For Rent or In Foreclosure?! How bout a short sale? Yikes!

My clients who were able to take advantage of the market in December of 2007 and get the house of their dreams decided to just keep their current home and rent it out. At that time lending standards had not changed and really it made sense on all levels at the time. They would have barely been able to break even on the sale of their home at that time. Current rent would easily cover their payment. So it was a no brainer for the family of five to move from their 1600 sq ft, three bed home into a 3000 sq ft, five bedroom home that was one of the first bank owned properties on the market at the time.

Flash forward to March of 2009. The current tenants in their home have been paying rent every other month. One of the renters is disabled and the other is missing a leg. They seem to be lawsuit happy when it comes to feeling as if they have been discriminated against. My client is calling me asking me what he can do. He can't make the mortgage payment without being paid rent regularly. Mind you, this home was their principal residense for around seven of the past eight years. In my mind, I'm thinking loan mod or short sale. Unfortunately loan mods are so questionable out here, I don't have anyone I trust that I can refer them to for that.

So now I'm faced with a possible short sale, which I am happy to help on. But my clients, the sellers, can't do anything without the permission of the tenants who won't call them back or answer the door. This is all happening of course in the face of possibly being sued for discrimination. They have considered evicting the tenants but are worried about any repercussions in court.

I'm wondering what, if anything, can I do to help my clients at this point. Obviously I would need to get the tenants signed permission to enter the property. Most agents understand that if you can't show a property easily then it makes it very difficult for you to sell a home. I'm just waiting to hear if I get a call back any time soon. I wish there was something I could do to help my clients. the homeowners.