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III. DETERMINING HOME EQUITY VALUE

The equity in the individual’s ownership interest in their home is the current market value of the ownership interest in the home minus any encumbrances on that interest. This applies to any ownership interest that the a/b has in their home. Refer to policy in MA- 2230, Financial Resources, to determine the current market value and equity of the home.

A. REDUCING HOME EQUITY THROUGH A HOME EQUITY LOAN

1. Applying and being approved for a home equity loan does not reduce the home’s equity. A line of credit does not reduce the equity value of the home. For example, the equity value of the home is $752,000, and the individual is approved for a reverse mortgage line of credit of $100,000. That action itself does not reduce equity.

2. The equity value of the interest in the home is reduced only when an amount of money is received from the home equity loan. For example:

The equity value of the interest in the home is $752,000 with a reverse mortgage with a line of credit of $100,000. The beneficiary receives $20,000 from the reverse mortgage. The equity value of interest in the home is reduced to $752,000. $752,000 - $20,000 = $732,000.

3. Evaluate a home equity loan transferred to another individual for a possible sanction.

a. If the proceeds of a home equity loan are given away in the month of receipt or any following months, apply transfer of resource policy in MA-2240, Transfer of Assets.

b. Count any remaining funds received from the home equity loan as an asset in the month after receipt. See MA-2230, Financial Resources.

B. REDUCING HOME EQUITY THROUGH REBUTTAL

See MA-2230, Financial Resources, for policy concerning the rebuttal of a home equity value.