Clarification on renting Basement in Airbnb

[Georges A.]

There seems to be a lot of confusion on landlords renting their finished basements via airbnb (i.e short term rentals < 7 days). 

Can someone clarify the legal repercussions of doing that?    I have heard from investors here in MA that renting a private home (i.e. airbnb) is perfectly legal even if there's no certificate of occupancy.  I have read on some forums some pretty scary stories where the lender may call the mortgage on the landlard, insurance refusing to pay if anything happens, or - god forbid - if anyone got injured, the landlord is liable for manslaughter. 

Can anyone shed more  light on this topic?