Server Maker Pushes Performance, Not Price, To Profit and FHA Chief: Reserves Rebuilding, No Repeat Of ‘Subprime’ Crisis

“I don’t know if there’s ever been a worse year in the period we’ve been tracking it,” said Gartner analyst Jeffrey Hewitt. According to IDC, worldwide server revenue fell 18.9% last year to $43 billion. But the fourth quarter showed signs of hope. Sales were still down from a year earlier, but they rose from the previous quarter. And two areas and blade servers showed a particular rebound.

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Those two areas are specialties of Super Micro Computer (SMCI). The 17-year-old company has been using x86 architecture to build its server systems for years. It has also been selling blade servers, so called because of their super-thin design, since 2007.

Supermicro, as it calls itself for short, takes pride in being at the leading edge of technology. It has little choice since it’s not in a position to compete on price, says Chief Executive Charles Liang. [Read the full article]

“While its Capital Reserve Account has decreased too quickly, FHA is not ‘the next subprime’ as some have suggested,” he said in prepared testimony to the House Financial Services Subcommittee on Housing and Community Opportunity. The panel posted his testimony, set for delivery at a Thursday hearing on FHA reform, on its Web site.

“Unlike subprime lenders, FHA requires that borrowers demonstrate they can pay their mortgage by verifying their income and employment,” Stevens said, noting that the subprime delinquencies are 240% more than FHA delinquencies.

“Credit and risk controls were antiquated. Enforcement was weak. And our personnel resources and IT systems were inadequate,” he said, noting FHA credit policy changes have been made to help rebuild reserves.

FHA’s reserves are just 0.53% of the value of the thousands of U.S. home mortgages it insures, vs. the 2% required by law, according to a study. [Read the full article]

Simon Property Group’s (SPG) CEO says a revised plan by General Growth Properties to emerge from bankruptcy would not pressure his firm to sweeten its own $10 billion offer.

Simon chief David Simon, who spoke at a New York University conference Thursday, said GGP’s proposal lacks certainty despite its new financial backing. Top U.S. mall owner Simon last month offered to buy No. 2 GGP in a plan supported by many GGP unsecured creditors.

Monday GGP set forth a competing plan in which William Ackman’s Pershing Square Capital Management and Fairholme Capital Management would invest up to $3.93 billion. That has backing from Brookfield Asset Management (BAM). Pershing is GGP’s largest shareholder, Fairholme its largest debt holder.

The nation’s No. 2 mall owner surged 3.9% to 14.01 in its first day of trading on the NYSE since filing bankruptcy in April. General Growth Properties (GGP) recently received a $10 bil takeover offer from Simon Property Group (SPG). [Read the full article]

First-timers comprised 47% of all buyers last year, according to the National Association of Realtors. That’s the highest percentage on record. Many young buyers are getting down payment money from parents, some of whom are co-signing loans too. But parents, grandparents and other relatives who want to help should educate themselves before jumping in, for everybody’s safety.

Loan rules have tightened in the past year, say mortgage specialists and real estate agents, and present a moving target. Buyers with gift money or a possible co-signer must meet specific requirements.

“Loans are much harder to get than a year ago,” said Eric Glassoff, an agent with Coldwell Banker in Brookline, Mass. Now lenders are “questioning everything.”

Etiquette dictates that gifts should be accepted graciously, without questions. Not so, say today’s lenders. [Read the full article]

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