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a. Count equity in the resource total unless otherwise exempt. b. Encumbrance on Excluded and Countable Property If there is a single encumbrance (loan, etc.) on both excluded and countable real property: (1) Divide the CMV of the countable property by the total CMV of everything which is mortgaged. The result is the percentage of the total encumbrance that applies to the countable property. (2) Multiply the amount needed to pay off the mortgage by this percentage. (3) Subtract this amount from the tax value of the countable property to determine equity. EXAMPLE: Applicant owns two tracts of land which are mortgaged together. They are not contiguous to the home site. One tract consists of 5 acres used to produce goods and services for home consumption. It has a CMV of $13,000. The other tract is 10 uncleared acres that are not used in any way. The CMV of this property is $20,000. Mortgage pay-off amount is $15,000 on the first day of the month of application. CMV of 5 acres $13,000 CMV of 10 acres (counted) 20,000 Total CMV of encumbered land 33,000 Determine the encumbrance on the countable acres by dividing the CMV of countable acres by total CMV of encumbered land and applying the resulting percentage to the total payoff amount: $20,000 divided by $33,000 = .606 or 61% of land is countable. (Round down if .49 or lower, round up if .50 or over). 61% of the $15,000 pay-off amount is $9,150. CMV of countable acres; $20,000 Encumbrance on these acres -9,150 Countable equity 10,850 4. Count the Equity of Real Property a. Determine equity for all types of interest or estate in countable real property by following steps 1. - 3. above. b. Document verification source and amount of liens on the eligibility form. c. Do not count the value of any property which is excluded. 45