CFO News

An enterprising person is one who comes across a pile of scrap metal and sees the making of a wonderful sculpture. An enterprising person is one who drives through an old decrepit part of town and sees a new housing development. An enterprising person is one who sees opportunity in all areas of life.

To be enterprising is to keep your eyes open and your mind active. It’s to be skilled enough, confident enough, creative enough and disciplined enough to seize opportunities that present themselves... regardless of the economy.

A person with an enterprising attitude says, “Find out what you can before action is taken.” Do your homework. Do the research. Be prepared. Be resourceful. Do all you can in preparation of what's to come?

Enterprising people always see the future in the present. Enterprising people always find a way to take advantage of a situation, not be burdened by it. And enterprising people aren't lazy. They don't wait for opportunities to come to them, they go after the opportunities. Enterprise means always finding a way to keep yourself actively working toward your ambition.

Enterprise is two things

The first is creativity

You need creativity to see what’s out there and to shape it to your advantage. You need creativity to look at the world a little differently. You need creativity to take a different approach, to be different.

What goes hand-in-hand with the creativity of enterprise is the second requirement: the courage to be creative. You need courage to see things differently, courage to go against the crowd, courage to take a different approach, courage to stand alone if you have to, courage to choose activity over inactivity.

And lastly

Being enterprising doesn’t just relate to the ability to make money. Being enterprising also means feeling good enough about yourself, having enough self-worth to want to seek advantages and opportunities that will make a difference in your future.

And by doing so you will increase your confidence, your courage, your creativity and your self-worth, your enterprising nature.

The European Central Bank is likely to cut the main euro zone interest rate at its monthly meeting on Thursday as the bloc's economy has weakened further. Since the last policy meeting on April 4, there have been few signs of the economy returning to growth, threatening the recovery which the ECB has said it expects to start in the second half of this year.

There are also increasing signs of weakness spreading to the euro zone's core. Confidence fell in April and did so by more than expected, data showed on Monday, highlighting the souring mood among companies and consumers since March, after an optimistic start to the year. Weaker reports, combined with ECB policymakers' statements showing renewed appetite for rate cuts, has changed economists' views and a narrow majority now forecast one when the Governing Council convenes in Bratislava, one of the two meetings it holds annually outside its Frankfurt base.

Senior sources involved in the deliberations say momentum is building for action to help a euro zone economy which has slipped back into recession, a move that some policymakers wanted to take earlier this year. In a Reuters poll, 43 of 76 economists said they expected the 17-country bloc's central bank to cut rates by 25 basis points to 0.5 percent. At the same time, 57 of 66 said a cut would not have much impact on the economy. "Most Council members have reached a point where they say we can't keep on doing nothing," RBS economist Richard Barwell said. "They probably feel that cutting rates would be better than doing nothing."

ECB Vice-President Vitor Constancio said last week that the central bank stood ready to act, adding that there was still room to cut rates. But, as the poll shows, a sizeable minority think the ECB is not ready to cut yet. A separate Reuters poll of euro money market dealers on Monday showed only half of the 22 expected the ECB to cut on Thursday. None of the 11 traders who replied to a question about the impact of a rate cut on interbank lending thought it would have any.

REASONS NOT TO

"A rate cut is not a done deal and the exact timing of the move remains very uncertain," Unicredit economist Marco Valli said. ECB Executive Board member Joerg Asmussen has said lower rates would have little impact on economies in the euro zone's crisis-stricken south, because they do not reach the consumers and businesses in those countries.

Another argument for waiting another month is that the ECB often moves rates when it has new data, and it will publish the next set of economic projections in June.

The ECB offers banks unlimited funds in its refinancing operations, and the excess liquidity has pushed money-market rates well below the main refi rate. The deposit rate, currently at zero, acts as a floor for money markets, and the ECB has made clear it has no appetite to take it into negative territory, which means that the ECB may choose to keep it, as well as the 1.5 percent interest rate on overnight lending, on hold even if the main rate is cut.

Thus, short-term money market rates are unlikely to fall further even if the main refi rate is cut. A rate cut would, however, profit banks. They have close to 870 billion euros of central bank funds, and a 25 basis point cut would reduce banks' interest payments more than 2 billion euros annually. Those favoring a cut also argue that it could have an important signaling effect, showing that the ECB is not done and could take more measures in the future. The bank has mulled ways to stimulate lending to small companies, which have difficulties finding funding, especially in southern Europe, but it does not appear ready to announce anything concrete yet.

Amid reports of bidding wars are markets where the art of flipping can still be maintained. After analyzing some 600 metros in its database, RealtyTrac came up with a list of 25 markets where investors can yield the highest gross profit (the difference between average original purchase price and the eventual flipped sales price) from flipping.

For the report, flipping was defined as a situation where the sale of a home occurred within six months or less of the previous sale of the same home. Even though foreclosure discounts aren’t where they used to be, RealtyTrac expects the practice of flipping homes to remain favorable for investors this year as home prices continue to rise.

The online foreclosure marketplace found flippers in Orlando, Florida averaged the highest gross profit at 63 percent. The average purchase price in the area was $103,701 in 2012, while the average flipped price was $168,677.

Las Vegas came in second, where flippers saw a gross profit of 53 percent last year. Phoenix, a metro known for its rapid price gains over the last year, pulled in a gross profit of 44 percent, putting it at third. Four more Florida metros were in the top 10—Tampa (No. 4), Miami (No. 6), Lakeland (No. 7) and Sarasota (No. 9). Gross profits ranged from 34 percent to 43 percent in those cities.

Tennessee metros Memphis and Nashville were also among the top 10 for their gross profits of 42 percent and 35 percent, respectively. Tucson was at No. 10, where gross profit stood at 34 percent last year.

While not among the top 10, 11 California metros were represented on the list, including San Diego, San Francisco, Sacramento, Inland Empire, and Stockton. Out of the 25 metros, Detroit, Michigan yielded the lowest gross profit for flippers at 8 percent. Average purchase prices for the metros ranged from $68,444 for Lakeland up to $422,526 for San Jose.

As debate continues to swirl around the future of the mortgage interest tax deduction, Pew Charitable Trusts released a study revealing the geographic impact of the tax deduction. The concentration of claims varies widely by state but is highest on the East Coast and in parts of the West, according to the study. States with the lowest claim rates are generally located in the South.

With 37 percent of all filers claiming the mortgage interest tax deduction, Maryland had the highest claim rate in the country, according to data from 2010. The lowest claim rate occurred in West Virginia and North Dakota, where 15 percent of filers claimed the deduction. Across the nation, about 25.5 percent of tax filers claimed the mortgage interest tax deduction in 2010, according to Pew. The amount claimed per tax filer—across those who claimed the deduction and those who did not—was also highest in Maryland, $4,580. The lowest claim-per-filer took place in North Dakota—$1,192.

Pew also noted differences in distribution of the mortgage interest tax deduction within states. Often, residents in large metropolitan areas were more likely to claim the deduction than residents in less populated or more rural areas. Texas demonstrated the greatest variance in claim rates and deduction amounts in one state. Austin, Texas, held both the highest claim rate and the highest deduction amount, which were four times and six times higher than the lowest rates recorded in the state.

On the other hand, in Pennsylvania, the state’s largest metro areas did not hold the highest concentration of claim rates. Pittsburgh “had relatively low claim rates” when compared to the less-populous York-Hanover area, according to the Pew study. “Looking at who benefits by state should inform federal policymakers as they consider options for changing or eliminating tax expenditures over the next several years,” said Ann Stauffer, a fiscal policy expert at Pew.

In 2011, mortgage interest tax deduction claims totaled about $360 billion. Pew noted in its study that the housing crisis did impact the amount and number of claims made in recent years. In 2007, the deduction amount peaked at $543 billion. Over the following three years, the deduction amount declined 28 percent, and the number of claims declined 12 percent, according to Pew.

What is the current state of housing on American Indian tribal lands? Well, it depends on which party you ask. A recent hearing of the U.S. Senate Committee on Indian Affairs brought starkly different opinions from the federal government and the tribal leadership.

For Rodger J. Boyd, deputy assistant secretary in the Office of Native American Programs and the Office of Public and Indian Housing at the U.S. Department of Housing and Urban Development (HUD), the state of tribal housing is a glowing success. "From HUD's perspective, our Indian housing programs are making great progress in providing housing to Indian families across the country because we do not take a 'one-size-fits-all' approach to Indian Country," said Boyd in his hearing testimony. "Our programs provide the flexibility for our grant and loan recipients to tailor their housing programs to address their unique housing and economic development needs."

Boyd pointed to the Indian Housing Block Grant (IHBG) program as having a positive impact on tribal housing development. "The block grant approach offers each tribe the flexibility to design, implement and administer unique, innovative housing programs, based on local need," he stated. "Grantees have received more than $9.9 billion in 16 years of funding [1998 to 2013] and, with few exceptions, have been using the funds in a timely and effective manner.

Overall, the IHBG program has a 94 percent expenditure rate." Boyd also commented on how IHBG funds have helped bring green building practices to Indian Country - including much-valued Leadership in Energy and Environmental Design (LEED) certifications. "For example, the Ho-Chunk Housing Authority of Wisconsin has developed housing projects that include green, energy-efficiency enhancements, including super-insulation, passive-solar design, geothermal systems and solar hot-water heaters," he said. "The Choctaw Housing Authority of Oklahoma has recently built 24 new units that are all Energy Star Certified. Just one year ago, the Tlingit-Haida Regional Housing Authority, in Juneau, Alaska, celebrated the grand opening of its Five Star Plus, energy-efficient Saxman Senior Center. And the Ketchikan community in southeast Alaska completed a 12-unit, condo-style building to house elders, which is the first building in that area to be certified LEED Silver. "The Puyallup Tribe in Tacoma has 10 units of new affordable housing that is certified LEED Platinum," he continued. "The Isleta Pueblo in New Mexico has used the innovative method of lava block construction to build 20 single-family homes. They realized a 50 percent cost savings over conventional construction techniques. The homes have maintenance-free exteriors, Energy Star appliances and fixtures, and the materials are termite-resistant and impervious to wind damage. The development created job training and employment opportunities for [the] local community."

On the other hand, the view from American Indian housing leaders showed a much different picture. Russell Sossamon, executive director of the Choctaw Nation Housing Authority, based in Durant, Okla., noted that significant economic pressures have weighed heavily on Choctaw tribal members. "Approximately 9,880 households within the Choctaw Nation's service area are considered low income, meaning they have annual incomes of less than 80 percent of the national median annual income," he said. "Of those households, an astounding 29.7 percent earn only between 30 percent and 50 percent of the national median annual income, and even worse, 29.8 percent earn less than 30 percent of the national median annual income.

Approximately 1,400 households within the Choctaw Nation's service area are overcrowded or lack a kitchen or plumbing. Of the households within the Choctaw Nation's service area, 1,939 households have a house-cost burden greater than 50 percent of their annual income. "In starkest terms, during the last fiscal year, the Choctaw Nation Housing Authority had a shortfall of 9,080 low-income units," Sossamon continued. "In sum, there is a severe housing shortage in our service area's tribal communities, resulting in overcrowded conditions. Many of the homes that do exist lack basic amenities that most Americans take for granted, such as full kitchens and plumbing, and even then, many of the existing homes are in need of substantial repairs."

Sossamon pointed to the Section 184 Loan Guarantee Program created by the Housing and Community Development Act of 1992 as the primary federal product to address the lack of mortgage lending in Indian Country. However, he added that this HUD-administered program has seen its share of hiccups. "It should be noted that fewer than 20 percent of the Section 184 loans made to tribal members have been made on tribal trust or individual allotment land," he said. "More than half of the Section 184 loans have been made in Alaska and Oklahoma, and because of the unique non-reservation system of land tenure for most Indian and Alaska Native groups in those states, nearly all of those loans were made for homes on fee simple land rather than trust land. "In March of this year, HUD temporarily suspended the processing of new Section 184 loan applications because of an apparent exhaustion at the time of program funding for current fiscal year 2013," he added. "With the passage of the latest Continuing Resolution by Congress to fund the federal government through September of this year, funding for the Section 184 program, as well as the cap on the amount of loans that can be guaranteed under the program, were increased. As a result, HUD has stated that the suspension of the Section 184 program has been lifted, and the program should be back in working order sometime this month."

However, the Section 184 program is not the only vehicle for encouraging tribal housing development. Two tribal leaders at the hearing spoke of vehicles that encouraged a greater degree of self sufficiency and less HUD input. Paul Iron Cloud, CEO of the Oglala Sioux (Lakota) Housing Authority at Pine Ridge Reservation, S.D., called to task the flaws within the federal Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA), which is also administered by HUD. "Sadly, in 2013, our housing - and tribal housing on many similarly situated reservations and Alaskan Native communities - is far worse today than 17 years ago," he said. "Though NAHASDA provides us and many other tribes and tribal housing entities valuable resources, because of stagnant and reduced funding levels as well as flawed funding allocation methods, we and a large number of other tribes today have the worst housing in the United States. NAHASDA funding levels limit us to building on average no more than 30 to 40 units a year, yet we currently need 4,000 new units and 1,000 homes repaired. The result is that we now have the most overcrowded housing in this country."

Iron Cloud said that his tribal nation has joined with four other tribal housing programs to create the Dakota Housing Needs Assessment Pilot Project as a means of fixing the problems facing this demographic. "We will each conclude statistically accurate housing surveys later this spring on each of our reservations," he said. "The project is designed to improve tribal data and program management. It will also give each of us the ability to do the 'census challenges' that NAHASDA permits us to make under its block grant allocation formula. However, if results should prove out, we believe that this pilot project could have nationwide application and could change how housing need is determined on reservations and result in better allocation of federal tribal housing funds."

Cheryl A. Causley, chairwoman of the National American Indian Housing Council, based in Sault Sainte Marie, Mich., advocated the value of Native Community Development Financial Institutions (Native CDFIs) to leverage resources for homeownership. The Native CDFIs are administered by the U.S. Department of the Treasury, not HUD, and Causley noted that these institutions "may also attract financial support from banks and other lenders and are especially conducive to tribal housing programs that seek focus on homeownership loans." Causley cited one of the tribal nations mentioned briefly by Boyd as a successful example of Native CDFI funding. "The Ho-Chunk Community Development Corp. (HCCDC) is an emerging CDFI and was formed by and partners with the Winnebago Tribe and its entities," she said. "A goal of HCCDC is to decrease substandard housing, increase housing opportunity, increase clients' ability to access housing and increase capital available locally.

The Winnebago Reservation lacks affordable housing, and tribal members who are able to afford a mortgage are forced to live elsewhere. Other tribal members lack the funds for the initial down payment to purchase a home. "Using the Winnebago Tribe's other private subsidiary, Ho-Chunk Inc., the HCCDC and the Winnebago Tribe have worked together to develop a Housing Down Payment Assistance Program that provides a significant portion of a standard down payment for a new homeowner," she added. "The homeowner is required to go through a special financial and homeownership education course and must meet other criteria to qualify. In 2010, Ho-Chunk Inc. and the Winnebago Tribe authorized a $1 million Housing Stimulus Program to set aside Ho-Chunk Inc. dividends and other tax revenues to offer $50,000 in down payment assistance to up to 20 new homeowners who build a home on the Winnebago Reservation. Through these combined efforts, housing on their reservation is more affordable, and tribal members can start building the traditional wealth that other non-Native homeowners have gained.