Can I refinance with a life estate?

Iloveu asked...

I take care of my mom, now 93, with dementia, since 2007. She goes to a daycare during the day when I work then a home-health aid comes in for two hours until I get home. She is on Medicaid and Medicare.

In 2004 my mom put the house in her name and mine with a life estate. In 2003 my brother stole $35,000. from my mom. She had taken a home equity loan out to put in two new windows, update with a new electrical service and gutters. My brother found out and stole it. The police were involved but Mom would not press charges, nor did he give her anything back. So I co-signed on a loan to cover that money times two. When she came down with dementia in April of 2007 I had to take out a mortgage on the house for 6.75% to make our home handicap accessible all the way around. Now I'm trying to refinance for a 5% rate.

Everything was ready to go but they said because my mom has a life estate on the mortgage they cannot do it and that no other lending company will. I have power of attorney. Mom did it in 2004, to ensure that my brother would not sell the house from underneath her like he had planned to do in 2003. He had her sign papers in 1994 after my dad died and she said she never read them. She signed them with an attorney friend of his and then my brother just kept the documents. We, Mom and I would have never caught him except my bank red-flagged me on my brother's actions with my mother's account that we all three had been on for years. His intention was to put Mom in a home and give the house to his son who was getting married in 2003.

I have been living with my mom since 1994 when my dad died of cancer. I find it very strange that my dad did not leave my mom anything to live on. But I believe now my brother must of took whatever as well.

My question is, do you know of any company that will help me refinance to save me $500.00 a month, with a Life estate attached to our mortgage? We live in New York and I cannot jeopardize my mom's care and I don't want to lose any Medicaid or Medicare.

Expert Answer

Barbara Repa, a senior editor, is an attorney, a journalist specializing in aging issues, and the author of Your Rights in the Workplace (Nolo), now in its 10th edition.

The situation you describe is such a complicated puzzle that there is likely lots more to the picture and to the solution than finding a lending company that will agree to refinance your house.

And because there's so much at stake"”your home, your livelihood, your mom's health and safety, even your sanity"”I would advise you to get a seasoned expert to consider all the matters involved and to eyeball all the documents you have that may affect the situation.

You will want someone experienced in handling elder law and Medicaid and Medicare matters. In New York, a good place to begin your search for an experienced elder care lawyer is through the state bar at In addition to providing consumers with background information on elder law issues, that group also has a directory of lawyers and spells out its criteria for offering free and low-cost legal services.

You can do a lot to ensure that you get the best advice possible by doing some organization work in advance that will help any expert you hire more able to hone in on the complicated issues at stake. This burden falls on you as the person most familiar with the situation and its many twists and turns.

To do this, make copies of all legal documentation involved"”including the power of attorney, deed to the house, recent correspondence from Medicare or Medicaid representatives, and relevant bank and other financial statements.

Then think hard about other specific concerns you might have about what's gone on and write concise questions to ask about them. For example, you will likely want to plumb for details about how and when your brother acted"”and under what authority. And you might also want to delve into what might have happened to any money or property your father might have left at his death.