT my favorite "product" although in certain situations they might prove (subject to a ton of factors) useful and remain one of the many tools in my estate and financial planning toolbox.

NOTE I have prepared several estate and financial plans for clients AND NO TWO WERE ALIKE. What's best and perfect for some gentleman on here may be totally opposite of what's best for another. I ask people do they want an estate and financial plan that's good for another person (or someone here) or do they want what's best for them ????????????

One option might be (person or their POA or Guardian) to establish an open Line of Credit, say $200,000 or so secured by a more traditional straight forward simple mortgage on the farm from which they could take monthly draws of the amount required. When the person passes the farm could be sold, loan repaid, and the heirs or devisees get their distribution. There are a whole variety of other methods of course. The ONLY way a Financial Planner or Banker or an Elder Law Attorney can give the best advice is to determine the person and familys exact goals and wishes and that cant be found by posting a few sentences here. It may take hours of interviews and legal research before a planner can render a worthwhile professional opinion.

As far as obtaining assistance, with a million dollars at stake, my advise is to seek qualified trained competent professional advice from say Bankers or Financial Planners or Elder Law Attorneys. Sure a lay person here or otherwise might offer advice or render their personal opinion or what they did and it may be right and it may be dead wrong SO ARE YOU WILLING TO GAMBLE A MILLION DOLLARS ON IT ??????????

Of course its far too late now to devise any beneficial plan to protect assets or dispose of them in a timely manner. Where Medicaid is involved there can be as many as a five year lookback.

Soooooooooo you ask a great and an often heard (by me at least) question and its my advice to seek professional trained experienced counsel from Bankers or Financial Planners or Elder Law Attorneys and whatever you do DONT BET THE FARM ON LAY OPINIONS ESPECIALLY WHEN ALL THE FACTS, FAMILY GOALS, AND THE LAWS OF YOUR STATE ARENT YET THOROUGHLY RESEARCHED

As always its your own concern and business do deal with as you so choose and NOT ours.

Best wishes and God Bless

John T BSEE, JD Electrical Engineer and Attorney at Law
 
Hi Counsellor, Indeed some financial institutions aren't exactly gung ho when it comes to farmland !!!!!!!!!!

John T
 
jeez, no help on your question, but ( canada ) here when dad was going to go to the home a couple years ago after a broken hip, i went and "
interviewed several, the most expensive was about $ 4000 a month, was for a private room, cable tv, meals and laundry just saying the dollar diff
is amazing he never did make it, could not get up and exercise the broken hip, did not wanna go to a home so he just gave up and passed
 
(quoted from post at 08:38:34 06/11/19)
Why would you even ask that here? It makes no sense whatsoever to take random advice from random tractor fans when the stakes are so high. For the sake of your entire family please seek counsel from an experienced lawyer.

1948 Case, I see nothing in the OP saying that he is considering doing what he is told here without legal advice. I see it as impolite to accuse someone of planning to act like a fool.
 
I have a different take on this then the others. It's Grams farm. If she wants to live the rest of her life in luxury. Fine. Let her do it. Sell the farm for the 1.2 million. Put
the money in the bank on simple guaranteed interest. Keep paying the home $11,000/month. With the interest earned that should go about 10 years. After that the farm and the money
are gone. So be it. She doesn't owe any of you anything. It is her farm. Bought and paid for by her.
 
There is a cautionary tale here for everyone. If you have a farm or other property you want to keep in the family, and you don't have sufficient savings to cover your future long-term care, you need to talk to a lawyer who specializes in long-term care. Likewise if your parents are in that situation; get them to plan for it while they still have their wits.

That said, some things you said don't add up:
- "Her farm is supposed to be worth about $1.2M."
- "The family would like to retain as much of the farm as possible."
- "...a conventional mortgage is not an option because she has very little income to support the payment."

How is it a million dollar farm has essentially no income? Why does the family even want to keep it if it isn't making any money?

Note that under Medicaid rules, a recipient's homestead is exempt when calculating eligibility. After the recipient's death, the government will come after the estate to recoup its expenses from the sale of the home. So if this is a non-working farm, then that's probably the route the family should take. At this point, they should probably forget about keeping the farm; if they don't have the resources to buy it now, they won't have the resources on down the line when the government or mortgage company comes for it.
 
(quoted from post at 02:47:51 06/12/19) There is a cautionary tale here for everyone. If you have a farm or other property you want to keep in the family, and you don't have sufficient savings to cover your future long-term care, you need to talk to a lawyer who specializes in long-term care. Likewise if your parents are in that situation; get them to plan for it while they still have their wits.

That said, some things you said don't add up:
- "Her farm is supposed to be worth about $1.2M."
- "The family would like to retain as much of the farm as possible."
- "...a conventional mortgage is not an option because she has very little income to support the payment."

How is it a million dollar farm has essentially no income? Why does the family even want to keep it if it isn't making any money?

Note that under Medicaid rules, a recipient's homestead is exempt when calculating eligibility. After the recipient's death, the government will come after the estate to recoup its expenses from the sale of the home. So if this is a non-working farm, then that's probably the route the family should take. At this point, they should probably forget about keeping the farm; if they don't have the resources to buy it now, they won't have the resources on down the line when the government or mortgage company comes for it.

MarkB, I agree that hopefully this thread can prompt a few people to get their affairs in order. My wife and I did it about three years ago. It cost us only $1200. We did it with an attorney through a friend at church. So far as no income from a farm worth $1.2 million, I could be wrong but I assume that it is property value. House lots are going for $125,000 in my area. Of course the family wants it! It is still land, and perhaps four siblings each want a new home in the country.
 
Thanks for any input provided. Again I am by no means asking legal advise so I understand that is a necessity that I really don't control. All I can do is make recommendations. Some times they listen to me and some times they don't.

Maybe it's the area I live in but even the cheap full blown nursing care facilities are around $8,000 per month. Spending an extra couple thousand a month is not unreasonable if she's well taken care of.

I also agree the reverse mortgage seems a little "scammy" and an easy place to take advantage of older folks.

Based on my OP about reverse mortgages I didn't really feel the need to get into the details of what the farm is but here we go. There are 115 acres of wooded ridge ground. There are 115 acres of fields/house&yard/barn. The roughly 100 acres of tillable ground gets rented to the neighbor. I honestly don't know the history of why my family discontinued farming it once my great grandfather passed. There are 2 uncles and they had their own jobs not on the farm so I assume that's why.

3 of the five children border the property and want to retain it to rent the farm house and land. They don't want it getting developed.

Ultimately, yes they need to consult with an attorney to see what their options are. I was just curious on reverse mortgages and experiences from like minded people.
 
> There are 115 acres of fields/house&yard/barn. The roughly 100 acres of tillable ground gets rented to the neighbor.

My suggestion is to sell the 100 acres of farmland and use the proceeds to pay for her care. When that's expended, she should qualify for Medicaid assuming she can claim the remaining 15 acres as her homestead. Depending on how long she lives and what her Medicaid expenses are, her heirs may or may not be able to keep the place.

There are already four potential buyers for the farmland: The renter and the three children whose property adjoins it. Get the property appraised; the asking price should be the full appraisal. Selling it for less than full market value will invite scrutiny from Medicaid.

IANAL.
 
Development can be a real windfall to some farms. People often sell a property in a metro area to developers and can then buy 5 to 10 times as many acres of the same quality ground two counties out of the metro with the same money.
 
(quoted from post at 09:56:01 06/11/19)
(quoted from post at 08:38:34 06/11/19)
Why would you even ask that here? It makes no sense whatsoever to take random advice from random tractor fans when the stakes are so high. For the sake of your entire family please seek counsel from an experienced lawyer.

My mistake on not putting OT at the beginning. I asked for opinions and experiences with reverse mortgages and some here have provided that.

_______________________________________

I don't know why they never did estate preservation. I'm too far down the lineage line to have been involved in those conversations.

My aunt did take care of her for a couple years. Then they hired in home care. Then she got moved to a nursing home. She is in really bad shape but keeps hanging on and that's why she's in a nursing home. From what I hear it is a really good home as far as that goes and that's why they keep her there and pay what they do.

It sounds like there are a lot of things working against the reverse mortgage and a conventional mortgage is not an option because she has very little income to support the payment.

They timbered a few years ago so that's not an option at this time.

Nrowles, There is no need to put "OT" before an off topic post. THe title tells everyone that it is off topic.
 

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