At a time when cities are still sorting out what effect, if any, Airbnb has on local rental and housing markets, the home-sharing giant is launching a new initiative that will further weave it into the fabric of owning a home.
In partnership with lenders Quicken Loans, Citizens Bank, and Better Mortgage, homeowners can now count income from renting their properties on Airbnb when refinancing a mortgage. The initiative also has government backing, as Fannie Mae, the mortgage facilitator that’s still under government conservatorship, is also part of the venture.
“This initiative was developed with Fannie Mae to identify new ways of recognizing home-sharing income, making it possible for homeowners to maximize their investment to better reach their financial goals,” Airbnb said in a statement. “The project is part of Fannie Mae’s work to find new, innovative ways to expand the availability of affordable mortgage credit.”
Airbnb supplies its hosts with a Proof of Income statement that hosts can now include when applying with Quicken Loans, Citizens Bank, and Better Mortgage to refinance an existing mortgage. Homeowners refinance their mortgages to take advantage of lower rates, or often to tap unrealized equity created by rising home prices.
It’s often referred to as “using your house as an ATM,” and it was one of the many issues at the heart of the housing bubble of the 2000s and its subsequent collapse in 2008. Another issue was lenders accepting income sources on mortgage applications without fully vetting them. Those standards have since tightened and Airbnb says it will provide data directly to the these lenders, but given the inconsistent nature of the tourism economy, Airbnb income can be unsteady.
Airbnb has been accused of driving up rents and home prices in the past, and the company has been the subject of numerous studies. A UCLA paper paper last year concluded that a 10 percent increase in Airbnb listings leads to 0.42 percent increase in rent and a 0.76 percent increase in home prices.
Despite one study concluding Airbnb has no impact on the hotel market, the hotel industry is fighting the company by propping up “watchdog” groups and even going so far as to fund one academic study that says Airbnb is responsible for restricting long-term rents, increasing median rents, and promoting gentrification in New York City.
Cities have also taken action against Airbnb. Most recently, Detroit put in a new zoning ordinance that quietly banned Airbnb, although in response to the fervor, the city said the ordinance is still under review and it won’t be enforcing it just yet. Baltimore’s city council is also considering strict limits on Airbnb rentals.
If the new initiative goes well, Fannie Mae could consider allowing Airbnb income on mortgage refinancing from all lenders.