So what is a Deed-in-Lieu of Foreclosure? For borrowers who are behind on their mortgages, it represents an opportunity to avoid outright foreclosure. Basically, a borrower signs over the title (the “Deed”) to his home to his lender, and in return is supposed to receive a cancellation of his debt. For those borrowers with underwater mortgages (the mortgage balance exceeds the market price of the associated property), this is an incredible benefit, since it essentially allows them to walk away from their mortgages and leave the bank with the balance. However, it is also beneficial for delinquent borrowers whose mortgages are not underwater, since the deed will probably result in a higher sale price (and more leftover equity for the borrower after repaying the bank) than if the property had slipped into foreclosure.

You’re probably wondering: If this is the case, why would any sane lender make such an agreement? The answer is that foreclosure is costly, complicated, and just plain annoying. It can take six months (and even longer) for a foreclosure to be completed, from initiating proceedings to evict a delinquent borrower and sale of the property. During that time, the lender receives nothing from the borrower, and must in effect, pay property taxes and utilities itself. In addition, many spiteful borrowers will deliberately fail to maintain the property or even vandalize it, while waiting to be evicted.

In short, lenders have come to the conclusion that a Deed-in-Lieu will actually save them money, especially if a foreclosure is imminent. In fact, this realization is behind a new Citigroup program which provides for the borrower to live in the home for six months free-of-charge, and then offers them $1,000 in “relocation assistance” as long as the property is in move-in condition. Wells Fargo has a similar policy. Anyone with a Fannie Mae loan, meanwhile, has the right to remain in the home for up to one year following a deed-in-lieu agreement, and must pay market-rate rent (which is presumably lower than their mortgage payments were).

There are a few downsides to signing a Deed-inLieu. As with a foreclosure, your credit will be severely impacted, and you won’t be able to obtain a mortgage for at least a couple years. In addition, a handful of states have laws which allow lenders to go after borrowers for the remaining balance when an underwater mortgage is involved. Thanks to recent legislation, however, there are no longer significant tax consequences associated with the cancellation of a (underwater) mortgage, but as with any aspect of the tax code, certain conditions must be met.

Since a Deed-in-Lieu agreement must be entered into voluntarily, most lenders will not initiate one for fear that it makes it look like they are pressing to take control of a property. Thus, if you think you are eligible for, and would benefit from a Deed-in-Lieu, you should speak to your lender, and make it clear that you are doing so voluntarily. You can also cite HAFA if you think it would help.

The first is that more than 20 million mortgages will soon be underwater (the mortgage exceeds the current market price of the home); that’s 25% of the total. More worrisome is that 5 million of these will be underwater by more than 25%, which is a “critical” threshold as determined by analysts. Of course, there is a certain arbitrariness to this threshold, but the idea behind it is that at a certain point, the idea of owing more than your home is worth takes on a real significance as parity in the near-term becomes less of a hope and more of a dream.

Even assuming that starting today, home prices will start appreciating by 5% per year, that means it will be five whole years (10 for a borrower that made a 25% down-payment) before a borrower that is 25% underwater can get back to the starting point of the mortgage. When you consider that underwater borrowers are predominantly located in markets that also experienced the largest bubbles (i.e. Nevada, Florida, Arizona), even assuming 3% a year looks generous at that point. When you further consider that some of those borrowers are more than 50% underwater, the idea of waiting 20 years before they can get back to even can seem sisyphean. Purely in terms of the numbers, then, there is already a critical mass of borrowers for whom strategic default will be attractive.

The second factor driving strategic default is increasing attention by the (mainstream) media, which appears largely indifferent – sometimes cautiously supportive – of strategic default. At the beginning of the credit crisis, when default was seen as “legitimate” (there was no way many of those borrowers could make good on their mortgages under current circumstances), nobody made much attention to strategic default. Those that noticed it thought of it as “baffling” (in the words of Wachovia), and a handful of columnists ventured to call it irresponsible.

Since the release of the University of Arizona Professor Brent White’s paper on the subject, strategic foreclosure has gradually gained mainstream acceptance. Professor White examined the issue from the legal perspective, noting that contracts are frequently broken when one of the parties determines that it’s in his best interest (i.e. the benefits outweigh the costs) to do so. Public opinion, meanwhile, has focused more on the comparison with Wall Street, which behaved irresponsibly during the years leading up to the credit crisis, only to avoid collapse by being out by the government. To hold borrowers up to a higher standard, goes the argument, seems unfair.

As I have argued in previous posts on the subject, for many people, it would indeed seem that the financial benefits outweigh the costs. In states where non-recourse loans are mandated, lenders are entitled to the home and nothing else in the event of foreclosure. In the majority of states, recourse loans are the norm, which means that a lender can technically sue for the difference in the event that a foreclosure sale turns up less than the value of the loan- though few lenders actually bother doing so. In addition, there are no tax consequences for the majority of defaulters, thanks to the Mortgage Forgiveness Debt Relief Act of 2007, which “applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately).” The only costs then are those associated with moving, and the inability to borrow for the next few years due to a flattened credit score. For many defaulters, these costs pale in comparison to the immediate savings from renting a comparable property rather than making mortgage payments.

The main argument against foreclosure continues to be a moral one. But even this is somewhat flimsy, when you consider that the possibility of default is an inherent feature of mortgages (that’s why borrowers have to pay interest!). This is especially the case with non-recourse loans, where a study recently determined that borrowers unwittingly pay lenders an extra $800, when compared to recourse loans. In these states, then, strategic defaulters can perhaps rest assured that one way or another, they paid for the right to default.

A few years ago, this would have been a fringe question for a fringe audience. Nowadays, though, 25% of all residential mortgages are underwater. In states like Nevada and Florida – two of the epicenters of the housing bubble and subsequent bust – more than half of borrowers owe more on their mortgages than their homes are worth. In other words, for a growing portion of homeowners, this question is of foremost importance.

For argument’s sake, let’s assume that you have already discussed a loan modification with your lender, and you have been either rejected or presented with an inadequate offer. As a result, you have made the decision to part with your home. [Admittedly, this is a weighty decision]. Should you sell your home at a loss, or simply walk away from your mortgage and allow your lender to deal with the fallout?

The first option is known as a “short-sale,” since the proceeds from the sale of your home wouldn’t be enough to cover the balance of your underwater mortgage. Accordingly, a short sale (or its first cousin, the deed in lieu of foreclosure) first requires the approval of the lender, because it is tantamount to writing off part of the mortgage as a loss. Still, many lenders are amenable to this possibility, because it is often less complicated – and hence, less expensive – than outright foreclosure. You will also need to confer with any junior-lien lenders as well as the mortgage insurance company, if applicable. After receiving an offer on your home, this must then be submitted to the lender (via its loss mitigation department) for final approval.

Here are a few additional things to keep in mind: Minimizing the transaction costs of the sale (by hiring an expensive real estate agent, for example) will go a long way towards convincing the lender that the deal is worthwhile. Next, while a short-sale is less painful than a foreclosure, there will still be some inevitable damage to your credit. In addition, you might be expected to pay taxes on the portion of your mortgage that was forgiven by the bank. Finally, be advised that short sales typically take longer to complete than normal sales, as lenders will often spend a long time deliberating over whether to approve the deal.

If your house has depreciated too much in value, and/or your lender is not willing to approve a short-sale, then a strategic default might be your last option. So-called as to distinguish it from a “conventional” foreclosure, a strategic default is a voluntary decision to stop making mortgage payments despite the capacity to do so. While choosing foreclosure might strike some as oxymoronic, it turns out that for many, it is actually a perfectly rational choice. Simply, the negative impact on one’s credit score and the possibility of a deficiency judgment, pales for some when weighed against the prospect of spending the rest of one’s lifetime paying off a mortgage that is well underwater.

That’s because while foreclosure technically remains on one’s credit report for 7-10 years, it can become functionally irrelevant in the eyes of lenders in half that time. In addition, deficiency judgments (in which the lender sues to collect the difference between the value of the property at the time of foreclosure and the amount owed under the mortgage) are illegal in many states, and rare in the rest. That being the case, the only remaining consideration is the moral one- deliberately breaking a contract that you have the ability to honor. While there are strong arguments to be made for both sides, I don’t think this is an appropriate forum to explore that dimension, however. Let your conscience be your guide.

Of course, it’s impossible to know whether we can extrapolate from this onto a nationwide scale. Still, anecdotal evidence suggests that it’s the case. Bidding wars have become commonplace at foreclosure auctions, with investors competing to outbid other investors and homebuyers being largely shut out of the process. Stories abound of homebuyers excited to snatch up homes at bargain basement prices, only to be over-matched by investors, who tend to be more experienced and better capitalized.

Speculators tend to have the upper hand in this aspect, since foreclosure sales are often conducted with cash only. There aren’t many real homebuyers that can afford – nor are willing – to pay $500,000 cash for a house at auction. To echo the advice of Charlie Rose, then, “Don’t try this at home kids. It’s still a risky business.” Not only must the homes be purchased with cash, but the decision to purchase must be made immediately, often without first having the opportunity to survey the property. This is an awful drawback, not only because it makes it difficult to know how much to pay, but also because many of the homes have been deliberately vandalized by the evicted homeowners, sometimes requiring tens of thousands of Dollars in repairs. Not to mention that there might also be other liens on the homes which are assumed automatically by the new owner and must be repaid before the home can be sold.

It’s hard to say how who this phenomenon is benefiting. Some would argue that speculators are yet another (useless) layer separating homesellers from homebuyers, collecting a fee merely for finding the property and underpaying for it. Given that many of these properties are “flipped” in a matter of weeks, there is certainly a shred of truth to this argument. At the same time, the system appears to benefiting all parties involved. Lenders are happy because they get paid cash for properties that they can then clear off their balance sheets and stop worrying about. Homebuyers are happy, because the houses being sold by investors are necessarily in livable condition, whereas the same cannot be said for homes purchased at foreclosure auctions. Speculators are naturally happy because they can earn a tidy profit in the process. The previous (evicted) homeowner probably isn’t happy, but they can’t rightfully blame speculators for their plight.

I always try to conclude all of my posts by underscoring how readers will potentially be affected by whatever phenomenon is being examined. In this case, it’s hard to say definitively. If you are considering jumping into this business, it goes without saying that you need to have done your homework first. From the standpoint of the housing market, it makes me nervous that speculation is picking up just as housing prices appear to be stabilizing. The demand created by speculation is temporary/artificial/illusory, and isn’t consistent with a real housing recovery.

Under the best-case scenario, the missed payment would have been a fluke, and you would resume making payments as normal. Given that for the majority of borrowers, delinquency is a precursor to foreclosure, this probably isn’t a realistic expectation. The alternative, then, would be to speak immediately with your lender, to determine if/how it is willing to help you.

Ideally, your lender will immediately consent to a loan modification, with both a reduced principal and lower interest rate. Unfortunately, this remains remains the exception, even given government incentives. In fact, the federal program has succeeded in catalyzing the conversion of an abysmal 4% of temporary modifications into permanent modifications. If you were to expand the denominator to include all delinquent mortgages – and not just those that have already received a temporary modification – this 4% figure would become so small as to be essentially meaningless. In other words, if you’re facing foreclosure, you probably can’t count on your lender to voluntarily save you.

Well, that’s not entirely true…Citigroup has announced a temporary moratorium on foreclosures until the conclusion of the winter holidays, and Fannie Mae has encouraged other lenders to follow suit, which means that at the very least, you can stay in your home for another couple weeks. But don’t worry, state and local governments have you covered. New York, in fact, is just the latest state to implement a new statute that requires lenders to submit to mandatory “mediation” with a third party prior to foreclosure. This initiative also aims to connect delinquent borrowers with counseling agencies, so that they can better understand the predicament and the choices they face.

If in spite of the government’s efforts and mediation, you are still facing foreclosure, you may want to consider a short-sale. Under a new set of regulations currently being mulled by the federal government, lenders would be required to adhere to “nationally uniform documents, timelines and financial incentives” when evaluating short-sales, which would greatly streamline the process. Of course, the burden would still fall on the borrowers to convince the lender/investor that a short-sale is in their best interest (when compared to a foreclosure), but anything that simplifies/expedites the process is certainly welcome. [By the way, for those who aren't familiar, a short-sale refers to a special type of home sale, whereby the proceeds of which are less than the value of one's mortgage. It is usually understood that the buyer will be "forgiven" the difference.]

Failing a short-sale, borrowers can plead their case in court. A handful of “activist” judges have handed down incredible rulings in recent months, in some cases absolving the borrower of all of their mortgage debt. Again, this remains the exception. Since the “cram-down” measure (which would have given judges discretionary power to modify mortgages) was defeated in the Senate, it looks like borrowers are back on the defensive on this front.

In the end, you may have to “settle for foreclosure. But don’t despair: according to a recent academic paper that has received a tremendous amount of publicity, foreclosure is not nearly half as bad as people think it is, from a legal/financial perspective. (Obviously, the emotional/practical side of foreclosure is tragic, but the paper ignores these considerations). In fact, some people are deliberately jumping straight from delinquency into foreclosure and skipping all of the hassle in between, in part of a growing trend known as “strategic default.” The author of the paper reckons that those with underwater mortgages could spend decades rebuilding the equity in their homes, or simply walk away “and their credit rating could recover enough in two years for them to qualify for new home loans.” Sounds like a no-brainer to me.

Have no fear: Obama is here! At least that’s what the federal government would have you believe. It credits its “Making Home Affordable program” with helping hundreds of thousands of people stay in their homes, where otherwise they would have already have been evicted. Unfortunately, this claim is contradicted by a deeper analysis of the data. While 650,000 loans have indeed been modified under the program, that represents only 20% of the pool of eligible loans. In addition, only 1,711 (less than 1%) of these temporary modifications were ultimately given permanent modifications. It can be assumed that a large portion of the remaining loans entered foreclosure anyway, after a temporary reprieve.

Weary of criticisms that the Making Home Affordable program is plagued with fraud and ultimately nothing more than a stopgap measure, the Obama administration yesterday announced that it was stepping up pressure on lenders, especially those whose participation can best be described as lackluster. (Haven’t we heard this before?). The last announcement involved monthly progress reports; the current iteration will involve twice-daily updates with the threat of “public shame” for those that still refuse to comply.

Both lenders and the government claim that the fault lies with homeowners for not providing the necessary paperwork to complete the modifications. This accusation seems to be almost completely without merit, however, as newspapers are rife with reports of year-long delays and lost paperwork, by lenders who seem to be doing everything in their power to ensure that the modification program proves to be an abject failure. Citigroup claims that the government’s standards are not as stringent as banks. It has moved to reduce principal (as well as interest) on eligible loans as part of a strategy it argues will be more successful over the long-term in averting foreclosure. Given the .3% conversion rate (from temporary to permanent modification) observed in the government’s program, they might have a point.

State and local governments are fed up, and have taken matters into their own hands. There are already isolated instances of rogue judges ruling in favor of borrowers in foreclosure hearings, but these remain the exception rather than the rule. The City of Philadelphia recently passed an ordinance that requires lenders to meet with borrowers in a “conciliation conference” before a borrower can be evicted from his home. If the judge ultimately determines that the lender didn’t work diligently to negotiate a compromise, then foreclosure will be forestalled. The city even has the support of the Sheriff on this initiative, which means going forward, no foreclosures will take unless the borrower has absolutely no means to continue making mortgage payments.

Unfortunately, this “unless” seems to apply to a substantial portion of defaults. “Foreclosures on prime mortgages accounted for 33 percent of all foreclosures last quarter, up from 21 percent at the start of the year.” As a result, it looks like the Philadelphia program is doomed to failure. Summarized a lawyer for homeowners, “It’s a largely ineffective stopgap prolonging what appears to be the inevitable, which is the loss of homes. It’s arbitrary and unpredictable, but it’s better than what anybody else is doing.” I guess at this point, that’s the best we can hope for.

In short, the crisis has entered a new phase. Initially, the majority of foreclosures were driven largely by sub-prime and other risky types of loans. As interest rates rose and housing values plummeted, many of these borrowers suddenly found themselves unable to afford the higher payments and defaulted on their loans. At this stage, foreclosures were largely concentrated in bubble regions of the country, where house prices had appreciated faster than justified by fundamentals. This type of foreclosure has been easy to address, although not as easy to prevent. With the support of lenders, the federal government has sought to modify the mortgages for those struggling with higher debt burden. The underlying principle was pretty straightforward: lower payments should translate into lower default rates.

In the still-emerging second stage, foreclosures have begun to crop up among prime borrowers in relative stable housing markets. This trend is unrelated to risky lending practices, but instead, is a product of the economic downturn and rising unemployment. Job losses have exposed the precariousness of many borrowers’ finances, causing them to begin missing payments almost immediately thereafter. As a result, “About 30% of foreclosures in June involved homes in the top third of local housing values, up from 16% when the foreclosure crisis began three years ago…The bottom one-third of housing markets, by home value, now account for 35% of foreclosures, down from 55% in 2006.”

This brand of foreclosure, while easy to identify, is nearly impossible to treat directly. In many cases, unemployed borrowers can’t afford to make any mortgage payment, which means a loan modification wouldn’t do much to ease the possibility of default. The government is facilitating refinancings for mortgages with negative equity, but for most borrowers, this will only forestall the inevitable. Only when the economy recovers and employers begin hiring again will the crisis subside. While the Mortgage Bankers Association (MBA) is projecting that unemployment will peak at 10% in 2010, many analysts expect that the total number of foreclosures will be roughly the same as in 2009.

Even if new foreclosure filings subside, however, there is still an enormous “shadow inventory” of foreclosed properties that hasn’t yet been brought to market. According to a recent report by Amherst Securities Group, “As many as 7 million pending foreclosures could flood the market in the near future, driving housing prices down. That number represents homes that have already been repossessed by lenders or are in serious danger of defaulting….The 7 million units represent 135 percent worth of an entire year of existing home sales, which are pegged at 5.2 million.” Lenders realize that the housing market is still tenuous to try offload more than a small portion of these properties.
“But some economists expect that a wave of foreclosed properties could hit the market in 2010, dampening home prices again,” as self-imposed moratoriums are canceled.

Many homebuyers smell opportunity, and have waded cautiously into the market. The same goes for speculators, some of which are buying foreclosed properties en masse. Others are buying mortgage notes at deep discounts, as part of a gamble that borrowers will be able to repay them after the crisis eases. “The process works like this: A company or its investors purchase a note, then the homeowners get a knock on their door and are given the news about the change of their loan servicer and offered a modification.” As always, these first-movers could potentially reap large windfalls, Still, given that foreclosures have yet to peak, it might be wise to remain on the sidelines, until all of the dust settles.

In light of these statistics, it’s not surprising that more and more borrowers are simply walking away from their mortgages, despite the fact that many have the financial wherewithal to continue making payments. According to Experian, a credit rating agency, 582,000 such borrowers executed a “strategic foreclosure” in 2008 alone, which is more than twice as high as the 2007 total.

In other words, a growing contingent of borrowers has determined that it’s simply not economical to continue paying their mortgages. (As an aside, this is an excellent indication that homeowners, themselves, don’t have much confidence in the apparent housing recovery that many analysts believe is taking shape). Before, it was assumed that the impact of foreclosure on one’s credit would be enough to discourage strategic default, but the uptick in this trend demonstrates otherwise. Some borrowers evidently think it will be too many years before housing prices will return to the bubble levels. For those that bought properties for speculative purposes, there is a sense that it makes little sense to continue making payments on an investment that has little value.

Despite the clearly negative impact of this phenomenon for lenders, they appear to be doing little to avert it. Some are finally helping borrowers with loan modifications, but this rarely involves a truncation of the principal amount. Thus, borrowers who were underwater before receiving a modification will likely remain underwater after a modification, despite the lower monthly payment.

The government, for its part, hasn’t done much either. Its program aimed at helping underwater borrowers reduce their debt burdens through refinancing has been a miserable failure, reaching only 3% of eligible borrowers, despite the recent elimination of an initial 5% cap on underwater equity. It seems that despite the possibility of a lower interest rates, most borrowers are smart enough to realize that paying money (i.e. closing costs associated with the refinancing) to retain an underwater mortgage doesn’t make financial sense. Ironically, the Mortgage Forgiveness Debt Relief Act of 2007 is facilitating strategic default by allowing borrowers to discharge of debt tax-free. [If not for the law's passage, foreclosure could have potential tax consequences].

Still, there are negative consequences of ignoring government help and deliberately defaulting on a mortgage. For the majority of Americans, foreclosure is still stigmatized. From a financial standpoint, foreclosure (as well as short sales and deeds in lieu of foreclosure) will immediately result in a lower credit rating, diminished ability to borrow, and higher interest rates. Thanks to the Mortgage Forgiveness Debt Relief Act, strategic default no longer carries any tax implications. Of course, they may be costs associated with finding a new residence.

From a legal perspective, one’s liability post-foreclosure depends one’s state of residence. 10 states forbid banks from making claims against personal assets when foreclosing on a mortgage with negative equity. The other states, however, generally allow lenders to sue for the difference. Legal experts have indicated, however, that this is only used in 15% of cases, which means the majority of defaulters get off with hardly a slap on the wrist. Still, if you’re considering this as an option, it would be beneficial to consult a lawyer and/or accountant just to confirm.

Generally, the burden is on the homeowner/taxpayer to prove that the current valuation is inaccurate. Given that housing prices have fallen across-the-board, chances are that many homeowners will find themselves facing such a problem. In most cases, it seems state and local governments are amenable to adjusting the valuation:”Once a petition is filed, the county Value Adjustment Board sets the case for hearing in front of a special magistrate. Should the magistrate rule to reduce the contested tax assessment, owners who have already paid their taxes will receive a refund.”

Other areas are being overwhelmed with appeals and finding it difficult to process them before the tax bills are sent out. For that reason, one jurisdiction is moving to give homeowners the benefit of the doubt: “If their assessed value jumps five-percent or more in a year, the new law shifts the burden to assessors to prove they got it right.”

Some homeowners will see their tax bills fall doubly, both as a result of a lower valuation and lower tax rates. There are stories of local governments that are contemplating lowering property taxes as a type of economic stimulus. And lowering taxes never hurt politically, either. Unfortunately, it appears that lower rates appears to be the exception. Most state and local governments are facing record budget deficits, and are using property taxes to plug the holes. By tweaking rates upward, they can at least compensate for the revenue that would otherwise have been lost to lower valuations.

A new strategy, practiced by governments most desperately in need, is to sell “their delinquent tax bills to the highest bidder….Private investors step in and buy tax liens, paying governments upfront all or part of the value of the taxes. The investors then get the right to foreclose on the properties, taking priority over mortgage lenders, and to charge interest rates as high as 18 percent on the unpaid taxes.” While a win-win scenario for governments and investors, both of whom stand to reap huge cash windfalls, the program can be extremely detrimental to homeowners, which can see their tax bills (as a result of interest) skyrocket.

Unfortunately, there’s no law protecting homeowners in such situations, since the investors function as collection agencies, only going after back-taxes instead of credit card debt. In the end, if you don’t pay your property taxes (whether to the government or to a legally entitled third party) the result is the same as if you didn’t pay your mortgage on time; you lose your house.

The idea works as follows: after foreclosure proceedings are completed, the previous owners would be given the option of renting the property at a market rate. After a few years of such an arrangement – assuming that all rent payments were made on time – the tenants would then be given the option to purchase the property back. This might seem familiar, and some of you might recognize this arrangement is a tweak of a traditional lease-to-own option, which are usually used to facilitate the purchase of a house, not after foreclosure.

Under current rules, lenders are permitted to rent to the previous owner (or anyone else for that matter), but since the idea is to sell the foreclosed property, lease arrangements are usually only month-to-month, and the owner-turned-tenant can be evicted at any time, once a permanent owner is found. Under the proposed legislation, “The mortgage holder is permitted to resell the house after foreclosure, but any buyer must honor the existing lease. Rents can be increased yearly, according to the Labor Department’s consumer price index for rents in the area.”

Of course, this idea is not without its faults. First of all, there is the notion that if a homeowner cannot afford the mortgage payments on a house, is it reasonable to expect him to be able to make rent payments as a tenant. There are other critics who insist that the legislation has not gone far enough, by giving banks the option – but not the obligation – to rent foreclosed properties back to the previous owners. Finally, there are some who insist that lenders are not suited to being landlords.

This notion is reflected in a variation to this arrangement, under which a third-party investor is introduced into the equation. “First, the bank agrees to a short sale to a private investor, just as they often do now….The investor is contractually bound to lease back the house on a “triple net” basis – the tenants pay taxes, insurance and utilities – for two to three years…The deal comes with a preset buyout price after the leaseback period. That price is higher than the short-sale price paid by the investor, but lower than the original price of the house paid by the foreclosed owners.” Under such an arrangement, everyone should theoretically emerge satisfied – the lender, investor, and homeowner/tenant.