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Title 8: Medicaid Page 119 Iowa Department of Health and Human Services Employees’ Manual Chapter D: Resources Specific Non-MAGI-Related Resources September 13, 2024 Mortgages and Contracts Mortgages and Contracts (Cont.) Make sure the financial institution is stating the actual worth of the contract and not an opinion on whether it wishes to buy the contract. Do not use the contract valuation to determine eligibility if it contains conditions such as:

 Credit approval of the buyer (unless there has been a recent credit approval of the buyer known to the client).

 Changes in the terms of the contract.

 Appraisal of the property at or above a particular value (unless there has been a recent appraisal at or above the stated value).

If a contract is jointly owned, the client’s interest may be sold without the consent of the other owner. In Iowa, real property mortgages and contracts are usually legally transferable, even if the terms of the contract or mortgage prevent it. Although such terms are not legally enforceable, a nontransferable clause or an uncooperative co-owner may affect the fair market value.

If the contract is a countable resource, the portion of a mortgage or contract payment that represents interest, minus any interest used to purchase the property, is counted as unearned income. The principal portion of the payment is treated as a resource.