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Rhode Island - I own a home in Rhode Island and have a Tenant

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Rhode Island - I own a home in Rhode Island and have a Tenant that is approved by HUD. We are under water financially and have decided that we may - no longer pay the mortgage on the house and let the house foreclose with our bank. The Question is, if we continue to accept the rental payments from HUD and subsequently a foreclosure action is filed, will I have to repay HUD/or the Government for the rental payments? If not, when is it necessary to get the tenants out of the house?
Until the home is foreclosed it is your house and you have the right to receive the rental payments (unless there is an assignment of rental income in your mortgage). In any event the HUD tenant is paying for current occupancy, which he has. As far as HUD is concerned the tenant is getting what they are paying for. However, if you allow the home to be foreclosed there may be a deficiency (the house could sell for much less than you owe to the lender). The lender would have a right to recover the deficiency from you. This could be a serious problem for you and force you into Bankruptcy. You should contact the lender and ask them if they will accept a deed in lieu of foreclosure. In essence you deed the property to the lender and they agree not to come after you for any deficiency. This will be less damaging to your credit as well. Another option may be a "short sale". In a short sale the Bank allows you to sell the house for less than the amount you owe on your mortgage. This option would be much better for your credit rating.
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Customer: replied 8 years ago.
So, basically - we will not have to pay back HUD and/or the Government if we continue to accept the rental payments from HUD? Correct?