Irvine Foreclosure Information
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Workouts, Not Bailouts
There are two main types of anti-foreclosure policies: bailouts and workouts. In bailouts, the government gives aid either to lenders (e.g. by purchasing bad mortgages at their full original value) or to homeowners (e.g. by giving them loans so they can repay their lenders). Of course, aid to Irvine homeowners indirectly bails out the lenders as well. In workouts, the terms of the original mortgage contract are modified, either by reducing the rate of interest or reducing the principal owed, or both, in order to make the loan more affordable. So far, most of the proposals to deal with the Irvine foreclosure crisis have been more workouts than bailouts, although there are elements of bailout in some of them as well. The lenders made fortunes on these risky mortgages during the housing bubble, so if someone has to suffer losses now, it should be the lenders. There should be no bailouts of the lenders in any way.
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