Americans Are Building Vacation-Home Empires With Easy-Money Loans

Another company, Hometown Equity Mortgage LLC, which does business as TheLender, is promoting its “Non Owner No Income,” or “NONI,” loans to mortgage brokers. Its acronym is also Italian slang for “grandmother.” A Facebook ad features a gray-haired woman in a red bathing suit, a straw hat, and red heart-shaped sunglasses who floats in a pool, a martini glass in hand: “Our NONI likes to Airbnb. The NONI program allows borrowers to use income from vacation rentals, like Airbnb and VRBO … Results without the B.S.”

Over the past year, Wall Street firms such as Credit Suisse Group AG and Barclays Plc have helped package and market hundreds of millions of dollars in mortgage-backed securities sold to institutional investors that included loans from these three companies. Some were rated investment grade; others, below. Credit Suisse and Barclays declined to comment. It’s unclear how many of the Airbnb-style loans are making their way into these offerings—or even how many have been sold overall—because no one has a full accounting.

“The influx of the starry-eyed inexperienced investors is artificially boosting demand and causing the rental market to be overheated,” she says. “This whole class of loan and, in particular, some of these underwriting practices are a sign of market euphoria. That rarely turns out well.”

A woman, eyeing retirement with her husband, has already bought one home to rent out by the day and is scouting others with the hope of creating an inheritance for her millennial children. “You’re my favorite call,” Carles says. “You’re going to live a long life, and you’re going to be partying it up, because you’re going to make a lot of money on these rentals.”

 In January, Winterberg quit her job as a manager at a radiology imaging company to become a broker at the Mortgage Shop, using her experience to evangelize and sell. “I get to help people literally do what I do,” she says. “It’s like, ‘Hey, let me tell you how you can make money and leave corporate America.’ It’s awesome.”

After her morning Zoom presentation, Carles brushes away such concerns, saying her mortgage company and its customers are sure to keep thriving because of the enduring popularity of the Smokies. In her $80,000 SUV, she’s negotiating a tricky turn on a mountain road, still listening to the BiggerPockets hosts and their guests’ tales of real estate riches. “Even if the economy goes to crap, people will still vacation here,” she says. “No matter if your family is in debt, most people have to have a vacation so they don’t go insane. They’ll put it on a credit card.”