This is the second of a two part interview with South Florida bankruptcy attorney Jeff Tromberg. Based out of Fort Lauderdale, Jeff is the managing attorney of the Florida Debt Relief Center. He took the time to answer a series of questions dealing with the state of the south Florida economy from fis perspective as a bankruptcy attorney. To view part one of the interview, click here.
What is the number one type of debt that is causing problems for your clients in South Florida?
Jeff: I would say mortgage debt is Problem Number One. Many homeowners took out large mortgages they can no longer afford. Whether they could have affored it when they first got the mortgage is irrelevant. They can’t afford the payment now and find themselves struggling for housing when they could simply find alternative housing at a far lower monthly cost. South Florida, Miami in particular has unfortunately been one of the areas that has been hardest hit by the housing crisis. So many of my clients are rightfully skeptical about South Florida home prices recovering anytime soon.
What will it take for the South Florida economy to turn around?
Jeff: More and better paying jobs, lower housing praces and a return to sanity. By that, I mean people need to recognize they are not judged by the house they live in or the car they drive. Instead, they should live within their means and simply enjoy life.
How would you solve the housing crisis in South Florida?
Jeff: For years, I have worked with NACBA and traveled to Washington, D.C. lobbying for bankruptcy reform to allow homeowners the opportunity to save their homes through bankruptcy. More specifically, I would end all current government programs because they simply don’t work. Instead, I would allow homeowners to file Chapter 13 bankruptcy and lower the principal amount owed to what the court says the property is worth. I would then give them new 30-year mortgages at, let’s say, 5% and see if they can make the payments. If not, they lose the house. If they can make the payments for 5 years, they can keep the house at that value and the amount owed above that is written off. Of course, homeowners would need incomes to qualify but the best part of this is that both the homeowners and the banks share in the fix. Banks have to write off the deficiency while homeowners get a house with no equity. It’s not as if they are getting a gift. They still have no equity but a way out.
Do you think there is any chance that Congress will allow first mortgages on borrower’s primary residences to be modified in bankruptcy?
Jeff: Not at all. Congress it too split over things like extending unemployment benefits and financial reform. We were close a couple of years ago but with the upcoming election in which Democarts are expected to lose control of the House and many seats in the Senate, I have absolutely no expection such a proposal will ever see the light of day. That is why I have no problem advising people to look out for their own interests and fight back by walking away from what has turned out to be a bad deal.