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Mom is probably soon going to Memory care. We have a LTC policy that covers a chunk and VET money as well but there is still extra cost. We would prefer not to sell her condo but instead, we would like to renovate it a bit to get it ready for rental. I have durable POA. Can you take a HELOC as POA? Has anyone been in this situation? How did you handle it? Does the condo have to be in your name? Im also on a Warranty deed for the condo. I called our bank, they said I should talk to our lawyer. Our lawyer said I should talk to the bank. Thanks in Advance.

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Be careful bringing more income for your mom without checking to see how it would affect VA benefits since they are partly based on income. However, if the rent income would be more than the VA benefit lost, it might be fine. An eldercare attorney may provide the best insight. Anything you do today may affect her benefits for the next three years.
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I’m unclear if your mom still has a mortgage on the condo? or she owns it outright?….. if there still is a mortgage, I think you will find that a person with no current salary & only retirement income getting a HELOC on mortgage encumbered property will be challenging. The issue kinda is if just SS avg is $1827 a mo so just 22K a year. Which is low for borrowing. It’s not age or retirement income discrimination but more flat being low income if there is not a traditional salary coming in.AND Even if the mortgage is paid off, if she is up in age, like over 70 she will be outside of traditional underwriter acceptance range. Why? It’s because mortgage & HELOC type lending will have to be repaid and it’s usually on 30 /20/ 10 year lending so over 70 is beyond life span tables (fixed actuarial tables that IRS, banks, insurance companies use) as female death in US is 79. It’s too much risk.

I think why your getting pass the potato from the bank is that they don’t want someone to file an Equal Credit Opportunity complaint for ageism when grannie gets turned down. They would rather not ever have to even accept an application in the first place.

To me, the best situation is to do - if it’s that mom just insists on keeping her place - is for you & your family to make the condo as freshy fresh as possible (paint, new carpet, get rid of anything that screams old lady’s condo), do the labor for free & mom pays for materials. Then rent it at a slightly lower market rent as it’s not comparable to a brand new, renovated place. Please be sure - if there is a HOA - rentals allowed and with whatever restrictions done. Like 1 year minimum rental with parking restrictions & no use of pool or gym or clubhouse if it’s a Condo HOA who really frowns on renters completely.

& please please read & reread the fine print on her LTC policy as to conditions needed to do a pay out. There will be a waiting period of private pay - tends to be 120 days - and some policies are quite specific as to the type of “care” that must be provided. That a certain # of health conditions must be met AND done by a certain type of health care professional. Like the policy means actually done by a Registered Nurse. Often AL & MC do not have the actual hands-on done by a RN but done by aides, CNAs, etc. So policy will not pay AL & MC but only will do it if it’s in an actual skilled nursing facility aka a SNF\NH and the facility documents their staffing info (credentials and bedside logs) to the LTC insurer.

I don’t know how common this is, but my moms 2nd & eons better NH did not accept LTC insurance for payment. Signage at the entry and in the elevators on this. It was private pay or LTC Medicaid. I asked why and got an earful from billing as to the issues when they did take LTC insurance….. the big issue was that some policies wanted info who the caregiver was, their education and scheduling which was too time consuming (plus privacy concerns) & also payments tended to run late due to this as something would need “clarification”. That it was flat better to have a Medicaid bed even at lower than private pay rate as Medicaid paid like clockwork and LTC insurance had too many glitches.
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First, check your POA document. Does it allow you to encumber, or borrow on, real estate? Ideally it would list the property specifically by address or other description; this isn’t required but it can make it easier for the other party to accept.

Next, deal with the fact that if she is moving to memory care, the lender won’t consider it an owner occupied property. Rental properties can get loans, but the rates are usually higher.

Note that HELOCs are often a second mortgage, with a preexisting mortgage already in place. If this is your situation, the existing mortgage probably has a lower rate than currently available. The existing lender will likely not make an issue of a long time owner occupied home becoming a rental. However, a new lender may be more reluctant to take second place behind the existing lender, so you may be looking at a cash out refinance with a higher rate for all the debt.

You will need a lender willing to deal with the POA. They will look at the amount of equity in the home and will evaluate your business plan including rent and vacancy projections as well as expected expenses and what your planned reserves are. If you have any education or experience in property management that could help, or maybe you will hire a property manager to handle tenants and repairs.

Another thought: does the condo HOA place limitations on rentals?

At least it sounds like you aren’t trying to make this work with Medicaid.
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innjup50 Jun 2023
Thank you for your answer. No No medicaid. We have a LTC policy as well. And it looks like VA money as well but memory care in her area is so expensive. The POA does say I can exercise all powers with regard to real property including convey or mortgage property ...it's quite a long encompassing paragraph about what Im allowed to do with the property. It doesnt say exactly the address but there is only one. We were very lucky that the condos value is now worth 6x what the remaining mortgage is and rentals in the community are very sought after. The community does allow but only long term which is fine. We do plan on a manager. Our bank is quite small that we asked. They said in general no they dont deal with POAS period. I guess I will go to some larger banks. Thanks again.
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Riverdale, that's great news!

Inn, I think I would not seek permission from the bank. Apply for the HELOC and attach your POA. Big they say "no" get your lawyer involved.
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Yes, what does your POA say. The problem I see is that Mom has to be competent to sign for a HELOC. My POA said I could buy and sell. You are not the legal owner so I don't see you being able to take out a loan for Mom who cannot pay it back.
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I tried to get a HELOC when my father was in a facility. I was told unless he was physically in the home the answer was NO! So you need to talk to the bank and see what they require.
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The attorney who told you to talk to the bank is not a very good attorney in my own very humble opinion. Be certain your next attorney is very familiar with drawing up POAs, and with how these documents work. This is a legal question and you need an attorney to answer it. As to the bank, it is their decision whether or not they wish to make you a loan.

A POA can allow you to do almost ANYTHING that the POA document says you can do. My own POA
was done by my brother and I with his attorney and at my brother's request. It was extremely complete, point by point about every single power I had with regard to his properties as Trustee of anything in trust and as POA for all other property.
At the end of the session, in fact, the attorney teased my brother, asking him if he was certain about signing this as "Your sister can now sell the gold out of your teeth".
The attorney you see should read your document and show you exactly what numeral spells out your right to ask for and pay loans on your parents' property.
If there is none, or if it is vaguely written legally, then a bank is very unlikely to make such a loan. Banks don't like problems they can forsee. They like clean deals they can predict. So even with the POWER there is no assurance of the loan.

I wish you the best of luck.
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Riverdale Jun 2023
Just a side comment on what you mentioned. I have had 3 different opinions from 2 Bank officers,1 attorney handling my mother's will and our accountant. They all have differing opinions on how to deal with a checking account I had POA with my mother and I know POA does not survive death but apparently a joint account can stay open if specific rights of survivorship are stated in account. No one mentioned any of this to me when I set up the account so I have tried to advise others to have an account with a beneficiary clause that will transfer after death. After 5 weeks I finally have the authority to access this account so that I can finish paying bills from it.
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