Page 196

MEDICAL SERVICES POLICY MANUAL, SECTION E

E 522 Determining Value of Personal Property

transfer, the caseworkermust consider whether the note, loan, ormortgage is a countable resource. If an applicant transfers resources while providing the appearance of a loan and documenting the transfer as a promissory note, the funds will continue to be considered as a resource unless all of the following conditions are met: • The repayment plan is actuarially sound and feasible, • The repayment plan provides for equal payment amounts during the term of the loan with no deferral or balloon payments, and • The repayment plan prohibits cancellation of the balance upon death of the lender. Promissory notes may be discounted and sold, unless the terms of the note prevent it. If the terms of the note prevent its sale, it is not considered to be a resource. Discounting refers to the interest deducted in advance by one who buys, or lends money on a bill or exchange or promissory note. For example, a bank may be willing to pay $450 for a $500 promissory note which is due in one year’s time. When the individual owns a promissory note which he could sell or discount, it is considered to be a resource in the amount for which it could be sold or discounted. If by examination of the promissory note, it cannot be determined whether the promissory note is saleable, or its value cannot be determined, contact with a local bank or lending institution will be necessary. The bank may wish to examine the note before making a determination. When this is required, the individual or person acting on his behalf should personally submit the note to the bank for examination. When the note is determined not to be saleable until maturity, its value is not a countable resource until that time. The cash payments received on a nonsalable promissory note are counted in full as unearned income. The cash payments received on a saleable promissory note, which is considered to be a resource, are treated as follows: (1) payment which represents payment on principal is considered as a resource; (2) payment which represents payment on interest is