Landlord facing foreclosure
We bought our house 5 years ago. We refinanced it after 3 years. When we refinanced it we assumed it would include principal, interest, taxes and insurance. We found out later the bank screwed us. Not only did they charge a high interest rate, we also had to pay out of pocket for the taxes and insurance. We put the house up for sale for 6 months, and hardly got anyone that was interested. We got to a point that it was just too much for us, so we moved out of the house and began renting from my in-laws. We decided to either rent it or sell it, we found some renters. The renters signed a year lease (the lease is up August 09). The problem is the rent is not covering the mortgage payment, taxes and insurance. We are having an extremely hard time paying for everything.
We would like to sell it but we owe more than it is worth. We have contacted the bank asking them to work out something with us, refinance or loan modification, but they won't because we have not been late on the mortgage yet.
We think we are just going to let the house foreclose. It's not worth it to us to hold onto... we just keep paying and paying and feel like we will never get ahead, and they won't work with us anyway.
However, what do we do about our renters? We know it takes 4-6 months for a foreclosure. We plan to give our renters their deposit back. Do we accept their rent if we are not paying the mortgage? It just doesn't seem right. We don't want to get into any trouble. But we don't NOT want to take the rent and have the renters destroy the home or have it be vandalized or something.
What should we do?