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Airbnb may bring problems to homeowners

One of the hottest trends right now is people listing their homes, part of their homes, or investment properties with Airbnb so they can host overnight guests for cash.
Airbnb claims to have over 2 million listings in 191 countries, with close to 100,000 listings in New York AirBnb rentalsalone.  In 2015, 63% of these were for an entire home, not just the pull-out couch many people envision when they think of Airbnb. While the allure of turning an extra bedroom, garage apartment, or rental property into ready cash is appealing, there are some potential dangers associated with listing your property with Airbnb.
According to a recent article on DSnews, a website for the servicing industry, there may be major problems for Airbnb hosts who hold Fannie Mae mortgages.  They report that the Federal National Mortgage Association, commonly known as Fannie Mae, says that using a property purchased as a residential dwelling for short-term rentals could violate their mortgage agreement.  That’s because most Fannie Mae mortgages contain a regulation against using the property as an investment property, which would be subject to a higher mortgage interest rate.
Additionally, if Fannie Mae decides that regular use as a short-term rental could cause the value of the property to decline, they could call the loan due, meaning the owner would have to pay off the balance immediately or lose the house. Pretty dire consequences.  But wait, there’s more. There are similar issues with homeowner’s insurance; if an Airbnb guest is injured in your home, your insurance company could deny the claim because you turned your home into an income-producing property.  I looked at the Airbnb website and at least this insurance issue seems to be covered by their Host Protection Insurance which acts as primary insurance and provides liability coverage for up to $1 million. But aside from the claims aspect, your company may not want to cover property which is rented out to others in this manner. So if you are considering listing your home with Airbnb, be aware of the potential consequences, especially if you have a Fannie Mae mortgage.
If you would like to read the entire DSnews article, here’s a link:  DSnews  If we can help you with any of your real estate questions, please give the Mark Boyland Team a call at (914) 234-4444 or stop by our office at 410 Old Post Road in Bedford.  We look forward to hearing from you, or meeting you in person.

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