It has been quite a year for lawyer Shari Olefson. First she joined the Tampa-based law firm of Fowler White Boggs. In April she published her first book, and how timely it was.
It's called Foreclosure Nation: Mortgaging the American Dream. Prometheus Books put it out. Foreclosure Nation doesn't play the usual woe-is-me-I-was-duped-by-predatory-lenders tune.
Olefson thinks Americans are so addicted to debt our penny-pinching grandparents would hardly recognize what they've spawned. And the government is so eager to protect us from ourselves, we might never learn the hard lessons of thrift and patience.
The 46-year-old attorney talked to the St. Petersburg Times about the foreclosure crisis as reflected in her book and law practice.
What inspired you to write the book?
It was kind of an accident. I was running the title insurance division for First American (Corporation). I went to a financial services conference in San Diego in 2006. You know how those things are: Hanging out at the hotel bar everyone was complaining about early defaults on residential mortgages. When I was flying back home on the plane, I pulled out my laptop and the title just came to me. The book became more about Americans' core values, and really a call to action at what has happened the past 100 years. The media (say) the cause of the foreclosure crisis is banks, Wall Street, the government and so on. But it's all of us Americans who caused the causes.
Really? How did we inflict this financial turmoil on ourselves?
I remember my grandparents' friends used to have mortgage burning parties when they paid off their houses. They'd toss it on the grill and everyone would show up to watch it burn. We've evolved away from that. With the mortgage interest deduction we're getting rewarded for getting bigger mortgages. I got a call from a doctor in Tampa. He makes $500,000 a year. He paid about $2 million for his house and owes a million and a half. He wants to know how to get out of his mortgage. And he can afford the house. What scares me isn't the financial impact but the cultural impact. What kind of a country is it that can walk away from its mortgages? That's scary.
Is the foreclosure crisis rippling into other areas of real estate like offices and shopping centers?
I represent banks and developers. Traditionally there's been a 12- to 18-month lag time between residential property troubles spinning into trouble with commercial property. You know the whole cycle: Unemployment begets reduced spending, which means less growth and more unemployment. And much of this started with the housing crisis. I talked to the general counsel at Jamba Juice. She said they were closing 60 outlets, and all were next to these neighborhoods with all the McMansions that didn't have anyone living in them.
Please tell us that foreclosures will start diminishing soon.
The foreclosure problem has become segmented now. The lines of demarcation are clearer. What's your geographical location? What's your county? What's the property type? The condos were built for speculators so there are more foreclosures there. There were way more McMansions built than there were people to buy them. But homes for first-time home buyers are flying off the shelf. That's how a recovery should work. The answer for one group of property owners will be different from the answer for another. You shouldn't ask what the outlook will be for all real estate, but what's the outlook for South Florida condos over $500,000. You have to break it down like that.
What's your advice to get out of this mess?
It's more of a national pride thing. You get the question, "Should I walk away from my mortgage?" That's what people should be asking their priest. It really isn't fair. This is a great opportunity to get back on the right track. At least temporarily, the administration will have to help people make up for the lost principal in their homes. I don't know if it's a tax write-off for 10 years or maybe an interest rate reduction for five years. We've got to come up with something to reward people who make good financial decisions and don't walk away. I'm hoping foreclosures don't become an American institution. It's time to go back to what I call New Traditional Values.