Can Airbnb Help Avoid Foreclosure?


I recently saw a  Airbnb TV commercial that attempts to promote the many benefits of this room sharing service for local communities.  Airbnb claims that its service has helped many homeowners avoid foreclosure, a topic that I want to discuss here.  Can Airbnb help avoid foreclosure?  As with all legal questions: it depends. 

Airbnb is a peer sharing service for renting rooms, apartments, and even entire houses.  An interested renter enters their desired location and travel dates and gets a list of available options, with rates and information of the rental property.  Airbnb follows the trend of similar “sharing economy” services like Uber and Lyft, allowing individuals to conduct business on their own terms.  Not surprisingly, these services are under attack by state and local governments: here in Massachusetts, there is talk of regulating Airbnb, over concern that this service takes business away from local hotels and other short term rental options.

I, personally, am a huge fan of the “shared economy.”  I see no reason why a homeowner or car owner should not be permitted to use their personal property for profit (while providing an important service for the general public).  Inevitably, however, there is push back from the commercial businesses who normally provide these services.  As local and state businesses continue to determine how to deal with Airbnb, the question on whether Airbnb can help avoid foreclosure is an important topic to consider.

For homeowners facing a temporary loss of income (ex. layoff from job or reduced working hours), Airbnb can be an option for avoiding foreclosure.  Short-term rental income can help provide the resources necessary to pay a mortgage loan and avoid default.  This is a much, much better option than letting a loan go unpaid.

I am a little more skeptical of using Airbnb as a means of producing income for purposes of obtaining a loan modification.  On paper, income from Airbnb should be adequate for getting a modification.  However, the unpredictability of this income can make it difficult to verify for a loan modification.  When applying for a modification, a lender wants to see definite, documented income.  I can see many lenders being reluctant to accept this income, out of concern that this income may not be consistent.

So, can Airbnb help avoid foreclosure?  If the homeowner can use Airbnb to stay current on a loan (or get caught up in missed payments), then I think it is an effective foreclosure defense strategy.  Airbnb is also a fantastic option for generating extra income for homeowners with a tight budget, thereby providing savings in the event that other income becomes scarce.

For homeowners with a significant loan default, who are in need of a loan modification, I wouldn’t rely 100% on Airbnb to produce the income necessary to qualify for this loss mitigation assistance.  Go ahead and use Airbnb, but also try to establish income that is more certain and definitive.  If you have space in your home to rent, consider finding a permanent tenant or roommate, which may be more effective in showing your lender that you have the income necessary for a modification.

If you find yourself facing foreclosure and need help, contact me for a consultation.