What are my options for this situation?

[Brett Holmes]

I am needing some advice about a potential deal and to see what options I might have.

My aunt, by marriage, is trying to get rid of her mother's house, because she is now living in a nursing home.  She does not want to deal with it and just wants it gone.  She does not want to go through with a conventional sale, because of the time and money involved and a profit cannot be made, or else her mother will lose her Medicaid.  The current mortgage balance is $85,000, which is right about what it is worth, however it will probably appraise closer to $100,000.  The house probably needs $5,000-10,000 worth of work to get it fixed up to sell or rent, but with the current mortgage balance, there is really no money to be made on a flip and would not be a good rental, because it would probably only rent for $800-900/month.  

My aunt has said that they are thinking about letting it go into foreclosure, because the house is only in her mother's name and at this point they are not worried about her credit.

What other options are there that I am missing here?  Is there a way to work out a deal with the bank to purchase the house for less than what is owed?  Should I wait and see if I can scoop it up after the bank forecloses?  I know that there are a lot of people on here that are a lot smarter and more creative than me with this stuff, so I appreciate your help in advance.

[Lauren B.]

Your aunt really needs to see an elder law attorney. Medicaid has penalties for selling within 5 yrs of applying for nursing home care and she may lose Medicaid if she sells. Medicaid will put a claim on her house so they get reimbursed for part of the cost of care. They have laws so you cannot circumvent this. You can’t less it for less than market value either. There’s a ton of details and only a lawyer can properly advise you.