It is not "surrendered property" because you stated your intent to surrender in your case. It is still your property. Just keep in mind that while you have a discharge of the debt, you still need to maintain and insure.
Yes it is legal but you should be cautious with tenants on long-term leases. As the prior answer stated, until the bank forecloses or accepts a deed-in-lieu, then although you may have stated that your intent was to surrender, it's still your house to do with as you please. Once the lender files an NOD then you have an obligation to tell any new potential tenants about it, but if it hasn't been filed then its your house.
William Devine, II
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