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16.7.2 Loans (including Home Equity Loans), Reverse Mortgages, and Promissory Notes The following information applies except as directed otherwise in SECTION 16.7.2.1 REVERSE MORTGAGE and SECTION 16.7.2.2 LOANS AND OTHER CONTRACTS EXCHANGED FOR PROMISSORY NOTES. If an AG member receives a loan and it is available for current living expenses, count it as an asset. Do this even if there is a repayment agreement. If it is not available for current living expenses, disregard it. If an AG member makes a loan (except a land contract), treat the repayments as follows: 1. Count any repayments toward the principal of the loan, whether it is a full payment, a partial payment, or an installment payment, as an asset. 2. Count any interest payment on the loan as unearned income in the month received and as an asset in the months following the month it was received. 16.7.2.1 Reverse Mortgage A reverse mortgage loan is a loan, or an agreement to lend, that is secured by a first mortgage on the borrower’s principal residence. The terms of the loan specify regular payments to the borrower. Repayment (through sale of the residence) is required at the time all the borrowers have died or when they have sold the residence or moved to a new one. Treat reverse mortgage loan payments to the borrower as assets in the month after the month received. Do not count undisbursed funds (not yet paid to the borrower) as assets. They are considered equity in the borrower’s residence. Note Home equity lines of credit (HELOCs) are treated like reverse mortgages. The available balance of the HELOC is not an asset. The equity value of the property that secures the HELOC is reduced by the HELOC's outstanding balance because it is secured with a lien as with a reverse mortgage. 16.7.2.2 Loans and Other Contracts Exchanged for Promissory Notes The current market value of a promissory note or loan made by an AG member will be assumed to be equal to the outstanding balance, and the promissory note or loan will be a countable asset in a Medicaid eligibility determination unless it cannot be sold. An applicant who disputes the value used by the IM worker must provide credible evidence from a knowledgeable source that the note is non-negotiable or has a different current market value. Promissory notes or loans that cannot be sold because they are not negotiable, assignable, enforceable, or otherwise marketable are considered unavailable assets (see Section 17.2.6.15 PROMISSORY NOTES, LOANS, LAND CONTRACTS, AND MORTGAGES regarding divestment policy). 16.7.3 U.S. Department of Housing and Urban Development Payments Disregard reimbursements resulting from federal regulatory changes in computing HUD housing rent as income in the month paid and assets in the next month.