I’d say this is a well-formed legal opinion. In the end, this is what the judge or jury will decide if you ever “take it that far.”
With respect to rent-credit there are a few issues.
(1) Are you lending? Do you need a license in your state?
(2) Is it secured by a dwelling? Is this a mortgage? Did you follow “the rules?”
(3) Who is asking? A private citizen or the state regulator or a federal regulator? What complaint do they have, and what are the penalties if you “lose?” Can you limit your loss to a reasonable number?
Right now it sounds like @Suburban has the case of the private citizen (potentially) claiming, “hey you cheated me” – and the judge agrees. Worst case – judge penalizes you
(a) with respect to this resident meaning you owe them [$price of home x 3] or something ridiculous
or even worse,
(b) by granting “class action” status to everyone you’ve dealt with similarly.
But in all likelihood, if you go through the correct court of general jurisdiction with a “judicial foreclosure” action you will win a default judgment awarding you possession of the home (and therefore the lot) and it won’t go any farther.
If the tenant even shows up, the judge will likely not be sympathetic to “I didn’t pay but I should get to keep living there or something anyway” – unless you did something “bad.”