Current Events in October 2017

Consumers are targeted by scams every day, but the Internal Revenue Service (IRS) warns that recent tragedies have unfortunately created an uptick in scams seeking to exploit Americans’ desire to help victims.

The IRS points out the country has experienced a series of major disasters and a mass shooting in quick succession, so donors need to be particularly vigilant to look for signs of a scam before sending money.

“These scams evolve over time and adjust to reflect events in the news, but they all typically are variations on a familiar theme,” said IRS Commissioner John Koskinen. “Recognizing these schemes and taking some simple steps can protect taxpayers against these con artists.”

Beware of unfamiliar charities

Consumers should look out for appeals for donations from unfamiliar charities, or organizations that have names similar to a legitimate charitable organization. They should also be highly suspicious of appeals that come in the form of an email, text, or telephone call since legitimate charities usually stick to mass advertising like television commercials to solicit donations.

Consumers who want to donate to any charitable cause should initiate the search for a group themselves, not respond to direct contact that may not be legitimate. The American Red Cross, Salvation Army, and United Way are three groups that are involved in providing help to victims of wildfires, hurricanes, and mass shootings.

The IRS, meanwhile, is also trying to help victims of the California wildfires. It's extending the deadline to file certain individual and business tax returns and make certain tax payments until Jan. 31, 2018. The extension postpones deadlines beginning October 8 and applies to residents of seven California counties.

Impersonating IRS agents

The tax agency spends a good deal of its time countering the efforts of scammers, who often pose as IRS agents to fool consumers. Most recently, it has warned about scammers using a phishing scheme to steal client email addresses from tax professionals to access insurance and annuity accounts.

The IRS reminds consumers that it does not call and leave pre-recorded, urgent messages demanding a call back. If you get one of these calls, it's from a scammer who hopes to scare you into thinking you will be arrested if you do not respond.

There are legitimate IRS functions that scammers may also try to exploit. The agency has sent letters to taxpayers whose overdue accounts have been assigned to one of four private sector collection agencies. Scammers are already trying to take advantage of this by calling and threatening taxpayers if they do not pay the overdue amount quickly.

What to do

If you receive one of these calls but are not aware that you have an overdue bill, it's a scam. The IRS says all of the taxpayers receiving calls about their overdue accounts are well aware of the issue, since they have been corresponding with the IRS about it for years.

Legitimate contact with the IRS almost always begins with a letter through the U.S. Mail. In rare cases, an IRS official may show up at your home or business, but they will always first establish the time and reason in a letter.

Any consumers with a question about whether a contact from the IRS is real should go online, look up the number for the closest IRS office, and call the agency directly to inquire.

Foreclosure activity hit an 11-year low in this year's third quarter, as an improving economy and stricter mortgage standards helped stabilize the housing market to pre-2008 levels.

The Third Quarter 2017 U.S. Foreclosure Market Report, compiled by ATTOM Data Solutions, shows there were 191,824 properties subject to foreclosure filings, which include default notices, scheduled auctions or bank repossessions.

The number is down 13 percent from the second quarter and 35 percent lower from a year ago. It's the lowest level since the second quarter of 2006, at the height of the housing bubble.

This does not appear to be a one-off occurrence. The drop in foreclosure activity in the last quarter was the fourth straight quarter in which it has tracked below the pre-recession average.

“Legacy foreclosures from the high-risk loans originating between 2004 and 2008 have largely been cleared out of the distressed market pipeline,” said Daren Blomquist, senior vice president at ATTOM Data Solutions.

Tougher lending standards

New post-crash mortgages must adhere to stricter standards and are subsequently performing much better, Blomquist says. The exception is FHA loans made in 2014.

Blomquist says those loans aren't performing nearly as well, with a foreclosure rate higher than any year since 2009. He explains it by noting there was a gradual loosening of credit that year.

Lenient lending standards in the early 2000s, along with a large number of subprime mortgages, created a “foreclosure tsunami” that was out of control by 2007. A year later, one in every 538 U.S. households received a foreclosure filing during March 2008, a five percent rise over the previous month and a shocking 57 percent increase over March 2007.

Now, applicants are required to have two solid years of employment history at the same company or in the same industry, have a good credit score, and a debt to income ratio of no more than 43 percent.

According to the Consumer Financial Protection Bureau (CFPB), studies have shown that mortgage applicants with a higher debt-to-income are more likely to have trouble making their monthly mortgage payments.

Benefits for homeowners

At the height of the foreclosure crisis, buyers had a lot more homes to choose from than they do today. However, the decline in foreclosures has produced major benefits for homeowners. The housing market is now more stable and home prices have risen back to their pre-crash levels in many housing markets.

Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle market, says foreclosure activity there is at a record low.

“As long as the regional economy continues to flourish, I do not expect to see foreclosures rise,” Gardner said.

The current threat to the housing market, he says, is price growth, which is good for homeowners but has started to negatively affect affordability, and according to Gardner, “is becoming troublesome.”