10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended November 30, 2006

Commission file number 1-11749

Lennar Corporation

(Exact name of registrant as specified in its charter)

Delaware	95-4337490
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

700 Northwest 107th Avenue, Miami, Florida 33172

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (305) 559-4000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Class A Common Stock, par value 10¢	New York Stock Exchange
Class B Common Stock, par value 10¢	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

YES  þ  NO  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES  ¨  NO  þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES   þ  NO  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer   þ Accelerated filer  ¨ Non-accelerated filer  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES  ¨  NO  þ

The aggregate market value of the registrant’s Class A and Class B common stock held by non-affiliates of the registrant (124,270,835 Class A shares and 10,843,179 Class B shares) as of May 31, 2006, based on the closing sale price per share as reported by the New York Stock Exchange on such date, was $6,431,999,899.

As of January 31, 2007, the registrant had outstanding 127,302,839 shares of Class A common stock and 31,234,563 shares of Class B common stock.

DOCUMENTS INCORPORATED BY REFERENCE:

Related Section	Documents
III	Definitive Proxy Statement to be filed pursuant to Regulation 14A on or before March 30, 2007.

PART I

Item 1.    Business.

Overview of Lennar Corporation

We are one of the nation’s largest homebuilders and a provider of financial services. Our homebuilding operations include the construction and sale of single-family attached and detached homes, and to a lesser extent multi-level buildings, as well as the purchase, development and sale of residential land directly and through unconsolidated entities in which we have investments. We have grouped our homebuilding activities into three reportable segments, which we refer to as Homebuilding East, Homebuilding Central and Homebuilding West. Information about homebuilding activities in states which are not economically similar to other states in the same geographic area is grouped under “Homebuilding Other.” Our reportable homebuilding segments and Homebuilding Other have divisions located in the following states:

East: Florida, Maryland, New Jersey and Virginia

Central: Arizona, Colorado and Texas

West: California and Nevada

Other: Illinois, Minnesota, New York, North Carolina and South Carolina

We have one Financial Services reportable segment that provides mortgage financing, title insurance, closing services and other ancillary services (including personal lines insurance, high-speed Internet and cable television) for both buyers of our homes and others. We sell substantially all of the loans that we originate in the secondary mortgage market. Our Financial Services segment operates generally in the same states as our homebuilding segments, as well as other states. For financial information about both our homebuilding and financial services operations, you should review Management’s Discussion and Analysis of Financial Condition and Results of Operations, which is Item 7 of this Report, and our consolidated financial statements and the notes to our consolidated financial statements, which are included in Item 8 of this Report.

A Brief History of Our Growth

1954:	We were founded as a local Miami homebuilder.
1969:	We began developing, owning and managing commercial and multi-family residential real estate.
1971:	We completed our initial public offering.
1972:	Our common stock was listed on the New York Stock Exchange. We also entered the Arizona homebuilding market.
1986:	We acquired Development Corporation of America in Florida.
1991:	We entered the Texas homebuilding market.
1992:	We expanded our commercial operations by acquiring, through a joint venture, a portfolio of loans, mortgages and properties from the Resolution Trust Corporation.
1995:	We entered the California homebuilding market through the acquisition of Bramalea California, Inc.
1996:	We expanded in California through the acquisition of Renaissance Homes, and significantly expanded operations in Texas with the acquisitions of the assets and operations of both Houston-based Village Builders and Friendswood Development Company, and acquired Regency Title.
1997:	We completed the spin-off of our commercial real estate investment business to LNR Property Corporation. We continued our expansion in California through homesite acquisitions and investments in unconsolidated entities. We also acquired Pacific Greystone Corporation, which further expanded our operations in California and Arizona and brought us into the Nevada homebuilding market.
1998:	We acquired the properties of two California homebuilders, ColRich Communities and Polygon Communities, acquired a Northern California homebuilder, Winncrest Homes, and acquired North American Title with operations in Arizona, California and Colorado.
1999:	We acquired Eagle Home Mortgage with operations in Nevada, Oregon and Washington and Southwest Land Title in Texas.

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2000:	We acquired U.S. Home Corporation, which expanded our operations into New Jersey, Maryland, Virginia, Minnesota, Ohio and Colorado and strengthened our position in other states. We expanded our title operations in Texas through the acquisition of Texas Professional Title.
2002:	We acquired Patriot Homes, Sunstar Communities, Don Galloway Homes, Genesee Company, Barry Andrews Homes, Cambridge Homes, Pacific Century Homes, Concord Homes and Summit Homes, which expanded our operations into the Carolinas and the Chicago, Baltimore and Central Valley, California homebuilding markets and strengthened our position in several existing markets. We also acquired Sentinel Title with operations in Maryland and Washington, D.C.
2003:	We acquired Seppala Homes and Coleman Homes, which expanded our operations in South Carolina and California. We also acquired Mid America Title in Illinois.
2004:	We acquired The Newhall Land and Farming Company through an unconsolidated entity of which we and LNR Property Corporation each own 50%. We expanded into the San Antonio, Texas homebuilding market by acquiring the operations of Connell-Barron Homes and entered the Jacksonville, Florida homebuilding market by acquiring the operations of Classic American Homes. Through acquisitions, we also expanded our mortgage operations in Oregon and Washington. We expanded our title and closing operations into Minnesota through the acquisition of Title Protection, Inc.
2005:	We entered the metropolitan New York City and Boston markets by acquiring, directly and through a joint venture, rights to develop a portfolio of properties in New Jersey facing mid-town Manhattan and waterfront properties near Boston. We also entered the Reno, Nevada market and then expanded in Reno through the acquisition of Barker Coleman. We expanded our presence in Jacksonville through the acquisition of Admiral Homes.

2006 Business Developments

During the second half of 2006, the market conditions in the homebuilding industry deteriorated. As a result, we evaluated our balance sheet for impairment on an asset-by-asset basis. Based on this assessment in 2006, we recorded $501.8 million of inventory valuation adjustments and $126.4 million of valuation adjustments to our investments in unconsolidated entities. This market deterioration was driven primarily by excess supply as speculators reduced purchases and returned homes to the market as well as negative customer sentiment surrounding the general homebuilding market. We also experienced slower sales (down 3% in 2006) and higher cancellation rates (29% in 2006) which have impacted most of our markets and therefore, we made greater use of sales incentives to generate sales in order to build-out our inventory, deliver our backlog and convert inventory into cash. The use of these sales incentives had a negative impact on gross margins.

Homebuilding Operations

Overview

We primarily sell single-family attached and detached homes, and to a lesser extent, multi-level buildings, in communities targeted to first-time, move-up and active adult homebuyers. The average sales price of a Lennar home was $315,000 in fiscal 2006. We operate primarily under the Lennar brand name and market our homes primarily under our Everything’s Included^® program.

Through our own efforts and unconsolidated entities in which we have investments, we are involved in all phases of planning and building in our residential communities including land acquisition, site planning, preparation and improvement of land and design, construction and marketing of homes. We view unconsolidated entities as a means to both expand our market opportunities and manage our risks. For additional information about our investments in and relationships with unconsolidated entities, see Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Report.

Management and Operating Structure

We balance a local operating structure with centralized corporate level management. Decisions related to our overall strategy, acquisitions of land and businesses, risk management, financing, cash management and information systems are centralized at the corporate level. Our local operating structure encompasses both land and homebuilding divisions, which are managed by individuals who generally have significant experience in the homebuilding industry and, in most instances, in their particular markets. Our land divisions are responsible for

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operating decisions regarding land identification, entitlement and development and the management of inventory levels for our planned growth. Our homebuilding divisions are responsible for community development, home design, evenflow construction and marketing our homes primarily under our Everything’s Included^® program.

Diversified Program of Property Acquisition

We generally acquire land for development and for the construction of homes that we sell to homebuyers. Land is subject to specified underwriting criteria and is acquired through our diversified program of property acquisition consisting of the following:

• Acquiring land directly from individual land owners/developers or homebuilders,

• Acquiring local or regional homebuilders that own, or have options to purchase, land in strategic markets,

• Acquiring land through option contracts, which generally enables us to defer acquiring portions of properties owned by third parties (including land funds) until we are ready to build homes on these properties, and

• Acquiring parcels of land through joint ventures, primarily to reduce and share our risk, among other factors, by limiting the amount of our capital invested in land, while increasing our access to potential future homesites and allowing us to participate in strategic ventures. We also acquire land through option contracts with our joint ventures.

At November 30, 2006, we owned 92,325 homesites and had access through option contracts to an additional 189,279 homesites, of which 94,758 were through option contracts with third parties and 94,521 were through option contracts with unconsolidated entities in which we have investments. At November 30, 2005, we owned 102,687 homesites and had access through option contracts to an additional 222,119 homesites, of which 127,013 were through option contracts with third parties and 95,106 were through option contracts with unconsolidated entities in which we have investments.

Construction and Development

We generally supervise and control the development of land and the design and building of our residential communities with a relatively small labor force. We hire subcontractors for site improvements and virtually all of the work involved in the construction of homes. Generally, arrangements with our subcontractors provide that our subcontractors will complete specified work in accordance with price schedules and applicable building codes and laws. The price schedules may be subject to change to meet changes in labor and material costs or for other reasons. We believe that the sources and availability of raw materials to our subcontractors are adequate for our current and planned levels of operation. We generally do not own heavy construction equipment. We finance construction and land development activities primarily with cash generated from operations and public debt issuances, as well as cash borrowed under our revolving credit facility, commercial paper program and unsecured, fixed-rate notes.

Marketing

We offer a diversified line of homes for first-time, move-up and active adult homebuyers. With homes priced from under $100,000 to above $1,000,000 and available in a variety of environments ranging from urban infill communities to golf course communities, we are focused on providing homes for a wide spectrum of buyers. Our Everything’s Included^® marketing program simplifies the homebuying experience by including desirable features as standard items. This marketing program enables us to differentiate our homes from those of our competitors by creating value through standard upgrades and competitive pricing, while reducing construction and overhead costs through a simplified manufacturing process, product standardization and volume purchasing. We sell our homes primarily from models that we have designed and constructed.

We employ sales associates who are paid salaries, commissions or both to complete on-site sales of homes. We also sell homes through independent brokers. We advertise our communities in newspapers, radio advertisements and other local and regional publications, on billboards and on the Internet, including our website, www.lennar.com. In addition, we advertise our active adult communities in areas where prospective active adult homebuyers live.

We have participated in charitable down-payment assistance programs for a small percentage of our homebuyers. Through these programs, we make a donation to a non-profit organization that provides financial assistance to a homebuyer who would not otherwise have sufficient funds for a down payment.

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Quality Service

We strive to continually improve homeowner customer satisfaction throughout the pre-sale, sale, construction, closing and post-closing periods. Through the participation of sales associates, on-site construction supervisors and customer care associates, all working in a team effort, we strive to create a quality homebuying experience for our customers, which we believe leads to enhanced customer retention and referrals.

The quality of our homes is substantially affected by the efforts of on-site management and others engaged in the construction process, by the materials we use in particular homes or by other similar factors. Currently, most management team members’ bonus plans are, in part, contingent upon achieving certain customer satisfaction standards.

We currently have a “Heightened Awareness” program, which is a focused initiative designed to objectively evaluate and measure the quality of construction in our communities. In addition to our “Heightened Awareness” program, we have a quality assurance program in certain markets in which we employ third-party consultants to inspect our homes during the construction process. These inspectors provide us with inspection reports and follow-up verification. We also obtain independent surveys of selected customers through a third-party consultant and use the survey results to further improve our standard of quality and customer satisfaction.

We warrant our new homes against defective material and workmanship for a minimum period of one year after the date of closing. Although we subcontract virtually all segments of construction to others and our contracts call for the subcontractors to repair or replace any deficient items related to their trade, we are primarily responsible to the homebuyer for the correction of any deficiencies.

Deliveries

The table below indicates the number of deliveries for each of our homebuilding segments and Homebuilding Other during our last three fiscal years:

	2006	2005	2004
East	14,859	11,220	10,438
Central	17,069	15,448	13,126
West	13,333	11,731	9,079
Other	4,307	3,960	3,561
Total	49,568	42,359	36,204

Of the total home deliveries listed above, 2,536, 1,477 and 1,015, respectively, represent deliveries from unconsolidated entities for the years ended November 30, 2006, 2005 and 2004.

Despite the fact that deliveries for the full fiscal 2006 year increased in each of our homebuilding segments and Homebuilding Other, during the fourth quarter of 2006, deliveries were lower in our Homebuilding Central and West segments and Homebuilding Other, compared to the fourth quarter of 2005.

Backlog

Backlog represents the number of homes under sales contracts. Homes are sold using sales contracts, which are generally accompanied by sales deposits. In some instances, purchasers are permitted to cancel sales contracts if they fail to qualify for financing or under certain other circumstances. We experienced a cancellation rate of 29% in 2006, compared to 17% and 16%, respectively, in 2005 and 2004. Although we experienced a significant increase in our cancellation rate during 2006, we remain focused on reselling these homes, which, in many instances, includes the use of higher sales incentives, to avoid the build up of excess inventory. We do not recognize revenue on homes under sales contracts until the sales are closed and title passes to the new homeowners, except for our multi-level buildings under construction for which revenue is recognized under percentage-of-completion accounting.

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The table below indicates the backlog dollar value for each of our homebuilding segments and Homebuilding Other as of the end of our last three fiscal years:

	2006		2005	2004
	(In thousands)
East	$	1,460,213	2,774,396	2,104,959
Central		850,472	1,210,257	911,303
West		1,328,617	2,374,646	1,597,185
Other		341,126	524,939	441,826
Total	$	3,980,428	6,884,238	5,055,273

Of the dollar value of homes in backlog listed above, $478,707, $590,129 and $644,839, respectively, represent the backlog dollar value from unconsolidated entities at November 30, 2006, 2005 and 2004.

As of December 31, 2006 and 2005, the backlog dollar value was $3.6 billion and $6.7 billion, respectively, of which $0.5 billion in 2006 and 2005 represents the backlog dollar value from unconsolidated entities.

Financial Services Operations

Mortgage Financing

We provide a full spectrum of conventional, FHA-insured and VA-guaranteed, first and second lien residential mortgage loan products to our homebuyers and others through our financial services subsidiaries, Universal American Mortgage Company, LLC and Eagle Home Mortgage, LLC, located generally in the same states as our homebuilding segments and Homebuilding Other, as well as other states. In 2006, our financial services subsidiaries provided loans to 66% of our homebuyers who obtained mortgage financing in areas where we offered services. Because of the availability of mortgage loans from our financial services subsidiaries, as well as independent mortgage lenders, we believe access to financing has not been, and is not, a significant obstacle for most purchasers of our homes.

During 2006, we originated approximately 41,800 mortgage loans totaling $10.5 billion. Substantially all of those loans were sold within a short period in the secondary mortgage market on a servicing released, non-recourse basis; however, we remain liable for certain limited representations and warranties related to loan sales.

We have a corporate risk management policy under which we hedge our interest rate risk on rate-locked loan commitments and loans held-for-sale to mitigate exposure to interest rate fluctuations. We finance our mortgage loan activities with borrowings under our financial services subsidiaries’ warehouse lines of credit or from our general corporate funds.

Title Insurance and Closing Services

We provide title insurance and title and closing services and other ancillary services to our homebuyers and others. We provided title and closing services for approximately 161,300 real estate transactions, issued approximately 195,700 title insurance policies and provided title insurance underwriting during 2006 through subsidiaries of North American Title Insurance Company. Title and closing services and title insurance underwriting are provided by agency subsidiaries in Arizona, California, Colorado, District of Columbia, Florida, Illinois, Maryland, Minnesota, Nevada, New Jersey, Pennsylvania, Texas, Virginia and Wisconsin.

Communication Services

Lennar Communications Ventures oversees our interests and activities in relationships with providers of advanced communication services and provides cable television and high-speed Internet services to residents of our communities and others. At December 31, 2006, we had approximately 11,300 subscribers across California, Florida and Texas.

Seasonality

We have historically experienced variability in our results of operations from quarter-to-quarter due to the seasonal nature of the homebuilding business. Currently, we are focusing our efforts on asset management and our homebuilding manufacturing process, in order to achieve a more evenflow production of home deliveries

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throughout the year. Evenflow production involves determining the appropriate production levels based on demand in the market, and is driven by a defined production schedule designed to produce a more consistent level of starts and deliveries throughout the year in order to gain production efficiencies. If our efforts at evenflow production are successful, the result should be a reduction in inventory cycle time and more consistent start, completion and delivery dates.

Competition

The residential homebuilding industry is highly competitive. We compete for homebuyers in each of the market regions where we operate with numerous national, regional and local homebuilders, as well as with resales of existing homes and with the rental housing market. We compete for homebuyers on the basis of a number of interrelated factors including location, price, reputation, amenities, design, quality and financing. In addition to competition for homebuyers, we also compete with other homebuilders for desirable properties, raw materials and reliable, skilled labor. We compete for land buyers with third parties in our efforts to sell land to homebuilders and others. We believe we are competitive in the market regions where we operate primarily due to our:

• Balance sheet, where we continue to focus on liquidity while maintaining a strong capital structure;

• Excellent land position, particularly in land-constrained markets;

• Intense focus on salesmanship and increasing our access to various marketing channels; and

• Pricing to current market conditions through higher sales incentives offered to homebuyers.

Our financial services operations compete with other mortgage lenders, including national, regional and local mortgage bankers and brokers, banks, savings and loan associations and other financial institutions, in the origination and sale of mortgage loans. Principal competitive factors include interest rates and other features of mortgage loan products available to the consumer. We compete with other title insurance agencies and underwriters for closing services and title insurance. Principal competitive factors include service and price. We compete with other communication service providers in the sale of high-speed Internet and cable television services. Principal competitive factors include price, quality, service and availability.

Regulation

Homes and residential communities that we build must comply with state and local laws and regulations relating to, among other things, zoning, construction permits or entitlements, construction material requirements, density requirements, and requirements relating to building design and property elevation, building codes and handling of waste. These include laws requiring the use of construction materials that reduce the need for energy-consuming heating and cooling systems. These laws and regulations are subject to frequent change and often increase construction costs. In some instances, we must comply with laws that require commitments from us to provide roads and other offsite infrastructure to be in place prior to the commencement of new construction. These laws and regulations are usually administered by counties and municipalities and may result in fees and assessments or building moratoriums. In addition, certain new development projects are subject to assessments for schools, parks, streets and highways and other public improvements, the costs of which can be substantial.

The residential homebuilding industry is also subject to a variety of local, state and federal statutes, ordinances, rules and regulations concerning the protection of health and the environment. These environmental laws include such areas as storm water and surface water management, soil, groundwater and wetlands protection, subsurface conditions and air quality protection and enhancement. Environmental laws and existing conditions may result in delays, may cause us to incur substantial compliance and other costs and may prohibit or severely restrict homebuilding activity in environmentally sensitive regions or areas.

In recent years, several cities and counties in which we have developments have submitted to voters “slow growth” initiatives and other ballot measures that could impact the affordability and availability of land suitable for residential development within those localities. Although many of these initiatives have been defeated, we believe that if similar initiatives were approved, residential construction by us and others within certain cities or counties could be seriously impacted.

In order to make it possible for some of our homebuyers to obtain FHA-insured or VA-guaranteed mortgages, we must construct the homes they buy in compliance with regulations promulgated by those agencies.

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Various states have statutory disclosure requirements relating to the marketing and sale of new homes. These disclosure requirements vary widely from state-to-state. In addition, some states require that each new home be registered with the state at or before the time title is transferred to a buyer (e.g., the Texas Residential Construction Commission Act).

In some states, we are required to be registered as a licensed contractor and comply with applicable rules and regulations. In various states, our new home consultants are required to be registered as licensed real estate agents and to adhere to the laws governing the practices of real estate agents.

Our mortgage and title subsidiaries must comply with applicable real estate laws and regulations. The subsidiaries are licensed in the states in which they do business and must comply with laws and regulations in those states. These laws and regulations include provisions regarding capitalization, operating procedures, investments, lending and privacy disclosures, forms of policies and premiums.

Our cable subsidiary is generally required to both secure a franchise agreement with each locality in which it operates and to satisfy requirements of the Federal Communications Commission in the ordinary conduct of its business.

A subsidiary of The Newhall Land and Farming Company, (“Newhall”) of which we currently, indirectly own 50%, provides water to a portion of Los Angeles County, California. This subsidiary is subject to extensive regulation by the California Public Utilities Commission. In December 2006, subsequent to our fiscal year end, we and LNR Property Corporation entered into an agreement to admit a new strategic partner into our LandSource joint venture, which owns Newhall (See Note 22 to our consolidated financial statements in Item 8 of this Report).

Employees

At December 31, 2006, we employed 12,605 individuals of whom 9,018 were involved in our homebuilding operations and 3,587 were involved in our financial services operations. We believe our relations with our employees are good. We do not have collective bargaining agreements relating to any of our employees. However, we subcontract many phases of our homebuilding operations and some of the subcontractors we use have employees who are represented by labor unions.

Relationship with LNR Property Corporation

In 1997, we transferred our commercial real estate investment and management business to LNR Property Corporation (“LNR”), and spun-off LNR to our stockholders. As a result, LNR became a publicly-traded company, and the family of Stuart A. Miller, our President, Chief Executive Officer and a Director, which had voting control of us, became the controlling shareholder of LNR.

Since the spin-off, we have entered into a number of joint ventures and other transactions with LNR. Many of the joint ventures were formed to acquire and develop land, part of which was subsequently sold to us or other homebuilders for residential building and part of which was subsequently sold to LNR for commercial development. Because for a number of years after the spin-off LNR was controlled by Mr. Miller and his family, all significant transactions we or our subsidiaries engaged in with LNR or entities in which it had an interest were reviewed and approved by the Independent Directors Committee of our Board of Directors.

In January 2004, a company of which we and LNR each own 50% acquired The Newhall Land and Farming Company (“Newhall”) for approximately $1 billion. The purchase price was paid with (1) approximately $200 million we contributed to the jointly-owned company, (2) approximately $200 million LNR contributed to the jointly-owned company, (3) a $400 million term loan borrowed under $600 million of bank financing obtained by the jointly-owned company and another company of which we and LNR each owned 50% and (4) approximately $217 million from the proceeds of a sale by Newhall of income-producing properties to LNR. Newhall owns approximately 48,000 acres in California, including approximately 34,000 acres in north Los Angeles County that includes two master-planned communities. In connection with the acquisition, we agreed to purchase 687 homesites and received options to purchase an additional 623 homesites from Newhall.

On November 30, 2004, we and LNR each transferred our interests in most of our joint ventures to the jointly-owned company that had acquired Newhall, and that company was renamed LandSource Communities Development LLC (“LandSource”). In December 2006, subsequent to our fiscal year end, we and LNR entered into an agreement to admit a new strategic partner into our LandSource joint venture (See Note 22 to our consolidated financial statements in Item 8 of this Report).

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In February 2005, LNR was acquired by a privately-owned entity. Although Mr. Miller’s family acquired a 20.4% financial interest in that privately-owned entity, this interest is non-voting and neither Mr. Miller nor anybody else in his family is an officer or director, or otherwise is involved in the management, of LNR or its parent. Nonetheless, because the Miller family has a 20.4% financial, non-voting, interest in LNR’s parent, significant transactions with LNR or entities in which it has an interest are still reviewed and approved by the Independent Directors Committee of our Board of Directors.

NYSE Certifications

We submitted our 2005 Annual CEO Certification to the New York Stock Exchange on April 20, 2006. The certification was not qualified in any respect.

Available Information

Our corporate website is www.lennar.com. We make available on our website, free of charge, our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to these reports, as soon as reasonably practicable after we electronically file these documents with, or furnish them to, the Securities and Exchange Commission. Information on our website is not part of this document.

Our website also includes printable versions of our Corporate Governance Guidelines, our Code of Business Conduct and Ethics and the charters for each of our Audit, Compensation and Nominating and Corporate Governance Committees of our Board of Directors. Each of these documents is also available in print to any stockholder who requests a copy by addressing a request to:

Lennar Corporation

Attention: Office of the General Counsel

700 Northwest 107^th Avenue

Miami, Florida 33172

Item 1A.    Risk Factors.

If any of the following risks develop into actual events, our business, financial condition, results of operations, cash flows, strategies and prospects could be materially adversely affected.

Homebuilding Market and Economic Risks

A significant decline in demand for new homes coupled with an increase in the inventory of available new homes adversely affects our sales volume and pricing.

In 2006, the homebuilding industry experienced a significant decline in demand for newly built homes in many of our markets. The decline followed an unusually long period of strong demand for new homes. Some of this strong demand resulted from “speculators” purchasing new homes with the intention of selling them at a profit, rather than with the intention of living in them. In many instances, the speculators do not have the financial resources to retain the purchased homes, and are selling these homes at depressed prices. Inventories of new homes have also increased as a result of increased cancellation rates on pending contracts as new homebuyers sometimes find it more advantageous to forfeit a deposit than to complete the purchase of the home. This combination of lower demand and higher inventories affects both the number of homes we can sell and the prices at which we can sell them. We have no basis for predicting how long demand and supply will remain out of balance in markets where we operate or whether, even if demand and supply come back in balance, sales volumes or pricing will return to prior levels.

Demand for new homes is sensitive to economic conditions over which we have no control.

Demand for homes is sensitive to changes in economic conditions such as the level of employment, consumer confidence, consumer income, the availability of financing and interest rate levels. Although the market experienced some increase in mortgage interest rates during 2006, mortgage interest rates remain lower than their historical averages. If mortgage interest rates increase or if any of these other economic factors adversely change nationally, or in the markets where we operate, the ability or willingness of prospective buyers to purchase new homes could be adversely affected and cancellations of pending contracts could further increase, resulting in a decrease in our revenues and earnings.

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Increasing interest rates could cause defaults for homebuyers who financed homes using non-traditional financing products, which could increase the number of homes available for resale.

During the recent time of high demand in the homebuilding industry, many homebuyers financed their purchases using non-traditional adjustable rate or interest only mortgages or other mortgages, including sub-prime mortgages, that involve significantly lower initial monthly payments. As a result, new homes have been more affordable in recent years. However, as monthly payments for these homes increase either as a result of increasing adjustable interest rates or as a result of principal payments coming due, some of these homebuyers could default on their payments and have their homes foreclosed, which would increase the inventory of homes available for resale. In addition, if lenders perceive deterioration in credit quality among homebuyers, lenders may eliminate some of the available non-traditional and sub-prime financing products or increase the qualifications needed for mortgages or adjust their terms to address any increased credit risk. In general, if mortgage rates increase or lenders make it more difficult for prospective buyers to finance home purchases, it could become more difficult or costly for customers to purchase our homes, which would have an adverse affect on our sales volume.

We sell substantially all of the loans we originate within a short period in the secondary mortgage market on a servicing released, non-recourse basis; however, we remain liable for certain limited representations and warranties related to loan sales and certain limited repurchase obligations in the event of early borrower default.

Inflation can adversely affect us, particularly in a period of declining home sale prices.

Inflation can have a long-term impact on us because increasing costs of land, materials and labor may require us to attempt to increase the sale prices of homes in order to maintain satisfactory margins. However, the increased inventory of new homes we are currently experiencing requires that we decrease prices in order to attempt to maintain sales volume. This deflation in sales price, in addition to impacting our margins on new homes, also reduces the value of our land inventory and makes it more difficult for us to recover the full cost of previously purchased land in new home sales prices or, if we choose, to dispose of land assets. In addition, depressed land values may cause us to walk away from deposits on option contracts if we cannot satisfactorily renegotiate the purchase price of the optioned land.

A decline in land values could result in impairment write-downs.

Some of the land we currently own was purchased at prices that reflected the recent high demand cycle in the homebuilding industry. As a result, during the fourth quarter of 2006 we recorded material inventory valuation adjustments. If market conditions continue to deteriorate, some of these assets may be subject to future impairment write-downs, decreasing the value of our assets as reflected on our balance sheet and adversely affecting our stockholders’ equity.

We face significant competition in our efforts to sell homes.

The homebuilding industry is highly competitive. We compete in each of our markets with numerous national, regional and local homebuilders. This competition with other homebuilders could reduce the number of homes we deliver, or cause us to accept reduced margins in order to maintain sales volume.

We also compete with the resale of existing homes, including foreclosed homes, sales by housing speculators and available rental housing. As demand for homes has slowed, competition, including competition with homes purchased for speculation rather than as places to live, has created increased downward pressure on the prices at which we are able to sell homes, as well as upon the number of homes we can sell.

Operational Risks

Homebuilding is subject to warranty and liability claims in the ordinary course of business that can be significant.

As a homebuilder, we are subject to home warranty and construction defect claims arising in the ordinary course of business. We are also subject to liability claims arising in the course of construction activities. We record warranty and other reserves for the homes we sell based on historical experience in our markets and our judgment of the qualitative risks associated with the types of homes built. We have, and many of our subcontractors have, general liability, property, errors and omissions, workers compensation and other business insurance. These insurance policies protect us against a portion of our risk of loss from claims, subject to certain self-insured retentions, deductibles and other coverage limits. However, because of the uncertainties inherent in these matters, we cannot provide assurance that our insurance coverage or our subcontractor arrangements will be adequate to address all warranty, construction defect and liability claims in the future. Additionally, the coverage offered by and the availability of general liability insurance for construction defects are currently limited and costly. There can be no assurance that coverage will not be further restricted and become even more costly.

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Natural disasters and severe weather conditions could delay deliveries, increase costs and decrease demand for new homes in affected areas.

Our homebuilding operations are located in many areas that are subject to natural disasters and severe weather. The occurrence of natural disasters or severe weather conditions can delay new home deliveries, increase costs by damaging inventories and negatively impact the demand for new homes in affected areas. Furthermore, if our insurance does not fully cover business interruptions or losses resulting from these events, our earnings, liquidity or capital resources could be adversely affected.

Supply shortages and other risks related to the demand for skilled labor and building materials could increase costs and delay deliveries.

Increased costs or shortages of skilled labor and/or lumber, framing, concrete, steel and other building materials could cause increases in construction costs and construction delays. We generally are unable to pass on increases in construction costs to customers who have already entered into sales contracts, as those sales contracts generally fix the price of the homes at the time the contracts are signed, which may be well in advance of the construction of the home. Sustained increases in construction costs may, over time, erode our margins, particularly if pricing competition restricts our ability to pass on any additional costs of materials or labor, thereby decreasing our margins.

We may not be able to acquire land suitable for residential homebuilding at reasonable prices, which could increase our costs and reduce our revenues, earnings and margins.

Our long-term ability to build homes depends upon our acquiring land suitable for residential building at reasonable prices in locations where we want to build. During the past few years, we have experienced an increase in competition for suitable land as a result of land constraints in many of our markets. As competition for suitable land increases, and as available land is developed, the cost of acquiring additional suitable land could rise, and in some areas no suitable land may be available at reasonable prices. Any land shortages or any decrease in the supply of suitable land at reasonable prices could limit our ability to develop new communities or result in increased land costs that we are not able to pass through to our customers. This could adversely impact our revenues, earnings and margins.

Reduced numbers of home sales force us to absorb additional costs.

We incur many costs even before we begin to build homes in a community. These include costs of preparing land and installing roads, sewage and other utilities, as well as taxes and other costs related to ownership of the land on which we plan to build homes. Reducing the rate at which we build homes extends the length of time it takes us to recover these costs. Also, we frequently acquire options to purchase land and make deposits that will be forfeited if we do not exercise the options within specified periods. Because of current market conditions, we have had to terminate some of these options, resulting in forfeiture of deposits we made with regard to the options.

We may be unable to obtain suitable financing and bonding for the development of our communities.

Our business requires that we are able to obtain financing for the development of our residential communities and to provide bonds to ensure the completion of our projects. We currently use our $2.7 billion credit facility to provide some of the financing we need. In addition, we have from time-to-time raised funds by selling debt securities into public and private capital markets. The willingness of lenders to make funds available to us could be affected by reductions in the amounts they are willing to lend to homebuilders generally, even if we continue to maintain a strong balance sheet. If we were unable to finance the development of our communities through our credit facility or other debt, or if we were unable to provide required surety bonds for our projects, our business operations and revenues could suffer materially.

Our competitive position could suffer if we were unable to take advantage of acquisition opportunities.

Our growth strategy depends in part on our ability to identify and purchase suitable acquisition candidates, as well as our ability to successfully integrate acquired operations into our business. Given current market conditions, executing this strategy by identifying opportunities to purchase at favorable prices companies that are having problems contending with the current difficult homebuilding environment may be particularly important. Not properly executing this strategy could put us at a disadvantage in our efforts to compete with other major homebuilders who are able to take advantage of such favorable acquisition opportunities.

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Our ability to continue to grow our business and operations in a profitable manner depends to a significant extent upon our ability to access capital on favorable terms.

At present, our access to capital is enhanced by the fact that our senior debt securities have an investment-grade credit rating from each of the principal credit rating agencies. If we were to lose our investment-grade credit rating for any reason, it would become more difficult and costly for us to access the capital that is required in order to implement our business plans and achieve our growth objectives.

We might have difficulty integrating acquired companies into our operations.

The integration of operations of acquired companies with our operations, including the consolidation of systems, procedures, personnel and facilities, the relocation of staff, and the achievement of anticipated cost savings, economies of scale and other business efficiencies, presents significant challenges to our management, particularly if several acquisitions occur at the same time.

The performance of our joint venture partners is important to the continued success of our joint venture strategies.

Our joint venture strategy depends in large part on the ability of our joint venture partners to perform their obligations under our agreements with them. If a joint venture partner does not perform its obligations, we may be required to make significant financial expenditures or otherwise undertake the performance of obligations not satisfied by our partner at significant cost to us.

We could be hurt by the loss of key management personnel.

Our future success depends, to a significant degree, on the efforts of our senior management. Our operations could be adversely affected if key members of senior management cease to be active in our company.

Our Financial Services segment could have difficulty financing its activities.

Our Financial Services segment has warehouse lines of credit totaling $1.4 billion. It uses those lines to finance its lending activities until it accumulates sufficient mortgage loans to be able to sell them into the capital markets. These warehouse lines of credit mature in September 2007 ($700 million) and in April 2008 ($670 million). If we are unable to renew or extend these debt arrangements when they mature, our Financial Services segment’s mortgage lending activities may be adversely affected.

Regulatory Risks

Federal laws and regulations that adversely affect liquidity in the secondary mortgage market could hurt our business.

Recent federal laws and regulations could have the effect of curtailing the activities of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). These organizations provide significant liquidity to the secondary mortgage market. Any curtailment of their activities could increase mortgage interest rates and increase the effective cost of our homes, which could reduce demand for our homes and adversely affect our results of operations.

The federal financial institution agencies recently issued their final Interagency Guidance on Nontraditional Mortgage Products (“Guidance”). This Guidance applies to credit unions, banks and savings associations and their subsidiaries, and bank and savings association holding companies and their subsidiaries. Although the Guidance does not apply to independent mortgage companies, it likely will affect the origination operations of many mortgage companies that broker or sell nontraditional mortgage loan products to such entities. This Guidance could reduce the number of potential customers who could qualify for loans to purchase homes from us and others.

Government entities in regions where we operate have adopted or may adopt, slow or no growth initiatives, which could adversely affect our ability to build or timely build in these areas.

Some state and local governments in areas where we operate have approved, and others where we operate may approve, various slow growth or no growth homebuilding initiatives and other ballot measures that could negatively impact the availability of land and building opportunities within those jurisdictions. Approval of slow

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growth, no growth or similar initiatives (including the effect of these initiatives on existing entitlements and zoning) could adversely affect our ability to build or timely build and sell homes in the affected markets and/or create additional administrative and regulatory requirements and costs, which, in turn, could have an adverse effect on our future revenues and earnings.

Compliance with federal, state and local regulations related to our business could create substantial costs both in time and money, and some regulations could prohibit or restrict some homebuilding ventures.

We are subject to extensive and complex laws and regulations that affect the land development and homebuilding process, including laws and regulations related to zoning, permitted land uses, levels of density, building design, elevation of properties, water and waste disposal and use of open spaces. In addition, we are subject to laws and regulations related to workers’ health and safety. We also are subject to a variety of local, state and federal laws and regulations concerning the protection of health and the environment. In some of the markets where we operate, we are required to pay environmental impact fees, use energy-saving construction materials and give commitments to municipalities to provide certain infrastructure such as roads and sewage systems. We generally are required to obtain permits, entitlements and approvals from local authorities to commence and carry out residential development or home construction. Such permits, entitlements and approvals may, from time-to-time, be opposed or challenged by local governments, neighboring property owners or other interested parties, adding delays, costs and risks of non-approval to the process. Our obligation to comply with the laws and regulations under which we operate, and our obligation to ensure that our employees, subcontractors and other agents comply with these laws and regulations, could result in delays in construction and land development, cause us to incur substantial costs and prohibit or restrict land development and homebuilding activity in certain areas in which we operate.

Tax law changes could make home ownership more expensive or less attractive.

Significant expenses of owning a home, including mortgage interest expense and real estate taxes, generally are deductible expenses for the purpose of calculating an individual’s federal, and in some cases state, taxable income, subject to various limitations under current tax law and policy. If the federal government or a state government changes income tax laws, as has been discussed recently, to eliminate or substantially reduce these income tax deductions, then the after-tax cost of owning a new home would increase substantially. This could adversely impact demand for, and/or sales prices of, new homes.

Other Risks

We have a stockholder who can exercise significant influence over matters that are brought to a vote of our stockholders.

Stuart A. Miller, our President, Chief Executive Officer and a Director, has voting control, through personal holdings and family-owned entities, of Class A and Class B common stock that enables Mr. Miller to cast approximately 49% of the votes that may be cast by the holders of our outstanding Class A and Class B common stock combined. That probably gives Mr. Miller the power to control the election of our directors and the approval of matters that are presented to our stockholders. Mr. Miller’s voting power might discourage someone from acquiring us or from making a significant equity investment in us, even if we needed the investment to meet our obligations and to operate our business. Also, because of his voting power, Mr. Miller may be able to authorize actions in matters that are contrary to our other stockholders’ desires.

Item 1B.    Unresolved Staff Comments.

Not applicable.

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Executive Officers of Lennar Corporation

Robert J. Strudler, who served as Chairman of our Board of Directors since 2004, passed away on November 7, 2006. Prior to Mr. Strudler’s appointment as Chairman in December 2004, he served as Lennar’s Vice Chairman and Chief Operating Officer from May 2000 through November 2004. As of the date of this Report, our Board of Directors has not appointed a new Chairman.

The following individuals are our executive officers as of February 8, 2007:

Name	Position	Age
Stuart A. Miller	President and Chief Executive Officer	49
Jonathan M. Jaffe	Vice President and Chief Operating Officer	47
Richard Beckwitt	Executive Vice President	47
Bruce E. Gross	Vice President and Chief Financial Officer	48
Marshall H. Ames	Vice President	63
Diane J. Bessette	Vice President and Controller	46
Mark Sustana	Secretary and General Counsel	45

Mr. Miller has served as our President and Chief Executive Officer since 1997 and is one of our Directors. Before 1997, Mr. Miller held various executive positions with us.

Mr. Jaffe has served as Vice President since 1994 and has served as our Chief Operating Officer since December 2004. Before that time, Mr. Jaffe served as a Regional President in our Homebuilding Division. Additionally, prior to his appointment as Chief Operating Officer, Mr. Jaffe was one of our Directors from 1997 through June 2004.

Mr. Beckwitt has served as our Executive Vice President since March 2006. In this position, Mr. Beckwitt is involved in all operational aspects of our company, with a focus on new business and strategic growth opportunities. Mr. Beckwitt served on the Board of Directors of D.R. Horton, Inc. from 1993 to November 2003. From 1993 to March 2000, he held various executive officer positions at D.R. Horton, including President of the company.

Mr. Gross has served as Vice President and our Chief Financial Officer since 1997. Before that, Mr. Gross was Senior Vice President, Controller and Treasurer of Pacific Greystone Corporation.

Mr. Ames has served as Vice President since 1982 and has been responsible for Investor Relations since 2000.

Ms. Bessette joined us in 1995 and has served as our Controller since 1997. She was appointed a Vice President in 2000.

Mr. Sustana has served as our Secretary and General Counsel since 2005. Before joining Lennar, Mr. Sustana held various legal positions at GenTek, Inc., a manufacturer of communication products, industrial components and performance chemicals.

Item 2. Properties.

We lease and maintain our executive offices in an office complex in Miami, Florida. We also lease and maintain regional offices in California and Texas. Our homebuilding and financial services offices are located in the markets where we conduct business, primarily in leased space. We believe that our existing facilities are adequate for our current and planned levels of operation.

Because of the nature of our homebuilding operations, significant amounts of property are held as inventory in the ordinary course of our homebuilding business. We discuss these properties in the discussion of our homebuilding operations in Item 1 of this Report.

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Item 3. Legal Proceedings.

We are party to various claims and lawsuits which arise in the ordinary course of business. Although the specific allegations in the lawsuits differ, most of them involve claims that we failed to construct homes in particular communities in accordance with plans and specifications or applicable construction codes and seek reimbursement for sums allegedly needed to remedy the alleged deficiencies, assert contract issues or relate to personal injuries. Lawsuits of these types are common within the homebuilding industry. We do not believe that the ultimate resolution of these claims or lawsuits will have a material adverse effect on our business, financial position, results of operations or cash flows.

Item 4. Submission of Matters to a Vote of Security Holders.

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our Class A and Class B common stock are listed on the New York Stock Exchange under the symbols “LEN” and “LEN.B,” respectively. The following table shows the high and low sales prices for our Class A and Class B common stock for the periods indicated, as reported by the NYSE, and cash dividends declared per share:

	Class A Common Stock High/Low Prices				Cash Dividends Per Class A Share
Fiscal Quarter	2006		2005		2006		2005
First	$	66.44 – 55.23	$	62.49 – 44.15	16	¢	13 3/4	¢
Second	$	62.38 – 47.30	$	62.09 – 50.30	16	¢	13 3/4	¢
Third	$	49.10 – 38.66	$	68.86 – 57.46	16	¢	13 3/4	¢
Fourth	$	53.00 – 41.79	$	62.78 – 52.34	16	¢	16	¢
	Class B Common Stock High/Low Prices				Cash Dividends Per Class B Share
Fiscal Quarter	2006		2005		2006		2005
First	$	61.26 – 50.99	$	57.40 – 40.81	16	¢	13 3/4	¢
Second	$	57.55 – 43.71	$	57.07 – 46.90	16	¢	13 3/4	¢
Third	$	45.09 – 35.93	$	64.00 – 53.50	16	¢	13 3/4	¢
Fourth	$	48.97 – 39.25	$	58.12 – 48.96	16	¢	16	¢

As of January 31, 2007, the last reported sale price of our Class A common stock was $54.38 and the last reported sale price of our Class B common stock was $50.56. As of January 31, 2007, there were approximately 1,100 and 800 holders of record, respectively, of our Class A and Class B common stock.

On January 10, 2007, our Board of Directors declared a quarterly cash dividend of $0.16 per share for both our Class A and Class B common stock, which is payable on February 15, 2007 to holders of record at the close of business on February 5, 2007. We regularly pay quarterly dividends as set forth in the table above. We currently expect that comparable cash dividends will continue to be paid in the future although we have no commitment to do that.

In June 2001, our Board of Directors authorized a stock repurchase program to permit future purchases of up to 20 million shares of our outstanding common stock. During the three months and year ended November 30, 2006, we repurchased the following shares of our Class A and Class B common stock (table and footnote amounts in thousands, except per share amounts):

	Total Number of Shares Purchased		Average Price Paid Per Share				Total Number of Shares Purchased Under Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
	Class		Class
Period	A	B	A		B
December 1, 2005 to February 28, 2006*	8	—	$	63.48	$	—	—	12,450
March 1, 2006 to May 31, 2006*	4,555	447		54.40		48.56	5,000	7,450
June 1, 2006 to August 31, 2006*	56	672		44.62		40.93	672	6,778
September 1, 2006 to September 30, 2006*	—	1		—		43.52	—	—
October 1, 2006 to October 31, 2006	—	285		—		43.51	285	6,493
November 1, 2006 to November 30, 2006*	1	249		50.21		43.46	249	6,244
Total	4,620	1,654	$	54.30	$	43.82	6,206

* The above includes 67 shares of Class A common stock and 1 share of Class B common stock that we repurchased in connection with activity related to our equity compensation plans and were not repurchased as part of our publicly announced stock repurchase program.

The information required by Item 201(d) of Regulation S-K is provided under Item 12 of this document.

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Item 6. Selected Financial Data.

The following table sets forth our selected consolidated financial and operating information as of or for each of the years ended November 30, 2002 through 2006. The information presented below is based upon our historical financial statements, except for the results of operations of a subsidiary of the Financial Services segment’s title company that was sold in May 2005, which have been classified as discontinued operations. Share and per share amounts have been retroactively adjusted to reflect the effect of our April 2003 10% Class B common stock distribution and our January 2004 two-for-one stock split.

	At or for the Years Ended November 30,
	2006		2005	2004 (1)	2003 (1)	2002 (1)
	(Dollars in thousands, except per share amounts)
Results of Operations:
Revenues:
Homebuilding	$	15,623,040	13,304,599	10,000,632	8,348,645	6,751,301
Financial services	$	643,622	562,372	500,336	556,581	482,008
Total revenues	$	16,266,662	13,866,971	10,500,968	8,905,226	7,233,309
Operating earnings from continuing operations:
Homebuilding	$	986,153	2,277,091	1,548,488	1,164,089	834,056
Financial services	$	149,803	104,768	110,731	153,719	126,941
Corporate general and administrative expenses	$	193,307	187,257	141,722	111,488	85,958
Loss on redemption of 9.95% senior notes	$	—	34,908	—	—	—
Earnings from continuing operations before provision for income taxes	$	942,649	2,159,694	1,517,497	1,206,320	875,039
Earnings from discontinued operations before provision for income taxes (2)	$	—	17,261	1,570	734	670
Earnings from continuing operations	$	593,869	1,344,410	944,642	750,934	544,712
Earnings from discontinued operations	$	—	10,745	977	457	417
Net earnings	$	593,869	1,355,155	945,619	751,391	545,129
Diluted earnings per share:
Earnings from continuing operations	$	3.69	8.17	5.70	4.65	3.51
Earnings from discontinued operations	$	—	0.06	—	—	—
Net earnings	$	3.69	8.23	5.70	4.65	3.51
Cash dividends declared per share—Class A common stock	$	0.64	0.573	0.513	0.144	0.025
Cash dividends declared per share—Class B common stock	$	0.64	0.573	0.513	0.143	0.0225
Financial Position:
Total assets (3)	$	12,408,266	12,541,225	9,165,280	6,775,432	5,755,633
Debt:
Homebuilding	$	2,613,503	2,592,772	2,021,014	1,552,217	1,585,309
Financial services	$	1,149,231	1,269,782	896,934	734,657	853,416
Stockholders’ equity	$	5,701,372	5,251,411	4,052,972	3,263,774	2,229,157
Shares outstanding (000s)		158,155	157,559	156,230	157,836	142,811
Stockholders’ equity per share	$	36.05	33.33	25.94	20.68	15.61
Homebuilding Data (including unconsolidated entities):
Number of homes delivered		49,568	42,359	36,204	32,180	27,393
New orders		42,212	43,405	37,667	33,523	28,373
Backlog of home sales contracts		11,608	18,565	15,546	13,905	12,108
Backlog dollar value	$	3,980,428	6,884,238	5,055,273	3,887,300	3,200,206

(1) In May 2005, the Company sold a subsidiary of the Financial Services segment’s title company. As a result of the sale, the subsidiary’s results of operations have been reclassified as discontinued operations to conform with the 2005 presentation.

(2) Earnings from discontinued operations before provision for income taxes includes a gain of $15.8 million for the year ended November 30, 2005 related to the sale of a subsidiary of the Financial Services segment’s title company.

(3) As of November 30, 2004, 2003 and 2002, the Financial Services segment had assets of discontinued operations of $1.0 million, $1.3 million and $0.4 million, respectively, related to a subsidiary of the segment’s title company that was sold in May 2005.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with “Selected Financial Data” and our audited consolidated financial statements and accompanying notes included elsewhere in this Report.

Special Note Regarding Forward-Looking Statements

Some of the statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in this Annual Report on Form 10-K, are “forward-looking statements,” as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding our business, financial condition, results of operations, cash flows, strategies and prospects. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those described under the caption “Risk Factors” in Item 1A of this Report. We do not undertake any obligation to update forward-looking statements.

Outlook

During the second half of 2006, conditions in the homebuilding industry deteriorated and we have not yet seen a recovery as we entered the first quarter of 2007. This market weakness is driven primarily by excess supply as speculators reduce purchases and return homes to the market as well as negative customer sentiment surrounding the general homebuilding market. We are experiencing slower sales (down 3% in 2006) and higher cancellations (29% in 2006) which have impacted most of our markets and, therefore, we are making greater use of sales incentives to generate sales in order to build-out our inventory, deliver our backlog and convert inventory into cash.

In order to manage under these difficult conditions, we have focused on generating cash flow and maintaining an “inventory neutral” position, which has created liquidity on our balance sheet. We have also renegotiated the prices at which we have options or agreements to purchase land, to bring them in line with current market prices. In order to generate cash flow, we have priced our inventory to market; however, this has resulted in higher than normal sales incentives, leading to lower gross margins on home sales. As we look ahead to 2007, the strength of our balance sheet, together with our renegotiated land positions that reflect current market conditions, provide the foundation from which we will try to rebuild our margins. Steps we expect to take to improve margins include reducing selling, general and administrative expenses to match current volume and reflect available efficiencies, reducing construction costs by negotiating lower prices, redesigning products to meet current market demand, and building on land at current market prices. We will also continue to carefully match our starts to demand, which we expect will cause deliveries in 2007 to be at least 20% lower than they were in 2006.

Results of Operations

Overview

Our net earnings from continuing operations in 2006 were $593.9 million, or $3.69 per diluted share ($3.76 per basic share), compared to $1.3 billion, or $8.17 per diluted share ($8.65 per basic share), in 2005. The decrease in net earnings was attributable to depressed market conditions during 2006 that impacted our Homebuilding segments’ operations. While our deliveries and average sales price on homes delivered increased, our gross margins decreased due to inventory valuation adjustments during the second half of 2006 and higher sales incentives offered to homebuyers in 2006, compared to 2005.

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The following table sets forth financial and operational information for the years indicated related to our continuing operations. The results of operations of the homebuilders we acquired during these years were not material to our consolidated financial statements and are included in the tables since the respective dates of the acquisitions.

	Years Ended November 30,
	2006			2005		2004
	(Dollars in thousands, except average sales price)
Homebuilding revenues:
Sales of homes	$	14,854,874		12,711,789		9,559,847
Sales of land		768,166		592,810		440,785
Total homebuilding revenues		15,623,040		13,304,599		10,000,632
Homebuilding costs and expenses:
Cost of homes sold		12,114,433		9,410,343		7,275,446
Cost of land sold		798,165		391,984		281,409
Selling, general and administrative		1,764,967		1,412,917		1,072,912
Total homebuilding costs and expenses		14,677,565		11,215,244		8,629,767
Equity in earnings (loss) from unconsolidated entities		(12,536	)	133,814		90,739
Management fees and other income, net		66,629		98,952		97,680
Minority interest expense, net		13,415		45,030		10,796
Homebuilding operating earnings		986,153		2,277,091		1,548,488
Financial services revenues		643,622		562,372		500,336
Financial services costs and expenses		493,819		457,604		389,605
Financial services operating earnings		149,803		104,768		110,731
Total operating earnings		1,135,956		2,381,859		1,659,219
Corporate general and administrative expenses		193,307		187,257		141,722
Loss on redemption of 9.95% senior notes		—		34,908		—
Earnings from continuing operations before provision for income taxes	$	942,649		2,159,694		1,517,497
Gross margin on home sales		18.4	%	26.0	%	23.9	%
SG&A expenses as a % of revenues from home sales		11.9	%	11.1	%	11.2	%
Operating margin as a % of revenues from home sales		6.6	%	14.9	%	12.7	%
Average sales price	$	315,000		311,000		272,000

2006 versus 2005

Revenues from home sales increased 17% in the year ended November 30, 2006 to $14.9 billion from $12.7 billion in 2005. Revenues were higher primarily due to a 15% increase in the number of home deliveries in 2006. New home deliveries, excluding unconsolidated entities, increased to 47,032 homes in the year ended November 30, 2006 from 40,882 homes last year. In the year ended November 30, 2006, new home deliveries were higher in each of our homebuilding segments and Homebuilding Other, compared to 2005. The average sales price of homes delivered increased to $315,000 in the year ended November 30, 2006 from $311,000 in 2005 despite higher sales incentives offered to homebuyers ($32,000 per home delivered in 2006, compared to $9,000 per home delivered in 2005).

Despite the full year increases, there was a significant slowdown in new home sales throughout the country as the year progressed. As a result, during the fourth quarter of the year, revenues from home sales declined by 14%, new home deliveries declined by 4%, excluding unconsolidated entities, and the average sales price declined by 11%, compared with the same period of the prior year. The decline in average sales price resulted from our use of higher sales incentives.

Gross margins on home sales excluding inventory valuation adjustments were $3.0 billion, or 20.3%, in the year ended November 30, 2006, compared to $3.3 billion, or 26.0%, in 2005. Gross margin percentage on home sales decreased compared to last year in all of our homebuilding segments and Homebuilding Other primarily due to higher sales incentives offered to homebuyers. Gross margins on home sales including inventory valuation

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adjustments were $2.7 billion, or 18.4%, in the year ended November 30, 2006 due to $280.5 million of inventory valuation adjustments ($157.0 million, $27.1 million, $79.0 million and $17.4 million, respectively, in our Homebuilding East, Central and West segments and Homebuilding Other).

Homebuilding interest expense (primarily included in cost of homes sold and cost of land sold) was $241.1 million in 2006, compared to $187.2 million in 2005. The increase in interest expense was due to higher interest costs resulting from higher average debt during 2006, as well as increased deliveries during 2006, compared to 2005. Our homebuilding debt to total capital ratio as of November 30, 2006 was 31.4%, compared to 33.1% as of November 30, 2005.

Selling, general and administrative expenses as a percentage of revenues from home sales were 11.9% and 11.1%, respectively, for the years ended November 30, 2006 and 2005. The 80 basis point increase was primarily due to increases in broker commissions and advertising expenses, partially offset by lower incentive compensation expenses. Management fees of $37.4 million received during the year ended November 30, 2005 from unconsolidated entities in which we had investments, which were previously recorded as a reduction of selling, general and administrative expenses, have been reclassified to management fees and other income, net in order to conform to the 2006 presentation.

Loss on land sales totaled $30.0 million in the year ended November 30, 2006, net of $152.2 million of write-offs of deposits and pre-acquisition costs ($80.5 million, $2.9 million, $44.0 million and $24.8 million, respectively, in our Homebuilding East, Central and West segments and Homebuilding Other) related to 24,235 homesites under option that we do not intend to purchase and $69.1 million of inventory valuation adjustments ($24.7 million, $17.3 million and $27.1 million, respectively, in our Homebuilding East and Central segments and Homebuilding Other), compared to gross profit from land sales of $200.8 million in 2005. Equity in earnings (loss) from unconsolidated entities was ($12.5) million in the year ended November 30, 2006, which included $126.4 million of valuation adjustments ($25.5 million, $92.8 million and $8.1 million, respectively, in our Homebuilding East and West segments and Homebuilding Other) to our investments in unconsolidated entities, compared to equity in earnings from unconsolidated entities of $133.8 million last year. Management fees and other income, net, totaled $66.6 million in the year ended November 30, 2006, compared to $99.0 million in 2005. Minority interest expense, net was $13.4 million and $45.0 million, respectively, in the years ended November 30, 2006 and 2005. Sales of land, equity in earnings (loss) from unconsolidated entities, management fees and other income, net and minority interest expense, net may vary significantly from period to period depending on the timing of land sales and other transactions entered into by us and unconsolidated entities in which we have investments.

Operating earnings from continuing operations for the Financial Services segment were $149.8 million in the year ended November 30, 2006, compared to $104.8 million last year. The increase was primarily due to a $17.7 million pretax gain generated from monetizing the segment’s personal lines insurance policies, as well as increased profitability from the segment’s mortgage operations as a result of increased volume and profit per loan. The segment’s mortgage capture rate (i.e., the percentage of our homebuyers, excluding cash settlements, who obtained mortgage financing from us in areas where we offered services) was 66% in both the years ended November 30, 2006 and 2005.

Corporate general and administrative expenses as a percentage of total revenues were 1.2% in the year ended November 30, 2006, compared to 1.4% in the same period last year.

At November 30, 2006, we owned 92,325 homesites and had access to an additional 189,279 homesites through either option contracts with third parties or agreements with unconsolidated entities in which we have investments. At November 30, 2006, 10% of the homesites we owned were subject to home purchase contracts. Our backlog of sales contracts was 11,608 homes ($4.0 billion) at November 30, 2006, compared to 18,565 homes ($6.9 billion) at November 30, 2005. As a result of pricing our homes to market through the use of higher sales incentives, building out our inventory and delivering our backlog in an effort to maintain an “inventory neutral” position, our backlog declined in 2006. The lower backlog was also attributable to the depressed market conditions during 2006, which resulted in lower new orders in 2006, compared to 2005. At November 30, 2006, our inventory balance was consistent with the balance at November 30, 2005.

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2005 versus 2004

Revenues from home sales increased 33% in 2005 to $12.7 billion from $9.6 billion in 2004. Revenues were higher primarily due to a 16% increase in the number of home deliveries and a 15% increase in the average sales price of homes delivered in 2005. New home deliveries, excluding unconsolidated entities, increased to 40,882 homes in the year ended November 30, 2005 from 35,189 homes in 2004. In 2005, new home deliveries were higher in each of our homebuilding segments and Homebuilding Other, compared to 2004. The average sales price of homes delivered increased to $311,000 in the year ended November 30, 2005 from $272,000 in 2004.

Gross margins on home sales were $3.3 billion, or 26.0%, in the year ended November 30, 2005, compared to $2.3 billion, or 23.9%, in 2004. Gross margin percentage on home sales increased 210 basis points primarily due to a product mix favoring our higher margin states, as well as a significant gross margin percentage improvement in Arizona, California and Florida.

Homebuilding interest expense (primarily included in cost of homes sold and cost of land sold) was $187.2 million in 2005, compared to $134.2 million in 2004. The increase in interest expense was due to higher interest costs resulting from higher debt, as well as increased deliveries during 2005, compared to 2004, due to the growth in our homebuilding operations. Our homebuilding debt to total capital ratio as of November 30, 2005 was 33.1%, compared to 33.3% as of November 30, 2004.

Selling, general and administrative expenses as a percentage of revenues from home sales were 11.1% in the year ended November 30, 2005, compared to 11.2% in the year ended November 30, 2004. Management fees of $37.4 million and $28.4 million received during the years ended November 30, 2005 and 2004, respectively, from unconsolidated entities in which we had investments, which were previously recorded as a reduction of selling, general and administrative expenses, have been reclassified to management fees and other income, net in order to conform to the 2006 presentation.

Gross profit on land sales totaled $200.8 million in the year ended November 30, 2005, compared to $159.4 million in 2004. Some of these land sales were from consolidated joint ventures, which resulted in minority interest expense. Minority interest expense, net from these land sales and other activities of the consolidated joint ventures was $45.0 million and $10.8 million, respectively, in the years ended November 30, 2005 and 2004. Management fees and other income, net, totaled $99.0 million in the year ended November 30, 2005, compared to $97.7 million in 2004. Equity in earnings from unconsolidated entities was $133.8 million in the year ended November 30, 2005, compared to $90.7 million in 2004. Sales of land, minority interest expense, net, management fees and other income, net and equity in earnings from unconsolidated entities may vary significantly from period to period depending on the timing of land sales and other transactions entered into by us and unconsolidated entities in which we have investments.

Operating earnings from continuing operations for the Financial Services segment were $104.8 million in the year ended November 30, 2005, compared to $110.7 million in 2004. The decrease was primarily due to reduced profitability from the segment’s mortgage operations as a result of a more competitive mortgage environment in 2005, as well as a $6.5 million pretax gain generated from monetizing a majority of the segment’s alarm monitoring contracts in 2004. This decrease was partially offset by improved profitability from the segment’s title operations in 2005. The segment’s mortgage capture rate (i.e., the percentage of our homebuyers, excluding cash settlements, who obtained mortgage financing from us in areas where we offered services) was 66% in the year ended November 30, 2005, compared to 71% in 2004. The decrease in the capture rate was a result of a more competitive mortgage environment. During 2005, we sold North American Exchange Company (“NAEC”), a subsidiary of the Financial Services’ title company, which generated a $15.8 million pretax gain.

Corporate general and administrative expenses as a percentage of total revenues were 1.4% and 1.3%, respectively, in the years ended November 30, 2005 and 2004.

At November 30, 2005, we owned 102,687 homesites and had access to an additional 222,119 homesites through either option contracts with third parties or agreements with unconsolidated entities in which we have investments. At November 30, 2005, 14% of the homesites we owned were subject to home purchase contracts. Our backlog of sales contracts was 18,565 homes ($6.9 billion) at November 30, 2005, compared to 15,546 homes ($5.1 billion) at November 30, 2004. The higher backlog was primarily attributable to our growth and strong demand for our homes, which resulted in higher new orders in 2005, compared to 2004. As a result of acquisitions combined with our organic growth, inventories increased 53% during 2005, while revenues from sales of homes increased 33% for the year ended November 30, 2005, compared to 2004.

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Homebuilding Segments

Our Homebuilding operations construct and sell homes primarily for first-time, move-up and active adult homebuyers primarily under our Everything’s Included^® program. Our land operations include the purchase, development and sale of land for our homebuilding activities, as well as the sale of land to third parties. In certain circumstances, we diversify our operations through strategic alliances and minimize our risks by investing with third parties in joint ventures.

We have grouped our homebuilding activities into three reportable segments, which we refer to as Homebuilding East, Homebuilding Central and Homebuilding West. Information about homebuilding activities in states that do not have economic characteristics that are similar to those in other states in the same geographic area is grouped under “Homebuilding Other.” References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to homebuilding segments are to those reportable segments.

At November 30, 2006, our reportable homebuilding segments and Homebuilding Other consisted of homebuilding divisions located in the following states: East: Florida, Maryland, New Jersey and Virginia. Central: Arizona, Colorado and Texas. West: California and Nevada. Other: Illinois, Minnesota, New York, North Carolina and South Carolina.

The following tables set forth selected financial and operational information related to our homebuilding operations for the years indicated:

Selected Financial and Operational Data

	Years Ended November 30,
	2006		2005	2004
	(In thousands)
Revenues:
East:
Sales of homes	$	4,642,582	3,430,903	2,647,294
Sales of land		129,297	68,080	98,994
Total East		4,771,879	3,498,983	2,746,288
Central:
Sales of homes		3,545,174	3,186,870	2,594,321
Sales of land		104,047	188,023	113,632
Total Central		3,649,221	3,374,893	2,707,953
West:
Sales of homes		5,466,437	5,030,190	3,455,703
Sales of land		503,075	272,577	201,350
Total West		5,969,512	5,302,767	3,657,053
Other:
Sales of homes		1,200,681	1,063,826	862,529
Sales of land		31,747	64,130	26,809
Total Other		1,232,428	1,127,956	889,338
Total homebuilding revenues	$	15,623,040	13,304,599	10,000,632

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	Years Ended November 30,
	2006			2005		2004
	(In thousands)
Operating earnings (loss):
East:
Sales of homes	$	305,397		602,000		365,795
Sales of land		(63,729	)	24,112		43,712
Equity in earnings (loss) from unconsolidated entities		(14,947	)	2,213		3,997
Management fees and other income, net		14,335		13,839		42,635
Minority interest expense, net		(4,402	)	(900	)	(1,399	)
Total East		236,654		641,264		454,740
Central:
Sales of homes		191,692		287,113		169,261
Sales of land		5,111		45,623		38,569
Equity in earnings from unconsolidated entities		7,763		15,103		4,672
Management fees and other income, net		10,131		21,005		4,331
Minority interest income (expense), net		689		(368	)	686
Total Central		215,386		368,476		217,519
West:
Sales of homes		532,456		956,470		592,961
Sales of land		84,749		132,713		74,677
Equity in earnings (loss) from unconsolidated entities		(6,449	)	109,995		82,060
Management fees and other income, net		38,918		58,733		42,507
Minority interest expense, net		(9,757	)	(43,762	)	(10,083	)
Total West		639,917		1,214,149		782,122
Other:
Sales of homes		(54,071	)	42,946		83,472
Sales of land		(56,130	)	(1,622	)	2,418
Equity in earnings from unconsolidated entities		1,097		6,503		10
Management fees and other income, net		3,245		5,375		8,207
Minority interest income, net		55		—		—
Total Other		(105,804	)	53,202		94,107
Total homebuilding operating earnings	$	986,153		2,277,091		1,548,488

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Summary of Homebuilding Data

	At or for the Years Ended November 30,
	2006	2005	2004
Deliveries
East	14,859	11,220	10,438
Central	17,069	15,448	13,126
West	13,333	11,731	9,079
Other	4,307	3,960	3,561
Total	49,568	42,359	36,204

Of the total home deliveries listed above, 2,536, 1,477 and 1,015, respectively, represent deliveries from unconsolidated entities for the years ended November 30, 2006, 2005 and 2004.

New Orders
East	11,290	11,096	11,550
Central	16,120	15,926	13,626
West	11,119	12,179	8,931
Other	3,683	4,204	3,560
Total	42,212	43,405	37,667

Of the new orders listed above, 1,921, 1,254 and 1,700, respectively, represent new orders from unconsolidated entities for the years ended November 30, 2006, 2005 and 2004.

Backlog—Homes
East	4,139	7,581	7,024
Central	3,598	4,547	3,750
West	2,991	4,883	3,472
Other	880	1,554	1,300
Total	11,608	18,565	15,546

Of the homes in backlog listed above, 1,089, 1,359 and 1,585, respectively, represent homes in backlog from unconsolidated entities at November 30, 2006, 2005 and 2004.

Backlog Dollar Value (In thousands)
East	$	1,460,213	2,774,396	2,104,959
Central		850,472	1,210,257	911,303
West		1,328,617	2,374,646	1,597,185
Other		341,126	524,939	441,826
Total	$	3,980,428	6,884,238	5,055,273

Of the dollar value of homes in backlog listed above, $478,707, $590,129 and $644,839, respectively, represent the backlog dollar value from unconsolidated entities at November 30, 2006, 2005 and 2004.

Backlog represents the number of homes under sales contracts. Homes are sold using sales contracts, which are generally accompanied by sales deposits. In some instances, purchasers are permitted to cancel sales if they fail to qualify for financing or under certain other circumstances. We experienced a cancellation rate of 29% in 2006, compared to 17% and 16% in 2005 and 2004, respectively. During the fourth quarter of 2006, our cancellation rate was 33%. Although we experienced a significant increase in our cancellation rate during 2006, we remain focused on reselling these homes, which, in many instances, would include the use of higher sales incentives (discussed below as a percentage of revenues from home sales) to avoid the build up of excess inventory. We do not recognize revenue on homes under sales contracts until the sales are closed and title passes to the new homeowners, except for our multi-level buildings under construction for which revenue is recognized under percentage-of-completion accounting.

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2006 versus 2005

East: Homebuilding revenues increased in 2006, compared to 2005, primarily due to an increase in the number of home deliveries in Florida and an increase in the average sales price of homes delivered in Florida and New Jersey. Gross margins on home sales excluding inventory valuation adjustments were $1.0 billion, or 22.0%, in 2006, compared to $976.9 million or 28.5% in 2005. Gross margin percentage on home sales decreased compared to last year primarily due to higher sales incentives offered to homebuyers (11.4% in 2006, compared to 1.8% in 2005), particularly during the second half of the year. Gross margins on home sales including inventory valuation adjustments were $865.0 million, or 18.6%, in 2006 due to a total of $157.0 million of inventory valuation adjustments in all states.

Central: Homebuilding revenues increased in 2006, compared to 2005, primarily due to an increase in the number of home deliveries in Arizona and Texas, and an increase in the average sales price of homes delivered in Arizona and Colorado. Gross margins on home sales excluding inventory valuation adjustments were $631.5 million, or 17.8%, in 2006, compared to $657.7 million, or 20.6%, in 2005. Gross margin percentage on home sales decreased compared to last year primarily due to higher sales incentives offered to homebuyers (9.1% in 2006, compared to 5.3% in 2005), particularly during the second half of the year. Gross margins on home sales including inventory valuation adjustments were $604.4 million, or 17.1%, in 2006 due to $27.1 million of inventory valuation adjustments primarily in Arizona and Colorado.

West: Homebuilding revenues increased in 2006, compared to 2005, primarily due to an increase in the number of home deliveries in all of the states in this segment and an increase in the average sales price of homes delivered in Nevada, due to higher deliveries in Reno. Gross margins on home sales excluding inventory valuation adjustments were $1.2 billion, or 22.4%, in 2006, compared to $1.5 billion, or 29.3%, in 2005. Gross margin percentage on home sales decreased compared to last year primarily due to higher sales incentives offered to homebuyers (7.5% in 2006, compared to 1.5% in 2005), particularly during the second half of the year. Gross margins on home sales including inventory valuation adjustments were $1.1 billion, or 20.9%, in 2006 due to a total of $79.0 million of inventory valuation adjustments in all states.

Other: Homebuilding revenues increased in 2006, compared to 2005, primarily due to an increase in the number of home deliveries in the Carolinas, Minnesota and New York, and an increase in the average sales price of homes delivered in the Carolinas and New York. Gross margins from home sales excluding inventory valuation adjustments were $143.9 million, or 12.0%, in 2006, compared to $191.8 million, or 18.0%, in 2005. Gross margins on home sales decreased compared to last year primarily due to higher sales incentives offered to homebuyers (7.8% in 2006, compared to 4.7% in 2005), particularly during the second half of the year. Gross margins on home sales including inventory valuation adjustments were $126.5 million, or 10.5%, in 2006 due to $17.4 million of inventory valuation adjustments primarily in Illinois and Minnesota.

2005 versus 2004

East: Homebuilding revenues increased in 2005, compared to 2004, primarily due to an increase in the number of home deliveries and an increase in the average sales price of homes delivered in all of the states in this segment. Gross margins on home sales were $976.9 million, or 28.5%, in 2005, compared to $669.5 million, or 25.3%, in 2004. Gross margins on home sales increased in 2005 due primarily to higher margins in Florida.

Central: Homebuilding revenues increased in 2005, compared to 2004, primarily due to an increase in the number of home deliveries in all of the states in this segment and an increase in the average sales price of homes delivered in all of the states in this segment, except Texas. Gross margins on home sales were $657.7 million, or 20.6%, in 2005, compared to $488.9 million, or 18.8%, in 2004. Gross margins on home sales increased in 2005 due to higher margins in all of the states in this segment.

West: Homebuilding revenues increased in 2005, compared to 2004, primarily due to an increase in the number of home deliveries and an increase in the average sales price of homes delivered in all of the states in this segment. Gross margins on home sales were $1.5 billion, or 29.3%, in 2005, compared to $935.0 million, or 27.1%, in 2004. Gross margins on home sales increased in 2005 primarily due to higher margins in California.

Other: Homebuilding revenues increased in 2005, compared to 2004, primarily due to an increase in the number of home deliveries in all of the states in Homebuilding Other, except Illinois, and an increase in the average sales price of homes delivered in all of the states in Homebuilding Other, except Minnesota. Gross margins from home sales were $191.8 million, or 18.0%, in 2005, compared to $191.0 million, or 22.1%, in 2004. Gross margins on home sales decreased in 2005 due to lower margins in Minnesota and Illinois, partially offset by an increase in the Carolinas.

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Financial Services Segment

We have one Financial Services reportable segment that provides mortgage financing, title insurance, closing services and other ancillary services (including personal lines insurance, high-speed Internet and cable television) for both buyers of our homes and others. The Financial Services segment sold substantially all of the loans it originated in the secondary mortgage market on a servicing released, non-recourse basis; however, we remain liable for certain limited representations and warranties related to loan sales. The following table sets forth selected financial and operational information relating to our Financial Services segment. The results of operations of companies we acquired during these years are included in the table since the respective dates of the acquisitions.

	Years Ended November 30,
	2006			2005		2004
	(Dollars in thousands)
Revenues	$	643,622		562,372		500,336
Costs and expenses		493,819		457,604		389,605
Operating earnings from continuing operations	$	149,803		104,768		110,731
Dollar value of mortgages originated	$	10,480,000		9,509,000		7,517,000
Number of mortgages originated		41,800		42,300		37,900
Mortgage capture rate of Lennar homebuyers		66	%	66	%	71	%
Number of title and closing service transactions		161,300		187,700		187,700
Number of title policies issued		195,700		193,900		185,100

Financial Condition and Capital Resources

At November 30, 2006, we had cash related to our homebuilding and financial services operations of $778.3 million, compared to $1.1 billion at November 30, 2005. The decrease in cash was primarily due to repayment of debt, a decrease in accounts payable and other liabilities, contributions to unconsolidated entities and repurchases of common stock, partially offset by our net earnings, distributions of capital from unconsolidated entities and proceeds from debt issuances.

We finance our land acquisition and development activities, construction activities, financial services activities and general operating needs primarily with cash generated from our operations and public debt issuances, as well as cash borrowed under our revolving credit facility, issuances of commercial paper and unsecured, fixed-rate notes and borrowings under our warehouse lines of credit.

Operating Cash Flow Activities

During 2006 and 2005, cash flows provided by operating activities amounted to $554.7 million and $323.0 million, respectively. During 2006, cash flows provided by operating activities consisted primarily of net earnings, distributions of earnings from unconsolidated entities and the change in inventories, including inventory write-offs and valuation adjustments, partially offset by the deferred income tax benefit and a decrease in accounts payable and other liabilities.

During 2005, cash flows provided by operating activities consisted primarily of net earnings, an increase in accounts payable and other liabilities and distributions of earnings from unconsolidated entities partially offset by an increase in inventories due to an increase in construction in progress to support a significantly higher backlog and land purchases to facilitate future growth, an increase in receivables resulting primarily from land sales and equity in earnings from unconsolidated entities.

Investing Cash Flow Activities

Cash flows used in investing activities totaled $406.5 million during 2006, compared to $1.0 billion in 2005. In 2006, we used $33.2 million of cash for acquisitions and $729.3 million of cash was contributed to unconsolidated entities. This usage of cash was partially offset by $321.6 million of distributions of capital from unconsolidated entities. In 2005, we used $416.0 million of cash for acquisitions and $919.8 million of cash was contributed to unconsolidated entities. We also had an increase in financial services loans held-for-investment of $117.4 million. This usage of cash was partially offset by $466.8 million of distributions of capital from unconsolidated entities.

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Financing Cash Flow Activities

Homebuilding debt to total capital is a financial measure commonly used in the homebuilding industry and is presented to assist in understanding the leverage of our homebuilding operations. By providing a measure of leverage of our homebuilding operations, management believes that this measure enables readers of our financial statements to better understand our financial position and performance. Homebuilding debt to total capital as of November 30, 2006 and 2005 is calculated as follows:

	2006			2005
	(Dollars in thousands)
Homebuilding debt	$	2,613,503		2,592,772
Stockholders’ equity		5,701,372		5,251,411
Total capital	$	8,314,875		7,844,183
Homebuilding debt to total capital		31.4	%	33.1	%

The leverage ratio at November 30, 2006 was lower than the leverage ratio in the prior year as we made greater use of sales incentives to generate sales in order to build-out our inventory, deliver our backlog and convert inventory into cash. This intensified focus on generating strong cash flow allowed us to strengthen our balance sheet and reduce the leverage of our homebuilding operations.

In addition to the use of capital in our homebuilding and financial services operations, we actively evaluate various other uses of capital, which fit into our homebuilding and financial services strategies and appear to meet our profitability and return on capital goals. This may include acquisitions of, or investments in, other entities, the payment of dividends or repurchases of our outstanding common stock or debt. These activities may be funded through any combination of our credit facilities, issuances of commercial paper and unsecured, fixed-rate notes, cash generated from operations, sales of assets or the issuance of public debt, common stock or preferred stock.

The following table summarizes our homebuilding senior notes and other debts payable:

	November 30,
	2006		2005
	(Dollars in thousands)
7 5/8% senior notes due 2009	$	277,830	276,299
5.125% senior notes due 2010		299,766	299,715
5.95% senior notes due 2011		249,415	—
5.95% senior notes due 2013		345,719	345,203
5.50% senior notes due 2014		247,559	247,326
5.60% senior notes due 2015		501,957	502,127
6.50% senior notes due 2016		249,683	—
Senior floating-rate notes due 2007		—	200,000
Senior floating-rate notes due 2009		300,000	300,000
5.125% zero-coupon convertible senior subordinated notes due 2021		—	157,346
Mortgage notes on land and other debt		141,574	264,756
	$	2,613,503	2,592,772

Our average debt outstanding was $4.0 billion in 2006, compared to $3.0 billion in 2005. The average rate for interest incurred was 5.7% in both 2006 and 2005. Interest incurred for the year ended November 30, 2006 was $247.5 million, compared to $172.9 million in 2005. The majority of our short-term financing needs, including financings for land acquisition and development activities and general operating needs, are met with cash generated from operations, funds available under our new senior unsecured revolving credit facility (the “New Facility”), which replaced our senior unsecured credit facility (the “Credit Facility”) in July 2006, and issuances of commercial paper and unsecured, fixed-rate notes.

The New Facility consists of a $2.7 billion revolving credit facility maturing in July 2011. The New Facility also includes access to an additional $0.5 billion of financing through an accordion feature, subject to additional commitments for a maximum aggregate commitment under the New Facility of $3.2 billion. The New Facility is guaranteed by substantially all of our subsidiaries other than finance company subsidiaries (which include mortgage and title insurance agency subsidiaries). Interest rates on outstanding borrowings are LIBOR-based, with margins determined based on changes in our credit ratings, or an alternate base rate, as described

26

in the credit agreement. At November 30, 2006, we had no outstanding balance under the New Facility. During the year ended November 30, 2006, the average daily borrowings under the Credit Facility and the New Facility were $447.4 million.

We have a structured letter of credit facility (the “LC Facility”) with a financial institution. The purpose of the LC Facility is to facilitate the issuance of up to $200 million of letters of credit on a senior unsecured basis. In connection with the LC Facility, the financial institution issued $200 million of their senior notes, which were linked to our performance on the LC Facility. If there is an event of default under the LC Facility, including our failure to reimburse a draw against an issued letter of credit, the financial institution would assign its claim against us, to the extent of the amount due and payable by us under the LC Facility, to its noteholders in lieu of their principal repayment on their performance-linked notes.

At November 30, 2006, we had letters of credit outstanding in the amount of $1.4 billion, which includes $190.8 million outstanding under the LC Facility. The majority of these letters of credit are posted with regulatory bodies to guarantee our performance of certain development and construction activities or are posted in lieu of cash deposits on option contracts. Of our total letters of credit outstanding, $496.9 million were collateralized against certain borrowings available under the New Facility.

In November 2006, we called our $200 million senior floating-rate notes due 2007 (the “Floating-Rate Notes”). The redemption price was $200.0 million, or 100% of the principal amount of the Floating-Rate Notes outstanding, plus accrued and unpaid interest as of the redemption date.

In April 2006, substantially all of our outstanding 5.125% zero-coupon convertible senior subordinated notes due 2021, (the “Convertible Notes”) were converted by the noteholders into 4.9 million Class A common shares. The Convertible Notes were convertible at a rate of 14.2 shares of our Class A common stock per $1,000 principal amount at maturity. Convertible Notes not converted by the noteholders were not material and were redeemed by us on April 4, 2006. The redemption price was $468.10 per $1,000 principal amount at maturity, which represented the original issue price plus accrued original issue discount to the redemption date.

In April 2006, we issued $250 million of 5.95% senior notes due 2011 and $250 million of 6.50% senior notes due 2016 (collectively, the “New Senior Notes”) at a price of 99.766% and 99.873%, respectively, in a private placement. Proceeds from the offering of the New Senior Notes, after initial purchaser’s discount and expenses, were $248.7 million and $248.9 million, respectively. We added the proceeds to our working capital to be used for general corporate purposes. Interest on the New Senior Notes is due semi-annually. The New Senior Notes are unsecured and unsubordinated, and substantially all of our subsidiaries other than finance company subsidiaries guarantee the New Senior Notes. In October 2006, we completed an exchange offer of the New Senior Notes for substantially identical notes registered under the Securities Act of 1933 (the “Exchange Notes”), with substantially all of the New Senior Notes being exchanged for the Exchange Notes. At November 30, 2006, the carrying value of the Exchange Notes was $499.1 million.

In March 2006, we initiated a commercial paper program (the “Program”) under which we may, from time-to-time, issue short-term unsecured notes in an aggregate amount not to exceed $2.0 billion. This Program has allowed us to obtain more favorable short-term borrowing rates than we would obtain otherwise. The Program is exempt from the registration requirements of the Securities Act of 1933. Issuances under the Program are guaranteed by all of our wholly-owned subsidiaries that are also guarantors of our New Facility. The average daily borrowings under the Program from its inception through November 30, 2006 were $553.3 million.

We also have an arrangement with a financial institution whereby we can enter into short-term, unsecured, fixed-rate notes from time-to-time. During the year ended November 30, 2006, the average daily borrowings under these notes were $379.0 million.

In September 2005, we sold $300 million of 5.125% senior notes due 2010 (the “5.125% Senior Notes”) at a price of 99.905% in a private placement. Proceeds from the offering, after initial purchaser’s discount and expenses, were $298.2 million. We added the proceeds to our working capital to be used for general corporate purposes. Interest on the 5.125% Senior Notes is due semi-annually. The 5.125% Senior Notes are unsecured and unsubordinated. Substantially all of our subsidiaries other than finance company subsidiaries guaranteed the 5.125% Senior Notes. In 2006, we exchanged the 5.125% Senior Notes for registered notes. The registered notes have substantially identical terms as the 5.125% Senior Notes, except that the registered notes do not include transfer restrictions that are applicable to the 5.125% Senior Notes. At November 30, 2006, the carrying value of the 5.125% Senior Notes was $299.8 million.

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In July 2005, we sold $200 million of 5.60% Senior Notes due 2015 (the “Senior Notes”) at a price of 101.407%. The Senior Notes were the same issue as the Senior Notes we sold in April 2005. Proceeds from the offering, after initial purchaser’s discount and expenses, were $203.9 million. We added the proceeds to our working capital to be used for general corporate purposes. Interest on the Senior Notes is due semi-annually. The Senior Notes are unsecured and unsubordinated. Substantially all of our subsidiaries other than finance company subsidiaries guaranteed the Senior Notes. At November 30, 2006, the carrying value of the Senior Notes sold in April and July 2005 was $502.0 million.

In May 2005, we redeemed all of our outstanding 9.95% senior notes due 2010 (the “Notes”). The redemption price was $337.7 million, or 104.975% of the principal amount of the Notes outstanding, plus accrued and unpaid interest as of the redemption date. The redemption of the Notes resulted in a $34.9 million pretax loss.

In April 2005, we sold $300 million of 5.60% Senior Notes due 2015 (the “Senior Notes”) at a price of 99.771%. Substitute registered notes were subsequently issued for the April and July 2005 Senior Notes. Proceeds from the offering, after initial purchaser’s discount and expenses, were $297.5 million. We added the proceeds to our working capital to be used for general corporate purposes. Interest on the Senior Notes is due semi-annually. The Senior Notes are unsecured and unsubordinated. Substantially all of our subsidiaries other than finance company subsidiaries guaranteed the Senior Notes.

Substantially all of our subsidiaries, other than finance company subsidiaries, have guaranteed all our Senior Notes and Floating Rate Notes (the “Guaranteed Notes”). The guarantees are full and unconditional and the guarantor subsidiaries are 100% directly and indirectly owned by Lennar Corporation. The principal reason our subsidiaries, other than finance company subsidiaries, guaranteed the Guaranteed Notes is so holders of the Guaranteed Notes will have rights at least as great with regard to our subsidiaries as any other holders of a material amount of our unsecured debt. Therefore, the guarantees of the Guaranteed Notes will remain in effect while the guarantor subsidiaries guarantee a material amount of the debt of Lennar Corporation, as a separate entity, to others. At any time, however, when a guarantor subsidiary is no longer guaranteeing at least $75 million of Lennar Corporation’s debt other than the Guaranteed Notes, either directly or by guaranteeing other subsidiaries’ obligations as guarantors of Lennar Corporation’s debt, the guarantor subsidiaries’ guarantee of the Guaranteed Notes will be suspended. Currently, the only debt the guarantor subsidiaries are guaranteeing other than the Guaranteed Notes is Lennar Corporation’s principal revolving bank credit line (currently the New Facility) and our Commercial Paper Program. Therefore, if, the guarantor subsidiaries cease guaranteeing Lennar Corporation’s obligations under the principal revolving bank credit line and are not guarantors of any new debt, the guarantor subsidiaries’ guarantees of the Guaranteed Notes will be suspended until such time, if any, as they again are guaranteeing at least $75 million of Lennar Corporation’s debt other than the Guaranteed Notes.

If the guarantor subsidiaries are guaranteeing the revolving credit line totaling at least $75 million, we will treat the guarantees of the Guaranteed Notes as remaining in effect even during periods when Lennar Corporation’s borrowings under the revolving credit line is less than $75 million. Because it is possible that our banks will permit some or all of the guarantor subsidiaries to stop guaranteeing our revolving credit line, it is possible that, at some time or times in the future, the Guaranteed Notes will no longer be guaranteed by the guarantor subsidiaries.

At November 30, 2006, our Financial Services segment had warehouse lines of credit totaling $1.4 billion to fund our mortgage loan activities. Borrowings under the lines of credit were $1.1 billion at November 30, 2006 and were collateralized by mortgage loans and receivables on loans sold but not yet funded by the investor with outstanding principal balances of $1.3 billion. There are several interest rate-pricing options, which fluctuate with market rates. The effective interest rate on the facilities at November 30, 2006 was 6.1%. The warehouse lines of credit mature in September 2007 ($700 million) and in April 2008 ($670 million), at which time we expect the facilities to be renewed. At November 30, 2006, we had advances under a conduit funding agreement amounting to $1.7 million, which had an effective interest rate of 6.2% at November 30, 2006. We also had a $25 million revolving line of credit that matures in May 2007, at which time we expect the line of credit to be renewed. The line of credit is collateralized by certain assets of the Financial Services segment and stock of certain title subsidiaries. Borrowings under the line of credit were $23.7 million at November 30, 2006 and had an effective interest rate of 6.3% at November 30, 2006.

We have various interest rate swap agreements, which effectively convert variable interest rates to fixed interest rates on $200 million of outstanding debt related to our homebuilding operations. The interest rate swaps mature at various dates through fiscal 2008 and fix the LIBOR index (to which certain of our debt interest rates

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are tied) at an average interest rate of 6.8% at November 30, 2006. The net effect on our operating results is that interest on the variable-rate debt being hedged is recorded based on fixed interest rates. Counterparties to these agreements are major financial institutions. At November 30, 2006, the fair value of the interest rate swaps was a $2.1 million liability. Our Financial Services segment, in the normal course of business, uses derivative financial instruments to reduce its exposure to fluctuations in interest rates. The Financial Services segment enters into forward commitments and, to a lesser extent, option contracts to protect the value of loans held-for-sale from increases in market interest rates. We do not anticipate that we will suffer credit losses from counterparty non-performance.

We have met all of our quantifiable debt covenants. There have been no significant changes in our liquidity from the balance sheet date to the date of issuance of this Annual Report on Form 10-K.

Changes in Capital Structure

In June 2001, our Board of Directors authorized a stock repurchase program to permit the purchase of up to 20 million shares of our outstanding common stock. During 2006, we repurchased a total of 6.2 million shares of our outstanding common stock under our stock repurchase program for an aggregate purchase price including commissions of $320.1 million, or $51.59 per share. During 2005, we repurchased a total of 5.1 million shares of our Class A common stock under the stock repurchase program for an aggregate purchase price including commissions of $274.9 million, or $53.38 per share. As of November 30, 2006, 6.2 million shares of common stock can be repurchased in the future under the program.

In addition to the common shares purchased under our stock repurchase program, we repurchased approximately 0.1 million and 0.2 million Class A common shares during the years ended November 30, 2006 and 2005, respectively, related to the vesting of restricted stock and distribution of common stock from our deferred compensation plan.

In 2006, our annual dividend rate with regard to our Class A and Class B common stock was $0.64 per share per year (payable quarterly). In September 2005, our Board of Directors voted to increase the annual dividend rate with regard to our Class A and Class B common stock to $0.64 per share per year (payable quarterly) from $0.55 per share per year (payable quarterly).

Based on our current financial condition and credit relationships, we believe that our operations and borrowing resources will provide for our current and long-term capital requirements at our anticipated levels of growth.

Off-Balance Sheet Arrangements

Investments in Unconsolidated Entities

We strategically invest in unconsolidated entities that acquire and develop land (1) for our homebuilding operations or for sale to third parties or (2) for the construction of homes for sale to third-party homebuyers. Through these entities, we primarily seek to reduce and share our risk by limiting the amount of our capital invested in land, while increasing access to potential future homesites and allowing us to participate in strategic ventures. The use of these entities also, in some instances, enables us to acquire land to which we could not otherwise obtain access, or could not obtain access on as favorable terms, without the participation of a strategic partner. Our partners in these joint ventures (“JVs”) are land owners/developers, other homebuilders and financial or strategic partners. JVs with land owners/developers give us access to homesites owned or controlled by our partner. JVs with other homebuilders provide us with the ability to bid jointly with our partner for large land parcels. JVs with financial partners allow us to combine our homebuilding expertise with access to our partners’ capital. JVs with strategic partners allow us to combine our homebuilding expertise with the specific expertise (e.g. commercial or infill experience) of our partner.

Although the strategic purposes of our JVs and the nature of our JV partners vary, the JVs are generally designed to acquire, develop and/or sell specific assets during a limited life-time. The JVs are typically structured through non-corporate entities in which control is shared with our venture partners. Each JV is unique in terms of its funding requirements and liquidity needs. We and the other JV participants typically make pro-rata cash contributions to the JV. In many cases, our risk is limited to our equity contribution and potential future capital contributions. The capital contributions usually coincide in time with the acquisition of properties by the JV. Additionally, most JVs obtain third-party debt to fund a portion of the acquisition, development and construction costs of their communities. The JV agreements usually permit, but do not require, the JVs to make additional capital calls in the future.

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Our investment in unconsolidated entities has grown in recent years primarily due to (1) our participation in a larger number of ventures in order to increase the number of homesites controlled while minimizing capital requirements and mitigating market risk and (2) the increase in land prices in recent years. At November 30, 2006, we had equity investments in approximately 260 unconsolidated entities. Our investments in unconsolidated entities are generally land development ventures and homebuilding ventures, most of which are accounted for by the equity method of accounting.

Our investments in unconsolidated entities by type of venture were as follows:

	November 30,
	2006		2005
	(In thousands)
Land development	$	1,163,671	1,082,101
Homebuilding		283,507	200,585
Total investment	$	1,447,178	1,282,686

During 2006, we experienced a slowdown in demand for homes in many markets and we increased sales incentives to maintain sales volumes. Primarily as a result of these market conditions, we recorded $126.4 million of valuation adjustments to our investment in unconsolidated entities for the year ended November 30, 2006. After the valuation adjustments, as of November 30, 2006, we believe that our investment in JVs is fully recoverable and it is unlikely that we will be called to perform on any of our guarantees that would have a material impact on our consolidated financial statements. We will continue to monitor our investments and the recoverability of assets owned by the JVs.

Under the terms of our JV agreements, we generally have the right to share in earnings and distributions of the entities on a pro-rata basis based on our ownership percentage. Some JV agreements provide for a different allocation of profit and cash distributions if and when the cumulative results of the JV exceed specified targets (such as a specified internal rate of return). Our equity in earnings from unconsolidated entities excludes our pro-rata share of JVs’ earnings resulting from land sales to our homebuilding divisions. Instead, we account for those earnings as a reduction of our costs of purchasing the land from the JVs. This in effect defers recognition of our share of the JVs’ earnings related to these sales until we deliver a home and title passes to a third-party homebuyer.

In some instances, we are designated as the manager of the unconsolidated entity and receive fees for such services. In addition, we often enter into option contracts to acquire properties from our JVs generally for market prices at specified dates in the future. Option contracts generally require us to make deposits using cash or irrevocable letters of credit toward the exercise price. These option deposits generally approximate 10% of the exercise price.

We regularly monitor the results of our unconsolidated JVs and any trends that may affect their future liquidity or results of operations. JVs in which we have investments are subject to a variety of financial and non-financial debt covenants related primarily to equity maintenance, fair value of collateral and minimum homesite takedown or sale requirements. We monitor the performance of JVs in which we have investments on a regular basis to assess compliance with debt covenants. For those JVs not in compliance with the debt covenants, we evaluate and assess possible impairment of our investment. As of November 30, 2006, substantially all of our unconsolidated JVs were in compliance with their debt covenants in all material respects.

Our arrangements with JVs generally do not restrict our activities or those of the other participants. However, in certain instances, we agree not to engage in some types of activities that may be viewed as competitive with the activities of these ventures in the localities where the JVs do business.

As discussed above, the JVs in which we invest generally supplement equity contributions with third-party debt to finance their activities. In many instances, the debt financing is non-recourse, thus neither we nor the other equity partners are a party to the debt instruments. In other cases, we and the other partners agree to provide credit support in the form of repayment or maintenance guarantees.

Material contractual obligations of our unconsolidated JVs primarily relate to the debt obligations described above. The JVs generally do not enter into lease commitments because the entities are managed either by us, or another of the JV participants, who supply the necessary facilities and employee services in exchange for market-based management fees. However, they do enter into management contracts with the participants who manage

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them. Some JVs also enter into agreements with developers, which may be us or other JV participants, to develop raw land into finished homesites or to build homes.

The JVs often enter into option agreements with buyers, which may include us or other JV participants, to deliver homesites or parcels in the future at market prices. Option deposits are recorded by the JVs as liabilities until the exercise dates at which time the deposit and remaining exercise proceeds are recorded as revenue. Any forfeited deposit is recognized as revenue at the time of forfeiture. Our unconsolidated JVs generally do not enter into off-balance sheet arrangements.

As described above, the liquidity needs of JVs in which we have investments vary on an entity-by-entity basis depending on each entity’s purpose and the stage in its life cycle. During formation and development activities, the entities generally require cash, which is provided through a combination of equity contributions and debt financing, to fund acquisition and development of properties. As the properties are completed and sold, cash generated is available to repay debt and for distribution to the JV’s members. Thus, the amount of cash available for a JV to distribute at any given time is a function of the scope of the JV’s activities and the stage in the JV’s life cycle.

We track our share of cumulative earnings and cumulative distributions of our JVs. For purposes of classifying distributions received from JVs in our statements of cash flows, cumulative distributions are treated as returns on capital to the extent of accumulated earnings. Cumulative distributions in excess of our share of cumulative earnings are treated as returns of capital. Returns of capital and returns on capital are separately identified and reported in our consolidated statements of cash flows as investing activities and operating activities, respectively.

At November 30, 2006, the JVs in which we had investments had total assets of $10.1 billion and total liabilities of $6.4 billion, which included $5.0 billion of notes and mortgages payable. These JVs usually finance their activities with a combination of partner equity and debt financing. As of November 30, 2006, our equity in these JVs represented 39% of the entities’ total equity. In some instances, we and our partners have guaranteed debt of certain JVs. Our summary of guarantees related to our unconsolidated entities was as follows:

	November 30, 2006
	(In thousands)
Sole recourse debt	$	18,920
Several recourse debt—repayment		163,508
Several recourse debt—maintenance		560,823
Joint and several recourse debt—repayment		64,473
Joint and several recourse debt—maintenance		956,682
Lennar’s maximum recourse exposure		1,764,406
Less joint and several reimbursement agreements with our partners		(661,486	)
Lennar’s net recourse exposure	$	1,102,920

The maintenance amounts above are our maximum exposure of loss, which assumes that the fair value of the underlying collateral is zero. As of November 30, 2006, the fair values of the maintenance guarantees and repayment guarantees were not material.

In addition, we and/or our partners occasionally grant liens on our respective interests in a JV in order to help secure a loan to that JV. When we and/or our partners provide guarantees, the JV generally receives more favorable terms from its lenders than would otherwise be available to it. In a repayment guarantee, we and our JV partners guarantee repayment of a portion or all of the debt in the event of a default before the lender would have to exercise its rights against the collateral. The maintenance guarantees only apply if the value or the collateral (generally land and improvements) is less than a specified percentage of the loan balance. If we are required to make a payment under a maintenance guarantee to bring the value of the collateral above the specified percentage of the loan balance, the payment would constitute a capital contribution or loan to the unconsolidated entity and increase our share of any funds the JV distributes. During 2006, amounts paid under our maintenance guarantees were not material. As of November 30, 2006, if there was an occurrence of a triggering event or condition under a guarantee, the collateral would be sufficient to repay the obligation.

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Summarized financial results for unconsolidated entities in which we had investments were as follows:

	November 30,
Balance Sheet	2006		2005
	(In thousands)
Assets:
Cash	$	276,501	334,530
Inventories		8,955,567	7,615,489
Other assets		868,073	875,741
	$	10,100,141	8,825,760
Liabilities and equity:
Accounts payable and other liabilities	$	1,387,745	1,004,940
Notes and mortgages payable		5,001,625	4,486,271
Equity of:
Lennar		1,447,178	1,282,686
Others		2,263,593	2,051,863
	$	10,100,141	8,825,760

Debt to total capital of our JVs is calculated as follows:

	November 30,
	2006			2005
	(Dollars in thousands)
Debt	$	5,001,625		4,486,271
Equity		3,710,771		3,334,549
Total capital	$	8,712,396		7,820,820
Debt to total capital of our JVs		57.4	%	57.4	%

	Years Ended November 30,
Statements of Earnings	2006			2005		2004
	(Dollars in thousands)
Revenues	$	2,651,932		2,676,628		1,641,018
Costs and expenses:		2,588,196		2,020,470		1,199,243
Net earnings of unconsolidated entities	$	63,736		656,158		441,775
Our share of net earnings	$	24,918		241,631		148,868
Our share of net earnings (loss)—recognized (1)	$	(12,536	)	133,814		90,739
Our cumulative share of net earnings—deferred at November 30	$	99,360		151,182		120,817
Our investment in unconsolidated entities	$	1,447,178		1,282,686		856,422
Equity of the unconsolidated entities	$	3,710,771		3,334,549		1,795,010
Our investment % in the unconsolidated entities		39.0	%	38.5	%	47.7	%

(1) For the year ended November 30, 2006, our share of net loss recognized from unconsolidated entities includes $126.4 million of valuation adjustments to our investments in unconsolidated entities.

        On December 29, 2006, we and LNR reached a definitive agreement to admit a new strategic partner into our LandSource joint venture. The transaction will result in a cash distribution to us and our current partner, LNR, of approximately $660 million each. For financial statement purposes, the transaction is expected to generate earnings of approximately $500 million for us, of which approximately $125 million will be recognized at closing and a potential of approximately $375 million could be realized over future years. The new partner will contribute cash and property with a combined value of approximately $900 million. Subsequent to the transaction, in addition to options we will have on certain LandSource assets, we will also have $153 million of specific performance options on other LandSource assets. Following the contribution and refinancing, our and LNR’s interest in LandSource will be diluted to 19% each, and the new partner will be issued a 62% interest in LandSource. The transaction is expected to close during our first quarter of 2007.

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Option Contracts

In our homebuilding operations, we have access to land through option contracts, which generally enables us to defer acquiring portions of properties owned by third parties (including land funds) and unconsolidated entities until we are ready to build homes on them.

A majority of our option contracts require a non-refundable cash deposit or irrevocable letter of credit based on a percentage of the purchase price of the land. These option deposits generally approximate 10% of the exercise price. These options are generally rolling options, in which we acquire homesites based on pre-determined take-down schedules. Our option contracts often include price escalators, which adjust the purchase price of the land to its approximate fair value at time of the acquisition. The exercise periods of our option contracts vary on a case-by-case basis, but generally range from one-to-ten years.

Our investments in option contracts are recorded at cost unless those investments are determined to be impaired, in which case our investments are written down to fair value. We review option contracts for impairment during each reporting period in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-lived Assets, (“SFAS 144”). The most significant indicator of impairment is a decline in the fair value of the optioned property such that the purchase and development of the optioned property would no longer meet our targeted return on investment. Such declines could be caused by a variety of factors including increased competition, decreases in demand or changes in local regulations that adversely impact the cost of development. Changes in any of these factors would cause us to re-evaluate the likelihood of exercising our land options.

Each option contract contains a predetermined take-down schedule for the optioned land parcels. However, in almost all instances, we are not required to purchase land in accordance with those take-down schedules. In substantially all instances, we have the right and ability to not exercise our option and forfeit our deposit without further penalty, other than termination of the option and loss of any unapplied portion of our deposit and pre-acquisition costs. Therefore, in substantially all instances, we do not consider the take-down price to be a firm contractual obligation. When we permit an option to terminate or walk away from an option, we write-off any unapplied deposit and pre-acquisition costs. For the year ended November 30, 2006, we wrote-off $152.2 million of option deposits and pre-acquisition costs related to 24,235 homesites under option that we do not intend to purchase, compared to $15.1 million in 2005.

In very limited cases, the land seller can enforce the take-down schedule by requiring us to exercise our option. We record the option contract as a financing arrangement when required in accordance with SFAS No. 49, Accounting for Product Financing Arrangements, and record the optioned property and related take-down liability in our consolidated financial statements.

We evaluated all option contracts for land when entered into or upon a reconsideration event and determined we were the primary beneficiary of certain of these option contracts. Although we do not have legal title to the optioned land, under FIN 46(R), we, if we are deemed to be the primary beneficiary, are required to consolidate the land under option at the purchase price of the optioned land. During 2006 and 2005, the effect of the consolidation of these option contracts was an increase of $548.7 million and $516.3 million, respectively, to consolidated inventory not owned with a corresponding increase to liabilities related to consolidated inventory not owned in our consolidated balance sheets as of November 30, 2006 and 2005. This increase was offset primarily by the exercising of our options to acquire land under certain contracts previously consolidated under FIN 46(R), resulting in a net increase in consolidated inventory not owned of $1.8 million. To reflect the purchase price of the inventory consolidated under FIN 46(R), we reclassified $80.7 million of related option deposits from land under development to consolidated inventory not owned in the accompanying consolidated balance sheet as of November 30, 2006. The liabilities related to consolidated inventory not owned represent the difference between the purchase price of the optioned land and our cash deposits.

At November 30, 2006 and 2005, our exposure to loss related to our option contracts with third parties and unconsolidated entities consisted of our non-refundable option deposits and advanced costs totaling $785.9 million and $741.6 million, respectively. Additionally, we posted $553.4 million of letters of credit in lieu of cash deposits under certain option contracts as of November 30, 2006.

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The table below indicates the number of homesites owned and homesites to which we had access through option contracts with third parties (“optioned”) or unconsolidated joint ventures in which we have investments (“JVs”) (i.e., controlled homesites) for each of our homebuilding segments and Homebuilding Other at November 30, 2006 and 2005:

	Controlled
November 30, 2006	Optioned		JVs		Total		Owned		Total
East	42,733		17,898		60,631		36,169		96,800
Central	27,435		30,815		58,250		21,887		80,137
West	17,959		43,789		61,748		22,390		84,138
Other	6,631		2,019		8,650		11,879		20,529
Total	94,758		94,521		189,279		92,325		281,604
Percentage	34	%	33	%	67	%	33	%	100	%
	Controlled
November 30, 2005	Optioned		JVs		Total		Owned		Total
East	60,954		15,930		76,884		39,259		116,143
Central	29,794		31,284		61,078		27,704		88,782
West	26,345		45,609		71,954		24,477		96,431
Other	9,920		2,283		12,203		11,247		23,450
Total	127,013		95,106		222,119		102,687		324,806
Percentage	39	%	29	%	68	%	32	%	100	%

Contractual Obligations and Commercial Commitments

The following table summarizes our contractual debt obligations at November 30, 2006:

			Payments Due by Period
Contractual Obligations	Total		Less than 1 year	1 to 3 years	3 to 5 years	More than 5 years
	(In thousands)
Homebuilding—Senior notes and other debts payable	$	2,613,503	87,298	613,940	567,347	1,344,918
Financial services—Notes and other debts payable		1,149,231	1,149,005	171	31	24
Interest commitments under interest bearing debt*		866,827	162,778	273,463	198,041	232,545
Operating leases		284,446	92,481	107,213	57,478	27,274
Total contractual cash obligations	$	4,914,007	1,491,562	994,787	822,897	1,604,761

* Interest commitments on variable interest-bearing debt are determined based on the interest rate as of November 30, 2006.

We are subject to the usual obligations associated with entering into contracts (including option contracts) for the purchase, development and sale of real estate in the routine conduct of our business. Option contracts for the purchase of land generally enable us to defer acquiring portions of properties owned by third parties and unconsolidated entities until we are ready to build homes on them. This reduces our financial risk associated with land holdings. At November 30, 2006, we had access to 189,279 homesites through option contracts with third parties and unconsolidated entities in which we have investments. At November 30, 2006, we had $785.9 million of non-refundable option deposits and advanced costs related to certain of these homesites. Additionally, we posted $553.4 million of letters of credit in lieu of cash deposits under certain option contracts as of November 30, 2006.

We are committed, under various letters of credit, to perform certain development and construction activities and provide certain guarantees in the normal course of business. Outstanding letters of credit under these arrangements totaled $1.4 billion (which included the $553.4 million of letters of credit noted above) at November 30, 2006. Additionally, we had outstanding performance and surety bonds related to site improvements at various projects with estimated costs to complete of $1.8 billion. We do not believe there will be any draws upon these letters of credit or bonds, but if there were any, we do not believe these draws would have a material effect on our financial position, results of operations or cash flows.

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Our Financial Services segment had a pipeline of loan applications in process of $2.9 billion at November 30, 2006. Loans in process for which interest rates were committed to the borrowers totaled approximately $323.9 million as of November 30, 2006. Substantially all of these commitments were for periods of 60 days or less. Since a portion of these commitments is expected to expire without being exercised by the borrowers, the total commitments do not necessarily represent future cash requirements.

Our Financial Services segment uses mandatory mortgage-backed securities (“MBS”) forward commitments and MBS option contracts to hedge its interest rate exposure during the period from when it extends an interest rate lock to a loan applicant until the time at which the loan is sold to an investor. These instruments involve, to varying degrees, elements of credit and interest rate risk. Credit risk is managed by entering into MBS forward commitments and MBS option contracts only with investment banks with primary dealer status and loan sales transactions with permanent investors meeting our credit standards. Our risk, in the event of default by the purchaser, is the difference between the contract price and fair value. At November 30, 2006, we had open commitments amounting to $335.0 million to sell MBS with varying settlement dates through January 2007.

The following sections discuss economic conditions, market and financing risk, seasonality, and interest rates and changing prices that may have an impact on our business:

Economic Conditions

During 2006, conditions in the homebuilding industry weakened and we have not yet seen a recovery as we entered the first quarter of 2007. This market deterioration has been driven primarily by excess supply as speculators reduced purchases and returned homes to the market as well as negative customer sentiment surrounding the general homebuilding market. We experienced slower sales (down 3% in 2006) and higher cancellations (29% in 2006) which have impacted most of our markets and therefore, we made greater use of sales incentives ($32,000 per home delivered in 2006, compared to $9,000 per home delivered in 2005) to generate sales in order to achieve our delivery goals which resulted in lower inventory levels. A continued decline in the prices for new homes could adversely affect both our revenues and margins, as well as the carrying value of our inventory and other investments.

Market and Financing Risk

We finance our contributions to JVs, land acquisition and development activities, construction activities, financial services activities and general operating needs primarily with cash generated from operations and public debt issuances, as well as cash borrowed under our revolving credit facility, issuance of commercial paper and unsecured, fixed-rate notes and borrowings under our warehouse lines of credit. We also purchase land under option agreements, which enables us to acquire homesites when we are ready to build homes on them. The financial risks of adverse market conditions associated with land holdings are managed by prudent underwriting of land purchases in areas we view as desirable growth markets, careful management of the land development process and limitation of risks by using partners to share the costs of purchasing and developing land, as well as obtaining access to land through option contracts.

Seasonality

We have historically experienced variability in our results of operations from quarter-to-quarter due to the seasonal nature of the homebuilding business. Currently, we are focusing our efforts on asset management and our homebuilding manufacturing process, in order to achieve a more evenflow production of home deliveries throughout the year. Evenflow production involves determining the appropriate production levels based on demand in the market, and is driven by a defined production schedule designed to produce a consistent level of starts and deliveries throughout the year in order to gain production efficiencies. If our efforts at evenflow production are successful, the result should be a reduction in inventory cycle time and more accurate start, completion and delivery dates.

Interest Rates and Changing Prices

Inflation can have a long-term impact on us because increasing costs of land, materials and labor result in a need to increase the sales prices of homes. In addition, inflation is often accompanied by higher interest rates, which can have a negative impact on housing demand and the costs of financing land development activities and housing construction. Rising interest rates, as well as increased materials and labor costs, may reduce gross margins. An increase in material and labor costs, along with a more normalized home sales price appreciation in

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2006 compared to previous years, have contributed to lower gross margins and in certain instances to inventory valuation adjustments. In recent years, the increases in these costs have followed the general rate of inflation and hence have not had a significant adverse impact on us. In addition, deflation can impact the value of real estate and make it difficult for us to recover our land costs. Therefore, either inflation or deflation could adversely impact our future results of operations.

New Accounting Pronouncements

In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of SFAS 109, (“FIN 48”). FIN 48 provides interpretive guidance for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 is effective for fiscal years beginning after December 15, 2006 (our fiscal year beginning December 1, 2007). We are currently reviewing the effect of this Interpretation on our consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 (our fiscal year beginning December 1, 2007), and interim periods within those fiscal years. SFAS 157 is not expected to materially affect how we determine fair value.

In September 2006, the Securities and Exchange Commission Staff issued Staff Accounting Bulletin 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, (“SAB 108”). SAB 108 addresses how the effects of prior year uncorrected financial statement misstatements should be considered in current year financial statements. SAB 108 requires registrants to quantify misstatements using both balance sheet and income statement approaches and to evaluate whether either approach results in quantifying an error that is material in light of relative quantitative and qualitative factors. SAB 108 is effective for annual financial statements covering the first fiscal year ending after November 15, 2006 (our fiscal year ended November 30, 2006). SAB 108 did not have an effect on our consolidated financial statements.

In November 2006, the FASB issued Emerging Issues Task Force Issue No. 06-8, Applicability of the Assessment of a Buyers Continuing Investment under FASB Statement No. 66, Accounting for Sales of Real Estate, for Sales of Condominiums, (“EITF 06-8”). EITF 06-8 establishes that a company should evaluate the adequacy of the buyer’s continuing investment in determining whether to recognize profit under the percentage-of-completion method. EITF 06-8 is effective for the first annual reporting period beginning after March 15, 2007 (our fiscal year beginning December 1, 2007). The effect of this EITF is not expected to be material to our consolidated financial statements.

Critical Accounting Policies and Estimates

Our accounting policies are more fully described in Note 1 of the notes to our consolidated financial statements included in Item 8 of this document. As discussed in Note 1, the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about future events that affect the amounts reported in our consolidated financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results could differ from those estimates, and such differences may be material to our consolidated financial statements. Listed below are those policies and estimates that we believe are critical and require the use of significant judgment in their application.

Homebuilding Operations

Revenue Recognition

Revenues from sales of homes are recognized when sales are closed and title passes to the new homeowner, the new homeowner’s initial and continuing investment is adequate to demonstrate a commitment to pay for the home, the new homeowner’s receivable is not subject to future subordination and we do not have a substantial continuing involvement with the new home in accordance with SFAS No. 66, Accounting for Sales of Real Estate, (“SFAS 66”). Revenues from sales of land are recognized when a significant down payment is received, the earnings process is complete, title passes and collectibility of the receivable is reasonably assured. We believe that the accounting policy related to revenue recognition is a critical accounting policy because of the significance of revenue recognition.

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Inventories

Inventories are stated at cost, unless the inventory within a community is determined to be impaired, in which case the impaired inventory would be written down to fair value. Inventory costs include land, land development and home construction costs, real estate taxes, deposits on land purchase contracts and interest related to development and construction. Land, land development, amenities and other costs are accumulated by specific area and allocated to homes within the respective areas.

We evaluate our inventory for impairment during each reporting period in accordance with SFAS 144. Accounting standards require that if the sum of the undiscounted future cash flows expected to result from an asset is less than the carrying value of the asset, an asset impairment must be recognized in the consolidated financial statements. The amount of impairment is calculated by subtracting the fair value of the asset from the carrying value of the asset.

We believe that the accounting related to inventory valuation and impairment is a critical accounting estimate because: (1) assumptions inherent in the valuation of our inventory are highly subjective and susceptible to change and (2) the impact of recognizing impairments on our inventory could be material to our consolidated balance sheets and statements of earnings. We evaluate our inventory for impairment periodically on an asset-by-asset basis. This evaluation includes two critical assumptions with regard to future homesite sales prices, cost of sales and absorption. The two critical assumptions include the timing of the homesite sales and the discount rate applied to determine the fair value of the homesites on the balance sheet date. Our assumptions on the timing of homesite sales are critical because the homebuilding industry has historically been cyclical and sensitive to changes in economic conditions such as interest rates and unemployment levels. Changes in these economic conditions could materially affect the projected sales price, costs to develop our homesites and/or absorption. Our assumption on discount rates is critical because the selection of a discount rate affects the estimated fair value of the homesites. A higher discount rate reduces the estimated fair value of the homesites, while a lower discount rate increases the estimated fair value of the homesites. Because of changes in economic and market conditions and assumptions and estimates required of management in valuing inventory during these changing market conditions, actual results could differ materially from management’s assumptions and may require material inventory impairment charges to be recorded in the future.

During the years ended November 30, 2006 and 2005, we recorded $501.8 million and $20.5 million, respectively, of inventory adjustments, which included $280.5 million of homebuilding inventory valuation adjustments in 2006, $152.2 million and $15.1 million, respectively, in 2006 and 2005 of write-offs of deposits and pre-acquisition costs related to land under option that we do not intend to purchase and $69.1 million and $5.4 million, respectively, in 2006 and 2005 of land inventory valuation adjustments. During the year ended November 30, 2004, we recorded $16.8 million of write-offs of deposits and pre-acquisition costs related to land under option that we do not intend to purchase. These valuation adjustments were calculated based on current market conditions and assumptions made by our management, which may differ materially from actual results if market conditions change.

Warranty Costs

Although we subcontract virtually all aspects of construction to others and our contracts call for the subcontractors to repair or replace any deficient items related to their trade, we are primarily responsible to correct any deficiencies. Additionally, in some instances, we may be held responsible for the actions of or losses incurred by subcontractors. Warranty reserves are established at an amount estimated to be adequate to cover potential costs for materials and labor with regard to warranty-type claims expected to be incurred subsequent to the delivery of a home. Reserves are determined based upon historical data and trends with respect to similar product types and geographical areas. We believe the accounting estimate related to the reserve for warranty costs is a critical accounting estimate because the estimate requires a large degree of judgment.

At November 30, 2006, the reserve for warranty costs was $172.6 million. While we believe that the reserve for warranty costs is adequate, there can be no assurances that historical data and trends will accurately predict our actual warranty costs. Additionally, there can be no assurances that future economic or financial developments might not lead to a significant change in the reserve.

Investments in Unconsolidated Entities

We frequently invest in entities that acquire and develop land for sale to us in connection with our homebuilding operations or for sale to third parties. Our partners generally are unrelated homebuilders, land owners/developers and financial or other strategic partners.

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Most of the unconsolidated entities through which we acquire and develop land are accounted for by the equity method of accounting because we are not the primary beneficiary, as defined under FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities, and we have a significant, but less than controlling, interest in the entities. We record our investments in these entities in our consolidated balance sheets as “Investments in Unconsolidated Entities” and our pro-rata share of the entities’ earnings or losses in our consolidated statements of earnings as “Equity in Earnings (Loss) from Unconsolidated Entities,” as described in Note 6 of the notes to our consolidated financial statements. Advances to these entities are included in the investment balance.

Management uses its judgment when determining if we are the primary beneficiary of, or have a controlling interest in, an unconsolidated entity. Factors considered in determining whether we have significant influence or we have control include risk and reward sharing, experience and financial condition of the other partners, voting rights, involvement in day-to-day capital and operating decisions and continuing involvement. The accounting policy relating to the use of the equity method of accounting is a critical accounting policy due to the judgment required in determining whether we are the primary beneficiary or have control or significant influence.

As of November 30, 2006, we believe that the equity method of accounting is appropriate for our investments in unconsolidated entities where we are not the primary beneficiary and we do not have a controlling interest, but rather share control with our partners. At November 30, 2006, the unconsolidated entities in which we had investments had total assets of $10.1 billion and total liabilities of $6.4 billion.

We evaluate our investments in unconsolidated entities for impairment during each reporting period in accordance with Accounting Principles Board (“APB”) Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock. A series of operating losses of an investee or other factors may indicate that a decrease in value of our investment in the unconsolidated entity has occurred which is other-than-temporary. The amount of impairment to recognize is calculated by subtracting the fair value of the asset from the carrying value of the asset. Our evaluation includes two critical assumptions: projected future distributions from the unconsolidated entities and discount rates applied to the future distributions. Our assumptions on the projected future distributions from the unconsolidated entities are critical because the operating results of the unconsolidated entities from which the projected distributions are derived are dependent on the status of the homebuilding industry, which has historically been cyclical and sensitive to changes in economic conditions such as interest rates and unemployment levels. Changes in these economic conditions could materially affect the projected operational results of the unconsolidated entities from which the distributions are derived. Our assumption on discount rates is critical because the selection of a discount rate affects the estimated fair value of our investment in the unconsolidated entities. A higher discount rate reduces the estimated fair value of our investment in the unconsolidated entities, while a lower discount rate increases the estimated fair value of our investment in the unconsolidated entities. During the years ended November 30, 2005 and 2004, we did not record any material valuation adjustments to our investment in unconsolidated entities; however, during the year ended November 30, 2006, we recorded $126.4 million of valuation adjustments. Because of changes in economic conditions, actual results could differ materially from management’s assumptions and may require material valuation adjustments to our investments in unconsolidated entities to be recorded in the future.

Financial Services Operations

Revenue Recognition

Loan origination revenues, net of direct origination costs, and gains and losses from the sale of loans and loan servicing rights are recognized when the loans are sold and shipped to an investor. Premiums from title insurance policies are recognized as revenue on the effective dates of the policies. Escrow fees are recognized at the time the related real estate transactions are completed, usually upon the close of escrow. Interest income on loans held-for-sale is recognized as earned over the terms of the mortgage loans based on the contractual interest rates. In all circumstances, we do not recognize revenue until the earnings process is complete and collectibility of the receivable is reasonably assured. We believe that the accounting policy related to revenue recognition is a critical accounting policy because of the significance of revenue recognition.

Allowance for Loan and Other Losses

We provide an allowance for loan losses by taking into consideration various factors such as past loan loss experience, present economic conditions and other factors considered relevant by management. Anticipated changes in economic conditions, which may influence the level of the allowance, are considered in the evaluation by management when the likelihood of the changes can be reasonably determined. This analysis is based on judgments and estimates and may change in response to economic developments or other conditions that may

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influence borrowers’ financial conditions or prospects. At November 30, 2006, the allowance for loan losses was $1.8 million. While we believe that the 2006 year-end allowance is adequate, particularly in view of the fact that we usually sell the loans in the secondary mortgage market on a non-recourse basis within 60 days after we originate them, remaining liable for certain representations and warranties, there can be no assurances that future economic or financial developments, including general interest rate increases or a slowdown in the economy, might not lead to increased provisions to the allowance or a higher occurrence of loan charge-offs. This allowance requires management’s judgment and estimate. For these reasons, we believe that the accounting estimate related to the allowance for loan losses is a critical accounting estimate.

We provide an allowance for estimated title and escrow losses based upon management’s evaluation of claims presented and estimates for any incurred but not reported claims. The allowance is established at a level that management estimates to be sufficient to satisfy those claims where a loss is determined to be probable and the amount of such loss can be reasonably estimated. The allowance for title and escrow losses for both known and incurred but not reported claims is considered by management to be adequate for such purposes.

Homebuilding and Financial Services Operations

Goodwill

Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations. The process of determining goodwill requires judgment. Evaluating goodwill for impairment involves the determination of the fair value of our reporting units. Inherent in such fair value determinations are certain judgments and estimates, including the interpretation of current economic indicators and market valuations, and our strategic plans with regard to our operations. To the extent additional information arises or our strategies change, it is possible that our conclusion regarding goodwill impairment could change, which could have a material effect on our financial position and results of operations. For these reasons, we believe that the accounting estimate related to goodwill impairment is a critical accounting estimate.

We review goodwill annually (or whenever indicators of impairment exist) for impairment in accordance with SFAS No. 142, Goodwill and Other Intangible Assets. We performed our annual impairment test of goodwill as of September 30, 2006 and determined that goodwill was not impaired.

At November 30, 2006, goodwill was $257.8 million. While we believe that no impairment existed as of November 30, 2006, there can be no assurances that future economic or financial developments, including general interest rate increases or a slowdown in the economy, might not lead to an impairment of goodwill.

Valuation of Deferred Tax Assets

We record income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and attributable to operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which the temporary differences are expected to be recovered or paid. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period when the changes are enacted.

We believe that the accounting estimate for the valuation of deferred tax assets is a critical accounting estimate because judgment is required in assessing the likely future tax consequences of events that have been recognized in our financial statements or tax returns. We base our estimate of deferred tax assets and liabilities on current tax laws and rates and, in certain cases, business plans and other expectations about future outcomes. Changes in existing tax laws or rates could affect actual tax results and future business results may affect the amount of deferred tax liabilities or the valuation of deferred tax assets over time. Our accounting for deferred tax consequences represents our best estimate of future events. Although it is possible there will be changes that are not anticipated in our current estimates, we believe it is unlikely such changes would have a material period-to-period impact on our financial position or results of operations.

At November 30, 2006, our net deferred tax asset was $307.2 million. Based on our assessment, it appears more likely than not that the net deferred tax asset will be realized through future taxable earnings.

Share-Based Payments

We have share-based awards outstanding under four different plans which provide for the granting of stock options and stock appreciation rights and awards of restricted common stock (“nonvested shares”) to key officers, employees and directors. The exercise prices of stock options and stock appreciation rights may not be

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less than the market value of the common stock on the date of the grant. No options granted under the plans may be exercisable until at least six months after the date of the grant. Thereafter, exercises are permitted in installments determined when options are granted. Each stock option and stock appreciation right will expire on a date determined at the time of the grant, but not more than ten years after the date of the grant.

Prior to December 1, 2005, we accounted for stock option awards granted under our share-based payment plans in accordance with the recognition and measurement provisions of APB Opinion No. 25, Accounting for Stock Issued to Employees, (“APB 25”) and related Interpretations, as permitted by Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation, (“SFAS 123”). Share-based employee compensation expense was not recognized in our consolidated statements of earnings prior to December 1, 2005, as all stock option awards granted under the plans had an exercise price equal to or greater than the market value of the common stock on the date of the grant. Effective December 1, 2005, we adopted the provisions of SFAS No. 123 (revised 2004), Share-Based Payment, (“SFAS 123R”) using the modified-prospective-transition method. Under this transition method, compensation expense recognized during 2006 included: (a) compensation expense for all share-based awards granted prior to, but not yet vested as of, December 1, 2005, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123, and (b) compensation expense for all share-based awards granted subsequent to December 1, 2005, based on the grant date fair value estimated in accordance with the provisions of SFAS 123R. In accordance with the modified-prospective-transition method, results for prior periods have not been restated. The adoption of SFAS 123R resulted in a charge to net earnings of $0.11 per diluted share during 2006.

We believe that the accounting estimate for share based payments is a critical accounting estimate because the calculation of share-based employee compensation expense involves estimates that require management’s judgments. These estimates include the fair value of each of our stock option awards, which are estimated on the date of grant using a Black-Scholes option-pricing model as discussed in Note 15 of our consolidated financial statements included under Item 8 of this document. The fair value of our stock option awards, which are subject to graded vesting, is expensed on a straight-line basis over the vesting life of the options. Expected volatility is based on an average of (1) historical volatility of our stock and (2) implied volatility from traded options on our stock. The risk-free rate for periods within the contractual life of the stock option award is based on the yield curve of a zero-coupon U.S. Treasury bond on the date the stock option award is granted with a maturity equal to the expected term of the stock option award granted. We use historical data to estimate stock option exercises and forfeitures within our valuation model. The expected life of stock option awards granted is derived from historical exercise experience under our share-based payment plans and represents the period of time that stock option awards granted are expected to be outstanding.

Prior to the adoption of SFAS 123R, we presented all tax benefits related to deductions resulting from the exercise of stock options as cash flows from operating activities in the consolidated statements of cash flows. SFAS 123R requires that cash flows resulting from tax benefits related to tax deductions in excess of the compensation expense recognized for those options (excess tax benefits) be classified as financing cash flows.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risks related to fluctuations in interest rates on our investments, debt obligations, loans held-for-sale and loans held-for-investment. We utilize derivative instruments, including interest rate swaps, in conjunction with our overall strategy to manage our exposure to changes in interest rates. We also utilize forward commitments and option contracts to mitigate the risks associated with our mortgage loan portfolio.

The table on the following page provides information at November 30, 2006 about our significant derivative financial instruments and other financial instruments that are sensitive to changes in interest rates. For investments available-for-sale, loans held-for-sale, loans held-for-investment and investments held-to-maturity, senior notes and other debts payable and notes and other debts payable, the table presents principal cash flows and related weighted average effective interest rates by expected maturity dates and estimated fair values at November 30, 2006. Weighted average variable interest rates are based on the variable interest rates at November 30, 2006. For interest rate swaps, the table presents notional amounts and weighted average interest rates by contractual maturity dates and estimated fair values at November 30, 2006. Notional amounts are used to calculate the contractual cash flows to be exchanged under the contracts. Our trading investments do not have interest rate sensitivity, and therefore, are also excluded from the following table.

See Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 and Notes 1 and 17 of the notes to consolidated financial statements in Item 8 for a further discussion of these items and our strategy of mitigating our interest rate risk.

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Information Regarding Interest Rate Sensitivity

Principal (Notional) Amount by

Expected Maturity and Average Interest Rate

November 30, 2006

	Years Ending November 30,															Fair Value at November 30, 2006
	2007			2008		2009		2010		2011		Thereafter		Total
	(Dollars in millions)
ASSETS
Financial services:
Loans held-for-sale, net:
Fixed rate	$	—		—		—		—		—		331.4		331.4		331.4
Average interest rate		—		—		—		—		—		7.0	%	7.0	%	—
Variable rate	$	—		—		—		—		—		152.3		152.3		152.3
Average interest rate		—		—		—		—		—		6.8	%	6.8	%	—
Loans held-for-investment and investments held-to-maturity:
Fixed rate	$	218.7		3.6		5.7		4.3		0.3		14.8		247.4		245.4
Average interest rate		5.8	%	7.4	%	9.5	%	6.8	%	9.2	%	8.5	%	6.1	%	—
Variable rate	$	—		—		—		—		0.1		1.7		1.8		1.8
Average interest rate		—		—		—		—		6.1	%	6.1	%	6.1	%	—
LIABILITIES
Homebuilding:
Senior notes and other debts payable:
Fixed rate	$	62.0		6.0		278.0		317.9		249.4		1,344.9		2,258.2		2,270.9
Average interest rate		2.6	%	7.9	%	7.6	%	5.3	%	6.0	%	5.8	%	5.9	%	—
Variable rate	$	25.3		30.0		300.0		—		—		—		355.3		355.3
Average interest rate		9.6	%	9.3	%	6.1	%	—		—		—		6.7	%	—
Financial services:
Notes and other debts payable:
Variable rate	$	1,149.0		0.1		0.1		—		—		—		1,149.2		1,149.2
Average interest rate		6.1	%	7.1	%	7.2	%	—		—		—		6.1	%	—
OTHER FINANCIAL INSTRUMENTS
Homebuilding liabilities:
Interest rate swaps:
Variable to fixed—notional amount	$	130.3		69.7		—		—		—		—		200.0		2.1
Average pay rate		6.8	%	6.8	%	—		—		—		—		6.8	%	—
Average receive rate		LIBOR		LIBOR		—		—		—		—		—

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Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control—Integrated Framework, our management concluded that our internal control over financial reporting was effective as of November 30, 2006. Our management’s assessment of the effectiveness of our internal control over financial reporting as of November 30, 2006 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their attestation report which is included herein.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Lennar Corporation

We have audited management’s assessment, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting, that Lennar Corporation and subsidiaries (the “Company”) maintained effective internal control over financial reporting as of November 30, 2006, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that the Company maintained effective internal control over financial reporting as of November 30, 2006, is fairly stated, in all material respects, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of November 30, 2006, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended November 30, 2006 of the Company and our report dated February 8, 2007 expressed an unqualified opinion on those financial statements.

/s/ DELOITTE & TOUCHE LLP

Certified Public Accountants

Miami, Florida

February 8, 2007

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Item 8.    Financial Statements and Supplementary Data.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Lennar Corporation

We have audited the accompanying consolidated balance sheets of Lennar Corporation and subsidiaries (the “Company”) as of November 30, 2006 and 2005, and the related consolidated statements of earnings, stockholders’ equity, and cash flows for each of the three years in the period ended November 30, 2006. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Lennar Corporation and subsidiaries as of November 30, 2006 and 2005, and the results of their operations and their cash flows for each of the three years in the period ended November 30, 2006, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of November 30, 2006, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 8, 2007 expressed an unqualified opinion on management’s assessment of the effectiveness of the Company’s internal control over financial reporting and an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

Certified Public Accountants

Miami, Florida

February 8, 2007

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LENNAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

November 30, 2006 and 2005

	2006			2005
	(In thousands, except per share amounts)
ASSETS
Homebuilding:
Cash	$	661,662		909,557
Restricted cash		24,796		22,681
Receivables, net		159,043		299,232
Inventories:
Finished homes and construction in progress		4,447,748		4,625,563
Land under development		3,011,408		2,867,463
Consolidated inventory not owned		372,327		370,505
Total inventories		7,831,483		7,863,531
Investments in unconsolidated entities		1,447,178		1,282,686
Goodwill		196,638		195,156
Other assets		474,090		266,747
		10,794,890		10,839,590
Financial services		1,613,376		1,701,635
Total assets	$	12,408,266		12,541,225
LIABILITIES AND STOCKHOLDERS’ EQUITY
Homebuilding:
Accounts payable	$	751,496		876,830
Liabilities related to consolidated inventory not owned		333,723		306,445
Senior notes and other debts payable		2,613,503		2,592,772
Other liabilities		1,590,564		1,997,824
		5,289,286		5,773,871
Financial services		1,362,215		1,437,700
Total liabilities		6,651,501		7,211,571
Minority interest		55,393		78,243
Stockholders’ equity:
Preferred stock		—		—
Class A common stock of $0.10 par value per share
Authorized: 2006 and 2005-300,000 shares
Issued: 2006-136,886 shares; 2005-130,247 shares		13,689		13,025
Class B common stock of $0.10 par value per share
Authorized: 2006 and 2005-90,000 shares
Issued: 2006-32,874 shares; 2005-32,781 shares		3,287		3,278
Additional paid-in capital		1,753,695		1,486,988
Retained earnings		4,539,137		4,046,563
Deferred compensation plan; 2006-172 Class A common shares and 17 Class B common shares; 2005-439 Class A common shares and 44 Class B common shares		(1,586	)	(4,047	)
Deferred compensation liability		1,586		4,047
Treasury stock, at cost; 2006-9,951 Class A common shares and 1,653 Class B common shares; 2005-5,468 Class A common shares		(606,395	)	(293,222	)
Accumulated other comprehensive loss		(2,041	)	(5,221	)
Total stockholders’ equity		5,701,372		5,251,411
Total liabilities and stockholders’ equity	$	12,408,266		12,541,225

See accompanying notes to consolidated financial statements.

45

LENNAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

Years Ended November 30, 2006, 2005 and 2004

	2006			2005	2004
	(Dollars in thousands, except per share amounts)
Revenues:
Homebuilding	$	15,623,040		13,304,599	10,000,632
Financial services		643,622		562,372	500,336
Total revenues		16,266,662		13,866,971	10,500,968
Costs and expenses:
Homebuilding (1)		14,677,565		11,215,244	8,629,767
Financial services		493,819		457,604	389,605
Corporate general and administrative		193,307		187,257	141,722
Total costs and expenses		15,364,691		11,860,105	9,161,094
Equity in earnings (loss) from unconsolidated entities (2)		(12,536	)	133,814	90,739
Management fees and other income, net		66,629		98,952	97,680
Minority interest expense, net		13,415		45,030	10,796
Loss on redemption of 9.95% senior notes		—		34,908	—
Earnings from continuing operations before provision for income taxes		942,649		2,159,694	1,517,497
Provision for income taxes		348,780		815,284	572,855
Net earnings from continuing operations		593,869		1,344,410	944,642
Discontinued operations:
Earnings from discontinued operations before provision for income taxes		—		17,261	1,570
Provision for income taxes		—		6,516	593
Net earnings from discontinued operations		—		10,745	977
Net earnings	$	593,869		1,355,155	945,619
Basic earnings per share:
Earnings from continuing operations	$	3.76		8.65	6.08
Earnings from discontinued operations		—		0.07	0.01
Net earnings	$	3.76		8.72	6.09
Diluted earnings per share:
Earnings from continuing operations	$	3.69		8.17	5.70
Earnings from discontinued operations		—		0.06	—
Net earnings	$	3.69		8.23	5.70

(1) Homebuilding costs and expenses include $501.8 million, $20.5 million and $16.8 million, respectively, of inventory valuation adjustments for the years ended November 30, 2006, 2005 and 2004.

(2) Equity in earnings (loss) from unconsolidated entities includes $126.4 million of valuation adjustments to the Company’s investments in unconsolidated entities for the year ended November 30, 2006. There were no material valuation adjustments for the years ended November 30, 2005 and 2004.

See accompanying notes to consolidated financial statements.

46

LENNAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Years Ended November 30, 2006, 2005 and 2004

	2006			2005		2004
	(Dollars in thousands)
Class A common stock:
Beginning balance	$	13,025		12,372		12,533
Conversion of 5.125% zero-coupon convertible senior subordinated notes to Class A common shares		488		409		—
Par value of retired treasury stock		—		—		(240	)
Employee stock and director plans		176		244		79
Balance at November 30,		13,689		13,025		12,372
Class B common stock:
Beginning balance		3,278		3,260		3,251
Employee stock plans		9		18		9
Balance at November 30,		3,287		3,278		3,260
Additional paid-in capital:
Beginning balance		1,486,988		1,275,216		1,354,003
Conversion of 5.125% zero-coupon convertible senior subordinated notes to Class A common shares		157,406		127,869		—
Conversion of other debt		—		—		25
Employee stock and director plans		82,342		37,807		14,449
Tax benefit from employee stock plans and vesting of restricted stock		15,705		39,180		13,142
Retirement of treasury stock		—		—		(109,404	)
Amortization of restricted stock and performance-based stock options		11,254		6,916		3,001
Balance at November 30,		1,753,695		1,486,988		1,275,216
Retained earnings:
Beginning balance		4,046,563		2,780,637		1,914,963
Net earnings		593,869		1,355,155		945,619
Cash dividends—Class A common stock		(80,860	)	(70,495	)	(63,252	)
Cash dividends—Class B common stock		(20,435	)	(18,734	)	(16,693	)
Balance at November 30,		4,539,137		4,046,563		2,780,637
Deferred compensation plan:
Beginning balance		(4,047	)	(6,410	)	(4,919	)
Deferred compensation activity		2,461		2,363		(1,491	)
Balance at November 30,	$	(1,586	)	(4,047	)	(6,410	)

See accompanying notes to consolidated financial statements.

47

LENNAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY—(Continued)

Years Ended November 30, 2006, 2005 and 2004

	2006			2005		2004
	(Dollars in thousands)
Deferred compensation liability:
Beginning balance	$	4,047		6,410		4,919
Deferred compensation activity		(2,461	)	(2,363	)	1,491
Balance at November 30,		1,586		4,047		6,410
Treasury stock, at cost:
Beginning balance		(293,222	)	(3,938	)	—
Employee stock plans		(3,125	)	(14,385	)	(4,020	)
Purchases of treasury stock		(320,104	)	(274,899	)	(109,562	)
Reissuance of treasury stock		10,056		—		—
Retirement of treasury stock		—		—		109,644
Balance at November 30,		(606,395	)	(293,222	)	(3,938	)
Accumulated other comprehensive loss:
Beginning balance		(5,221	)	(14,575	)	(20,976	)
Unrealized gains arising during period on interest rate swaps, net of tax		2,853		10,049		6,734
Unrealized gains arising during period on available-for-sale investment securities, net of tax		7		185		53
Reclassification adjustment for gains included in net earnings for available-for-sale investment securities, net of tax		(245	)	—		—
Change to the Company’s portion of unconsolidated entity’s minimum pension liability, net of tax		565		(880	)	(386	)
Balance at November 30,		(2,041	)	(5,221	)	(14,575	)
Total stockholders’ equity	$	5,701,372		5,251,411		4,052,972
Comprehensive income	$	597,049		1,364,509		952,020

See accompanying notes to consolidated financial statements.

48

LENNAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended November 30, 2006, 2005 and 2004

	2006			2005		2004
	(Dollars in thousands)
Cash flows from operating activities:
Net earnings from continuing operations	$	593,869		1,344,410		944,642
Adjustments to reconcile net earnings from continuing operations to net cash provided by operating activities:
Depreciation and amortization		45,431		58,253		52,572
Amortization of discount/premium on debt, net		4,580		14,389		17,713
Gain on sale of personal lines insurance policies		(17,714	)	—		—
Equity in (earnings) loss from unconsolidated entities, net of $126.4 million of valuation adjustments to the Company’s investments in unconsolidated entities in 2006		12,536		(133,814	)	(90,739	)
Distribution of earnings from unconsolidated entities		174,979		221,131		128,535
Minority interest expense, net		13,415		45,030		10,796
Share-based compensation expense		36,632		6,916		3,001
Tax benefits from share-based awards		8,602		39,180		13,142
Deferred income tax provision (benefit)		(198,005	)	10,220		81,532
Loss on redemption of 9.95% senior notes		—		34,908		—
Inventory write-offs and valuation adjustments		501,786		20,542		16,769
Changes in assets and liabilities, net of effect from acquisitions:
(Increase) decrease in receivables		47,843		(221,275	)	(385,204	)
Increase in inventories, net of inventory write-offs and valuation adjustments		(371,268	)	(1,708,033	)	(886,963	)
(Increase) decrease in other assets		9,253		(30,150	)	(1,289	)
(Increase) decrease in financial services loans held-for-sale		78,922		(114,657	)	94,948
Increase (decrease) in accounts payable and other liabilities		(386,211	)	741,690		418,573
Net earnings from discontinued operations		—		10,745		977
Adjustment to reconcile net earnings from discontinued operations to net cash provided by operating activities (including gain on sale of discontinued operations of ($15,816) in 2005)		—		(16,510	)	1,187
Net cash provided by operating activities		554,650		322,975		420,192
Cash flows from investing activities:
(Increase) decrease in restricted cash		(2,115	)	(11,129	)	32,584
Additions to operating properties and equipment		(26,783	)	(21,747	)	(27,389	)
Contributions to unconsolidated entities		(729,304	)	(919,817	)	(751,211	)
Distributions of capital from unconsolidated entities		321,610		466,800		330,614
(Increase) decrease in financial services loans held-for-investment		70,970		(117,359	)	1,211
Purchases of investment securities		(108,626	)	(37,350	)	(48,562	)
Proceeds from sales of investment securities		82,492		36,078		34,376
Proceeds from sale of business		—		17,000		—
Proceeds from sale of personal lines insurance policies		18,500		—		—
Acquisitions, net of cash acquired		(33,213	)	(416,049	)	(105,730	)
Net cash used in investing activities		(406,469	)	(1,003,573	)	(534,107	)
Cash flows from financing activities:
Net borrowings (repayments) under financial services debt		(120,858	)	372,849		162,277
Net proceeds from senior floating-rate notes due 2007		—		—		199,300
Net proceeds from senior floating-rate notes due 2009		—		—		298,500
Net proceeds from 5.125% senior notes		—		298,215		—
Net proceeds from 5.50% senior notes		—		—		245,480
Net proceeds from 5.60% senior notes		—		501,460		—
Net proceeds from 5.95% senior notes		248,665		—		—
Net proceeds from 6.50% senior notes		248,933		—		—
Redemption of senior floating-rate notes due 2007		(200,000	)	—		—
Redemption of 9.95% senior notes		—		(337,731	)	—
Proceeds from other borrowings		2,489		53,198		—

See accompanying notes to consolidated financial statements.

49

LENNAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)

Years Ended November 30, 2006, 2005 and 2004

	2006			2005		2004
	(Dollars in thousands)
Principal payments on other borrowings		(150,793	)	(190,240	)	(404,089	)
Net payments related to minority interests		(71,351	)	(33,181	)	(18,396	)
Excess tax benefits from share-based awards		7,103		—		—
Common stock:
Issuances		31,131		38,069		14,537
Repurchases		(323,229	)	(289,284	)	(113,582	)
Dividends		(101,295	)	(89,229	)	(79,945	)
Net cash provided by (used in) financing activities		(429,205	)	324,126		304,082
Net increase (decrease) in cash	$	(281,024	)	(356,472	)	190,167
Cash at beginning of year		1,059,343		1,415,815		1,225,648
Cash at end of year	$	778,319		1,059,343		1,415,815
Summary of cash:
Homebuilding	$	661,662		909,557		1,310,920
Financial services		116,657		149,786		104,895
	$	778,319		1,059,343		1,415,815
Supplemental disclosures of cash flow information:
Cash paid for interest, net of amounts capitalized	$	28,731		15,844		—
Cash paid for income taxes, net	$	915,743		571,498		278,444
Supplemental disclosures of non-cash investing and financing activities:
Conversion of debt to equity	$	157,894		128,278		25
Purchases of inventory financed by sellers	$	36,810		159,078		45,892
Non-cash contributions to unconsolidated entities	$	39,491		—		—
Non-cash distributions from unconsolidated entities	$	25,329		74,498		31,311
Issuance of common stock for employee compensation	$	38,150		—		—
Consolidation/deconsolidation of previously unconsolidated/consolidated entities, net:
Receivables	$	(232	)	20,100		—
Inventories	$	188,191		153,005		92,614
Investments in unconsolidated entities	$	(38,354	)	(26,103	)	(4,903	)
Other assets	$	6,563		6,423		1,919
Other debts payable	$	(81,455	)	(81,006	)	(48,099	)
Other liabilities	$	(40,588	)	(49,401	)	(21,331	)
Minority interest	$	(34,125	)	(23,018	)	(20,200	)
Acquisitions:
Fair value of assets acquired, including cash of $0 in 2006, $0 in 2005 and $1,392 in 2004	$	23,843		409,262		88,822
Goodwill recorded		10,518		13,781		26,656
Fair value of liabilities assumed		(1,148	)	(6,994	)	(8,356	)
Cash paid	$	33,213		416,049		107,122

See accompanying notes to consolidated financial statements.

50

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    Summary of Significant Accounting Policies

Basis of Consolidation

The accompanying consolidated financial statements include the accounts of Lennar Corporation and all subsidiaries, partnerships and other entities in which Lennar Corporation has a controlling interest and variable interest entities (see Note 18) in which Lennar Corporation is deemed the primary beneficiary (the “Company”). The Company’s investments in both unconsolidated entities in which a significant, but less than controlling, interest is held and in variable interest entities in which the Company is not deemed to be the primary beneficiary are accounted for by the equity method. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Share-Based Payments

The Company has share-based awards outstanding under four different plans which provide for the granting of stock options and stock appreciation rights and awards of restricted common stock (“nonvested shares”) to key officers, employees and directors. The exercise prices of stock options and stock appreciation rights may not be less than the market value of the common stock on the date of the grant. No options granted under the plans may be exercisable until at least six months after the date of the grant. Thereafter, exercises are permitted in installments determined when options are granted. Each stock option and stock appreciation right will expire on a date determined at the time of the grant, but not more than ten years after the date of the grant.

Prior to December 1, 2005, the Company accounted for stock option awards granted under the plans in accordance with the recognition and measurement provisions of Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, (“APB 25”) and related Interpretations, as permitted by Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation, (“SFAS 123”). Share-based employee compensation expense was not recognized in the Company’s consolidated statements of earnings prior to December 1, 2005, as all stock option awards granted under the plans had an exercise price equal to or greater than the market value of the common stock on the date of the grant. Effective December 1, 2005, the Company adopted the provisions of SFAS No. 123 (revised 2004), Share-Based Payment, (“SFAS 123R”) using the modified-prospective-transition method. Under this transition method, compensation expense recognized during the year ended November 30, 2006 included: (a) compensation expense for all share-based awards granted prior to, but not yet vested as of, December 1, 2005, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123, and (b) compensation expense for all share-based awards granted subsequent to December 1, 2005, based on the grant date fair value estimated in accordance with the provisions of SFAS 123R. In accordance with the modified-prospective-transition method, results for prior periods have not been restated.

As a result of adopting SFAS 123R, the charge to earnings before provision for income taxes for the year ended November 30, 2006 was $25.6 million. The impact of adopting SFAS 123R on net earnings for the year ended November 30, 2006 was $18.5 million. The impact of adopting SFAS 123R on basic and diluted earnings per share for the year ended November 30, 2006 was $0.12 per share and $0.11 per share, respectively. See Note 15 for details related to share-based payments.

Revenue Recognition

Revenues from sales of homes are recognized when the sales are closed and title passes to the new homeowner, the new homeowner’s initial and continuing investment is adequate to demonstrate a commitment to pay for the home, the new homeowner’s receivable is not subject to future subordination and the Company does not have a substantial continuing involvement with the new home in accordance with SFAS No. 66, Accounting for Sales of Real Estate (“SFAS 66”). Revenues from sales of land are recognized when a significant down payment is received, the earnings process is complete, title passes and the collectibility of the receivables is reasonably assured.

51

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Advertising Costs

The Company expenses advertising costs as incurred. Advertising costs were $155.5 million, $82.3 million and $60.3 million for the years ended November 30, 2006, 2005 and 2004, respectively.

Cash

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. Due to the short maturity period of the cash equivalents, the carrying amounts of these instruments approximate their fair values. Cash as of November 30, 2006 and 2005 included $135.9 million and $193.6 million, respectively, of cash primarily held in escrow for approximately three days.

Restricted Cash

Restricted cash consists of customer deposits on home sales held in restricted accounts until title transfers to the homebuyer as required by the state and local governments in which the homes were sold.

Inventories

Inventories are stated at cost unless the inventory within a community is determined to be impaired, in which case the impaired inventory would be written down to fair value. Inventory costs include land, land development and home construction costs, real estate taxes, deposits on land purchase contracts and interest related to development and construction. The Company reviews inventories for impairment during each reporting period in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-lived Assets, (“SFAS 144”). The Company evaluates long-lived assets for impairment based on the projected undiscounted future cash flows of the assets. Write-downs of inventories deemed to be impaired are recorded as adjustments to the cost basis of the respective inventories. During the years ended November 30, 2006 and 2005, the Company recorded $501.8 million and $20.5 million, respectively, of inventory adjustments, which included $280.5 million of homebuilding inventory valuation adjustments in 2006 (no adjustments in 2005), $152.2 million and $15.1 million, respectively, in 2006 and 2005 of write-offs of deposits and pre-acquisition costs related to land under option that the Company does not intend to purchase and $69.1 million and $5.4 million, respectively, in 2006 and 2005 of land inventory valuation adjustments. During the year ended November 30, 2004, the Company recorded $16.8 million of write-offs of deposits and pre-acquisition costs related to land under option that it does not intend to purchase. These valuation adjustments were calculated based on current market conditions and assumptions made by management, which may differ materially from actual results if market conditions change.

Construction overhead and selling expenses are expensed as incurred. Homes held-for-sale are classified as inventories until delivered. Land, land development, amenities and other costs are accumulated by specific area and allocated to homes within the respective areas.

Interest and Real Estate Taxes

Interest and real estate taxes attributable to land and homes are capitalized as inventories while they are being actively developed. Interest related to homebuilding and land, including interest costs relieved from inventories, is included in cost of homes sold and cost of land sold. Interest expense related to the financial services operations is included in its costs and expenses.

During 2006, 2005 and 2004, interest incurred by the Company’s homebuilding operations was $247.5 million, $172.9 million and $137.9 million, respectively; interest capitalized into inventories was $226.3 million, $171.1 million and $137.6 million, respectively; and interest expense primarily included in cost of homes sold and cost of land sold was $241.1 million, $187.2 million and $134.2 million, respectively.

Operating Properties and Equipment

Operating properties and equipment are recorded at cost and are included in other assets in the consolidated balance sheets. The assets are depreciated over their estimated useful lives using the straight-line method. At the time operating properties and equipment are disposed of, the asset and related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to earnings. The estimated useful life for operating properties is thirty years, for furniture, fixtures and equipment is two to ten years and for leasehold improvements is five years or the life of the lease, whichever is shorter.

52

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Investment Securities

Investment securities are classified as available-for-sale unless they are classified as trading or held-to-maturity. Securities classified as trading are carried at fair value and unrealized holding gains and losses are recorded in earnings. Securities classified as held-to-maturity are carried at amortized cost because they are purchased with the intent and ability to hold to maturity. Available-for-sale securities are recorded at fair value. Any unrealized holding gains or losses on available-for-sale securities are reported as accumulated other comprehensive gain or loss, which is a separate component of stockholders’ equity, net of tax, until realized.

At November 30, 2006 and 2005, investment securities classified as held-to-maturity totaled $59.6 million and $32.1 million, respectively, and were included in the assets of the Financial Services segment. The held-to-maturity securities consist mainly of certificates of deposit and U.S. treasury securities. At November 30, 2006 and 2005, the Company had investment securities classified as trading that totaled $8.5 million and $8.7 million, respectively, and were included in other assets of the Homebuilding operations. The trading securities are comprised mainly of marketable equity mutual funds designated to approximate the Company’s liabilities under its deferred compensation plan. Additionally, at November 30, 2006, the Company had no investment securities classified as available-for-sale, compared to $8.9 million in the prior year included in other assets of the Homebuilding operations. The available-for-sale securities were comprised of municipal bonds with an original maturity of 20 years and were sold in 2006.

Derivative Financial Instruments

SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, (“SFAS 133”), as amended and interpreted, establishes accounting and reporting standards for derivative instruments and for hedging activities by requiring that all derivatives be recognized in the balance sheet and measured at fair value. Gains or losses resulting from changes in the fair value of derivatives are recognized in earnings or recorded in other comprehensive income or loss and recognized in the statement of earnings when the hedged item affects earnings, depending on the purpose of the derivatives and whether they qualify for hedge accounting treatment.

The Company’s policy is to designate at a derivative’s inception the specific assets, liabilities, or future commitments being hedged and monitor the derivative to determine if it remains an effective hedge. The effectiveness of a derivative as a hedge is based on high correlation between changes in its value and changes in the value of the underlying hedged item. The Company recognizes gains or losses for amounts received or paid when the underlying transaction settles. The Company does not enter into or hold derivatives for trading or speculative purposes.

The Company has various interest rate swap agreements, which effectively convert variable interest rates to fixed interest rates on $200.0 million of outstanding debt related to its homebuilding operations. The swap agreements have been designated as cash flow hedges and, accordingly, are reflected at their fair value in other liabilities in the consolidated balance sheets at November 30, 2006 and 2005. The related loss is deferred, net of tax, in stockholders’ equity as accumulated other comprehensive loss. The Company accounts for its interest rate swaps using the shortcut method, as described in SFAS 133. Amounts to be received or paid as a result of the swap agreements are recognized as adjustments to interest incurred on the related debt instruments. The Company believes that there will be no ineffectiveness related to the interest rate swaps and therefore no portion of the accumulated other comprehensive loss will be reclassified into future earnings. The net effect on the Company’s operating results is that interest on the variable-rate debt being hedged is recorded based on fixed interest rates.

The Financial Services segment, in the normal course of business, uses derivative financial instruments to reduce its exposure to fluctuations in interest rates. The segment enters into mortgage-backed securities (“MBS”) forward commitments and, to a lesser extent, MBS option contracts to protect the value of fixed rate-locked loan commitments and loans held-for-sale from fluctuations in market interest rates. These derivative financial instruments are designated as fair value hedges, and, accordingly, for all qualifying and highly effective fair value hedges, the changes in the fair value of the derivative and the loss or gain on the hedged asset related to the risk being hedged are recorded currently in earnings.

53

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in business combinations. At November 30, 2006 and 2005, goodwill was $257.8 million and $253.1 million, respectively. During fiscal 2006, the Company’s goodwill had a net increase of $4.7 million due to an acquisition by the Financial Services segment and payment of contingent consideration related to prior period acquisitions. During fiscal 2005, the Company’s goodwill increased $13.8 million due to 2005 acquisitions and payment of contingent consideration related to prior period acquisitions. Goodwill is included in the assets of the Homebuilding segments ($196.6 million and $195.2 million, respectively, at November 30, 2006 and 2005) and the assets of the Financial Services segment ($61.2 million and $58.0 million, respectively, at November 30, 2006 and 2005) in the consolidated balance sheets.

The Company reviews goodwill annually (or whenever indicators of impairment exist) for impairment in accordance with SFAS No. 142, Goodwill and Other Intangible Assets. The Company performed its annual impairment test of goodwill as of September 30, 2006 and determined that goodwill was not impaired. No impairment was recorded during the years ended November 30, 2006, 2005 or 2004. As of November 30, 2006 and 2005, there were no material identifiable intangible assets, other than goodwill.

Income Taxes

Income taxes are accounted for in accordance with SFAS No. 109, Accounting for Income Taxes, (“SFAS 109”). Under SFAS 109, deferred tax assets and liabilities are determined based on temporary differences between financial reporting carrying values and tax bases of assets and liabilities, and are measured by using enacted tax rates expected to apply to taxable income in the years in which those differences are expected to reverse.

Product Warranty

Warranty and similar reserves for homes are established at an amount estimated to be adequate to cover potential costs for materials and labor with regard to warranty-type claims expected to be incurred subsequent to the delivery of a home. Reserves are determined based on historical data and trends with respect to similar product types and geographical areas. The Company constantly monitors the warranty reserve and makes adjustments to its pre-existing warranties in order to reflect changes in trends and historical data as information becomes available. Warranty reserves are included in other liabilities in the consolidated balance sheets. The activity in the Company’s warranty reserve was as follows:

	November 30,
	2006			2005
	(In thousands)
Warranty reserve, beginning of year	$	144,916		116,826
Warranties issued during the period		170,020		145,519
Adjustments to pre-existing warranties from changes in estimates		25,487		31,766
Payments		(167,852	)	(149,195	)
Warranty reserve, end of year	$	172,571		144,916

Self-Insurance

Certain insurable risks such as general liability, medical and workers’ compensation are self-insured by the Company up to certain limits. Undiscounted accruals for claims under the Company’s self-insurance program are based on claims filed and estimates for claims incurred but not yet reported.

Minority Interest

The Company has consolidated certain joint ventures because the Company either was determined to be the primary beneficiary pursuant to Financial Accounting Standards Board (“FASB”) Interpretation No. 46(R) (“FIN 46(R)”), Consolidation of Variable Interest Entities, or has a controlling interest in these joint ventures. Therefore, the entities’ financial statements are consolidated in the Company’s consolidated financial statements and the other partners’ equity is recorded as minority interest. At November 30, 2006 and 2005, minority interest was $55.4 million and $78.2 million, respectively. Minority interest expense, net was $13.4 million, $45.0 million and $10.8 million, respectively, for the years ended November 30, 2006, 2005 and 2004.

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Earnings per Share

Earnings per share is accounted for in accordance with SFAS No. 128, Earnings per Share, which requires a dual presentation of basic and diluted earnings per share on the face of the consolidated statement of earnings. Basic earnings per share is computed by dividing net earnings attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company.

Financial Services

Loan origination revenues, net of direct origination costs and gains and losses from the sale of loans and loan servicing rights are recognized when the loans are sold and shipped to an investor. Premiums from title insurance policies are recognized as revenue on the effective dates of the policies. Escrow fees are recognized at the time the related real estate transactions are completed, usually upon the close of escrow.

Loans held-for-sale by the Financial Services segment that are designated as hedged assets are carried at fair value because the effect of changes in fair value are reflected in the carrying amount of the loans and in earnings. Premiums and discounts recorded on these loans are presented as an adjustment to the carrying amount of the loans and are not amortized.

When the segment sells loans in the secondary mortgage market, a gain or loss is recognized to the extent that the sales proceeds exceed, or are less than, the book value of the loans. Substantially all of these loans were sold within a short period in the secondary mortgage market on a servicing released, non-recourse basis; however, the Company remains liable for certain limited representations and warranties related to loan sales. Loan origination fees, net of direct origination costs, are deferred and recognized as a component of the gain or loss when loans are sold.

Loans for which the segment has the positive intent and ability to hold to maturity consist of mortgage loans carried at cost, net of unamortized discounts. Discounts are amortized over the estimated lives of the loans using the interest method. Interest income on loans held-for-sale is recognized as earned over the term of the mortgage loans based on the contractual interest rates.

The segment also provides an allowance for loan losses. The provision recorded and the adequacy of the related allowance is determined by management’s continuing evaluation of the loan portfolio in light of past loan loss experience, credit worthiness and nature of underlying collateral, present economic conditions and other factors considered relevant by management. Anticipated changes in economic factors, which may influence the level of the allowance, are considered in the evaluation by management when the likelihood of the changes can be reasonably determined. While management uses the best information available to make such evaluations, future adjustments to the allowance may be necessary as a result of future economic and other conditions that may be beyond management’s control.

New Accounting Pronouncements

In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of SFAS 109, (“FIN 48”). FIN 48 provides interpretive guidance for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 is effective for fiscal years beginning after December 15, 2006 (the Company’s fiscal year beginning December 1, 2007). The Company is currently reviewing the effect of this Interpretation on its consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 (the Company’s fiscal year beginning December 1, 2007), and interim periods within those fiscal years. SFAS 157 is not expected to materially affect how the Company determines fair value.

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In September 2006, the Securities and Exchange Commission (“SEC”) Staff issued Staff Accounting Bulletin 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, (“SAB 108”). SAB 108 addresses how the effects of prior year uncorrected financial statement misstatements should be considered in current year financial statements. SAB 108 requires registrants to quantify misstatements using both balance sheet and income statement approaches and to evaluate whether either approach results in quantifying an error that is material in light of relative quantitative and qualitative factors. SAB 108 is effective for annual financial statements covering the first fiscal year ending after November 15, 2006 (the Company’s fiscal year ended November 30, 2006). SAB 108 did not have an effect on the Company’s consolidated financial statements.

In November 2006, the FASB issued Emerging Issues Task Force Issue No. 06-8, Applicability of the Assessment of a Buyers Continuing Investment under FASB Statement No. 66, Accounting for Sales of Real Estate, for Sales of Condominiums, (“EITF 06-8”). EITF 06-8 establishes that a company should evaluate the adequacy of the buyer’s continuing investment in determining whether to recognize profit under the percentage-of-completion method. EITF 06-8 is effective for the first annual reporting period beginning after March 15, 2007 (the Company’s fiscal year beginning December 1, 2007). The effect of this EITF is not expected to be material to the Company’s consolidated financial statements.

Reclassifications

Certain prior year amounts in the consolidated financial statements have been reclassified to conform with the 2006 presentation. These reclassifications had no impact on reported net earnings.

2.    Discontinued Operations

In May 2005, the Company sold North American Exchange Company (“NAEC”), a subsidiary of the Financial Services segment’s title company, which generated a $15.8 million pretax gain. NAEC’s revenues were $3.3 million and $3.9 million, respectively, for the years ended November 30, 2005 and 2004. As of November 30, 2005, there were no remaining assets or liabilities of discontinued operations.

3.    Acquisitions

During 2006, the Company did not have any material acquisitions. During 2005, the Company expanded its presence through homebuilding acquisitions in all of its homebuilding segments and Homebuilding Other. In connection with these acquisitions and contingent consideration related to prior period acquisitions, the Company paid $416.0 million. The results of operations of these acquisitions are included in the Company’s results of operations since their respective acquisition dates. The pro forma effect of these acquisitions on the results of operations is not presented as the effect is not material. Total goodwill associated with these acquisitions and contingent consideration related to acquisitions prior to 2005 was $13.8 million.

During 2004, the Company expanded its presence through homebuilding acquisitions in all of its homebuilding segments, expanded its mortgage operations in Oregon and Washington and expanded its title and closing business into Minnesota through the acquisition of Title Protection, Inc. In connection with these acquisitions and contingent consideration related to prior period acquisitions, the Company paid $105.7 million, net of cash acquired. The results of operations of these acquisitions are included in the Company’s results of operations since their respective acquisition dates. The pro forma effect of these acquisitions on the results of operations is not presented as the effect is not material. Total goodwill associated with these acquisitions and contingent consideration related to acquisitions prior to 2004 was $26.7 million.

4.    Operating and Reporting Segments

The Company’s operating segments are aggregated into reportable segments in accordance with SFAS No. 131, Disclosures About Segments of an Enterprise and Related Information (“SFAS 131”), based primarily upon similar economic characteristics, geography and product type. The Company’s reportable segments consist of:

(1) Homebuilding East

(2) Homebuilding Central

(3) Homebuilding West

(4) Financial Services

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Information about homebuilding activities in states which are not economically similar to other states in the same geographic area is grouped under “Homebuilding Other,” which is not considered a reportable segment in accordance with SFAS 131.

Operations of the Company’s homebuilding segments primarily include the sale and construction of single-family attached and detached homes, and to a lesser extent, multi-level buildings, as well as the purchase, development and sale of residential land directly and through the Company’s unconsolidated entities. The Company’s reportable homebuilding segments, and all other homebuilding operations not required to be reported separately, have divisions located in the following states:

East: Florida, Maryland, New Jersey and Virginia

Central: Arizona, Colorado and Texas

West: California and Nevada

Other: Illinois, Minnesota, New York, North Carolina and South Carolina

Operations of the Financial Services segment include mortgage financing, title insurance, closing services and other ancillary services (including personal lines insurance, high-speed Internet and cable television) for both buyers of the Company’s homes and others. Substantially all of the loans the Financial Services segment originated were sold in the secondary mortgage market on a servicing released non-recourse basis; however, the Company remains liable for certain limited representations and warranties related to loan sales. The Financial Services segment operates generally in the same states as the Company’s homebuilding segments, as well as other states.

Evaluation of segment performance is based primarily on operating earnings from continuing operations before provision for income taxes. Operating earnings for the homebuilding segments consist of revenues generated from the sales of homes and land, equity in earnings (loss) from unconsolidated entities and management fees and other income, net, less the cost of homes and land sold, selling, general and administrative expenses and minority interest expense, net. Operating earnings for the Financial Services segment consist of revenues generated from mortgage financing, title insurance and other ancillary services (including personal lines insurance, high-speed Internet and cable television) less the cost of such services and certain selling, general and administrative expenses incurred by the Financial Services segment.

Each reportable segment follows the same accounting policies described in Note 1—“Summary of Significant Accounting Policies” to the consolidated financial statements. Operational results of each segment are not necessarily indicative of the results that would have occurred had the segment been an independent, stand-alone entity during the periods presented.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Financial information relating to the Company’s operations was as follows:

	November 30,
	2006		2005
	(In thousands)
Assets:
Homebuilding East	$	3,326,371	3,454,318
Homebuilding Central		1,651,848	1,682,593
Homebuilding West		3,972,562	4,187,525
Homebuilding Other		1,164,304	1,131,146
Financial Services		1,613,376	1,701,635
Corporate and unallocated		679,805	384,008
Total assets	$	12,408,266	12,541,225
Investments in unconsolidated entities:
Homebuilding East	$	241,490	240,210
Homebuilding Central		180,768	170,791
Homebuilding West		974,404	814,129
Homebuilding Other		50,516	57,556
Total investments in unconsolidated entities	$	1,447,178	1,282,686
Goodwill:
Homebuilding East	$	49,135	47,653
Homebuilding Central		31,587	31,587
Homebuilding West		46,640	46,640
Homebuilding Other		69,276	69,276
Financial Services		61,205	57,988
Total goodwill	$	257,843	253,144

	Years Ended November 30,
	2006			2005		2004
	(In thousands)
Revenues:
Homebuilding East	$	4,771,879		3,498,983		2,746,288
Homebuilding Central		3,649,221		3,374,893		2,707,953
Homebuilding West		5,969,512		5,302,767		3,657,053
Homebuilding Other		1,232,428		1,127,956		889,338
Financial Services		643,622		562,372		500,336
Total revenues	$	16,266,662		13,866,971		10,500,968
Operating earnings (loss):
Homebuilding East	$	236,654		641,264		454,740
Homebuilding Central		215,386		368,476		217,519
Homebuilding West		639,917		1,214,149		782,122
Homebuilding Other		(105,804	)	53,202		94,107
Financial Services		149,803		104,768		110,731
Corporate and unallocated (1)		(193,307	)	(222,165	)	(141,722	)
Earnings from continuing operations before provision for income taxes	$	942,649		2,159,694		1,517,497

(1) Corporate and unallocated includes corporate general and administrative expenses and a $34,908 loss on the redemption of 9.95% senior notes in 2005.

During the year ended November 30, 2006, the Company recorded $501.8 million of inventory valuation adjustments, which included $280.5 million of homebuilding inventory valuation adjustments ($157.0 million, $27.1 million, $79.0 million and $17.4 million, respectively, in the Company’s Homebuilding East, Central and

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LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

West segments and Homebuilding Other), $152.2 million of write-offs of deposits and pre-acquisition costs ($80.5 million, $2.9 million, $44.0 million and $24.8 million, respectively, in the Company’s Homebuilding East, Central and West segments and Homebuilding Other) related to 24,235 homesites under option that the Company does not intend to purchase and $69.1 million of land inventory valuation adjustments ($24.7 million, $17.3 million and $27.1 million, respectively, in the Company’s Homebuilding East and Central segments and Homebuilding Other). During the year ended November 30, 2006, the Company also recorded $126.4 million of valuation adjustments ($25.5 million, $92.8 million and $8.1 million, respectively, in the Company’s Homebuilding East and West segments and Homebuilding Other) to the Company’s investments in unconsolidated entities.

	Years Ended November 30,
	2006			2005	2004
	(In thousands)
Homebuilding interest expense:
Homebuilding East	$	62,326		35,231	28,992
Homebuilding Central		45,608		41,203	34,118
Homebuilding West		108,687		91,954	58,871
Homebuilding Other		24,445		18,766	12,212
Total homebuilding interest expense	$	241,066		187,154	134,193
Financial Services interest income, net	$	64,524		33,989	27,003
Depreciation and amortization:
Homebuilding East	$	7,051		5,241	4,250
Homebuilding Central		4,821		4,271	5,785
Homebuilding West		19,373		19,623	12,753
Homebuilding Other		3,950		3,353	2,677
Financial Services		8,594		10,346	9,725
Corporate and unallocated		12,698		22,335	20,383
Total depreciation and amortization	$	56,487		65,169	55,573
Additions to operating properties and equipment:
Homebuilding East	$	5,073		1,097	1,878
Homebuilding Central		2,245		1,017	534
Homebuilding West		4,556		3,540	675
Homebuilding Other		2,704		556	35
Financial Services		6,244		10,008	19,837
Corporate and unallocated		5,961		5,529	4,430
Total additions to operating properties and equipment	$	26,783		21,747	27,389
Equity in earnings (loss) from unconsolidated entities:
Homebuilding East	$	(14,947	)	2,213	3,997
Homebuilding Central		7,763		15,103	4,672
Homebuilding West		(6,449	)	109,995	82,060
Homebuilding Other		1,097		6,503	10
Total equity in earnings (loss) from unconsolidated entities	$	(12,536	)	133,814	90,739

During 2006, 2005 and 2004, interest included in the homebuilding segments’ and Homebuilding Other’s cost of homes sold was $207.5 million, $168.8 million and $128.0 million, respectively. During 2006, 2005 and 2004, interest included in the homebuilding segments’ and Homebuilding Other’s cost of land sold was $12.4 million, $16.5 million and $5.8 million, respectively. All other interest related to the homebuilding segments and Homebuilding Other is included in management fees and other income, net.

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LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

5.    Receivables

	November 30,
	2006			2005
	(In thousands)
Accounts receivable	$	123,211		103,275
Mortgages and notes receivable		37,473		198,376
		160,684		301,651
Allowance for doubtful accounts		(1,641	)	(2,419	)
	$	159,043		299,232

The Company’s accounts receivable result primarily from the sale of land. The Company performs ongoing credit evaluations of its customers. The Company generally does not require collateral for accounts receivable. Mortgages and notes receivable are generally collateralized by the property sold to the buyer. Allowances are maintained for potential credit losses based on historical experience, present economic conditions and other factors considered relevant by the Company.

6.    Investments in Unconsolidated Entities

Summarized condensed financial information on a combined 100% basis related to unconsolidated entities in which the Company has investments that are accounted for primarily by the equity method was as follows:

	November 30,
	2006		2005
	(In thousands)
Assets:
Cash	$	276,501	334,530
Inventories		8,955,567	7,615,489
Other assets		868,073	875,741
	$	10,100,141	8,825,760
Liabilities and equity:
Accounts payable and other liabilities	$	1,387,745	1,004,940
Notes and mortgages payable		5,001,625	4,486,271
Equity of:
The Company		1,447,178	1,282,686
Others		2,263,593	2,051,863
	$	10,100,141	8,825,760

	Years Ended November 30,
	2006			2005	2004
	(In thousands)
Revenues	$	2,651,932		2,676,628	1,641,018
Costs and expenses		2,588,196		2,020,470	1,199,243
Net earnings of unconsolidated entities	$	63,736		656,158	441,775
Company’s share of net earnings (loss)—recognized (1)	$	(12,536	)	133,814	90,739

(1) For the year ended November 30, 2006, the Company’s share of net loss recognized from unconsolidated entities includes $126.4 million of valuation adjustments to the Company’s investments in unconsolidated entities.

The Company’s partners generally are unrelated homebuilders, land owners/developers and financial or other strategic partners. The unconsolidated entities follow accounting principles generally accepted in the United States of America. The Company shares in the profits and losses of these unconsolidated entities generally in accordance with its ownership interests. In many instances, the Company is appointed as the

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LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

day-to-day manager of the unconsolidated entities and receives management fees and/or reimbursement of expenses for performing this function. During 2006, 2005 and 2004, the Company received management fees and reimbursement of expenses from the unconsolidated entities totaling $72.8 million, $58.6 million and $40.6 million, respectively.

The Company and/or its partners sometimes obtain options or enter into other arrangements under which the Company can purchase portions of the land held by the unconsolidated entities. Option prices are generally negotiated prices that approximate fair value when the Company receives the options. During 2006, 2005 and 2004, $742.5 million, $431.2 million and $547.6 million, respectively, of the unconsolidated entities’ revenues were from land sales to the Company. The Company does not include in its equity in earnings (loss) from unconsolidated entities its pro rata share of unconsolidated entities’ earnings resulting from land sales to its homebuilding divisions. Instead, the Company accounts for those earnings as a reduction of the cost of purchasing the land from the unconsolidated entities. This in effect defers recognition of the Company’s share of the unconsolidated entities’ earnings related to these sales until the Company delivers a home and title passes to a third-party homebuyer.

The unconsolidated entities in which the Company has investments usually finance their activities with a combination of partner equity and debt financing. As of November 30, 2006, the Company’s equity in these unconsolidated entities represented 39% of the entities’ total equity. In some instances, the Company and its partners have guaranteed debt of certain unconsolidated entities.

The Company’s summary of guarantees related to its unconsolidated entities was as follows:

	November 30, 2006
	(In thousands)
Sole recourse debt	$	18,920
Several recourse debt—repayment		163,508
Several recourse debt—maintenance		560,823
Joint and several recourse debt—repayment		64,473
Joint and several recourse debt—maintenance		956,682
The Company’s maximum recourse exposure		1,764,406
Less joint and several reimbursement agreements with the Company’s partners		(661,486	)
The Company’s net recourse exposure	$	1,102,920

The maintenance amounts above are the Company’s maximum exposure of loss, which assumes that the fair value of the underlying collateral is zero. As of November 30, 2006 and 2005, the fair values of the maintenance guarantees and repayment guarantees were not material.

In addition, the Company and/or its partners occasionally grant liens on their interest in a joint venture in order to help secure a loan to that joint venture. When the Company and/or its partners provide guarantees, the unconsolidated entity generally receives more favorable terms from its lenders than would otherwise be available to it. In a repayment guarantee, the Company and its venture partners guarantee repayment of a portion or all of the debt in the event of a default before the lender would have to exercise its rights against the collateral. The maintenance guarantees only apply if the value or the collateral (generally land and improvements) is less than a specified percentage of the loan balance. If the Company is required to make a payment under a maintenance guarantee to bring the value of the collateral above the specified percentage of the loan balance, the payment would constitute a capital contribution or loan to the unconsolidated entity and increase the Company’s share of any funds the unconsolidated entity distributes. During 2006, amounts paid under the Company’s maintenance guarantees were not material. As of November 30, 2006, if there was an occurrence of a triggering event or condition under a guarantee, the collateral would be sufficient to repay the obligation.

In November 2003, the Company and LNR Property Corporation (“LNR”) each contributed its 50% interests in certain of its jointly-owned unconsolidated entities that had significant assets to a new limited liability company named LandSource Communities Development LLC (“LandSource”) in exchange for 50% interests in LandSource. In addition, in July 2003, the Company and LNR formed, and obtained 50% interests in, NWHL, which in January 2004 purchased The Newhall Land and Farming Company (“Newhall”) for a total of approximately $1 billion. Newhall’s primary business is developing two master-planned communities in Los Angeles County, California.

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LandSource was formed as a vehicle to obtain financing based on the value of the combined assets of the joint venture entities that the Company and LNR contributed to LandSource. The Company and LNR used LandSource’s financing capacity, together with the financing value of Newhall’s assets, to obtain improved financing for part of the purchase price of Newhall and for working capital to be used by the LandSource subsidiaries and Newhall.

The Company and LNR each contributed approximately $200 million to NWHL, and LandSource and NWHL jointly obtained $600 million of bank financing, of which $400 million was a term loan used in connection with the acquisition of Newhall (the remainder of the acquisition price was paid with proceeds of a sale of income-producing properties from Newhall to LNR for $217 million at the closing of the transaction). The remainder of the bank financing was a $200 million revolving credit facility that is available to finance operations of Newhall and other property ownership and development companies that are jointly owned by the Company and LNR. The Company agreed to purchase 687 homesites ($132 million at November 30, 2006) and obtained options to purchase an additional 623 homesites from Newhall. The Company is not obligated with regard to the borrowings by LandSource and NWHL, except that the Company and LNR have made limited maintenance guarantees and have committed to complete any property development commitments in the event LandSource or NWHL defaults.

In November 2004, LandSource was merged into NWHL. NWHL was renamed LandSource Communities Development LLC (“Merged LandSource”) upon completion of the merger. The Company and LNR may use Merged LandSource for future joint ventures. The consolidated assets and liabilities of Merged LandSource were $1.5 billion and $888.8 million, respectively, at November 30, 2006 and $1.4 billion and $767.5 million, respectively, at November 30, 2005. The Company’s investment in Merged LandSource was $329.1 million and $332.7 million at November 30, 2006 and 2005, respectively. In December 2006, subsequent to the Company’s fiscal year end, the Company and LNR entered into an agreement to admit a new strategic partner into their Merged LandSource joint venture (See Note 22).

7.    Operating Properties and Equipment

	November 30,
	2006			2005
	(In thousands)
Operating properties	$	13,120		12,203
Leasehold improvements		33,896		22,027
Furniture, fixtures and equipment		45,922		37,966
		92,938		72,196
Accumulated depreciation and amortization		(50,061	)	(41,544	)
	$	42,877		30,652

Operating properties and equipment are included in other assets in the consolidated balance sheets.

8.    Senior Notes and Other Debts Payable

	November 30,
	2006		2005
	(Dollars in thousands)
7 5/8% senior notes due 2009	$	277,830	276,299
5.125% senior notes due 2010		299,766	299,715
5.95% senior notes due 2011		249,415	—
5.95% senior notes due 2013		345,719	345,203
5.50% senior notes due 2014		247,559	247,326
5.60% senior notes due 2015		501,957	502,127
6.50% senior notes due 2016		249,683	—
Senior floating-rate notes due 2007		—	200,000
Senior floating-rate notes due 2009		300,000	300,000
5.125% zero-coupon convertible senior subordinated notes due 2021		—	157,346
Mortgage notes on land and other debt		141,574	264,756
	$	2,613,503	2,592,772

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In July 2006, the Company replaced its senior unsecured Credit Facility (the “Credit Facility”) with a new senior unsecured revolving credit facility (the “New Facility”). The New Facility consists of a $2.7 billion revolving credit facility maturing in 2011. The New Facility also includes access to an additional $0.5 billion of financing through an accordion feature, subject to additional commitments, for a maximum aggregate commitment under the New Facility of $3.2 billion. The New Facility is guaranteed by substantially all of the Company’s subsidiaries other than finance company subsidiaries (which include mortgage and title insurance agency subsidiaries). Interest rates on outstanding borrowings are LIBOR-based, with margins determined based on changes in the Company’s credit ratings, or an alternate base rate, as described in the credit agreement. At November 30, 2006, the Company had no outstanding balance under the New Facility. At November 30, 2005, the Company had no outstanding balance under the Credit Facility.

The Company has a structured letter of credit facility (the “LC Facility”) with a financial institution. The purpose of the LC Facility is to facilitate the issuance of up to $200 million of letters of credit on a senior unsecured basis. In connection with the LC Facility, the financial institution issued $200 million of their senior notes, which were linked to the Company’s performance on the LC Facility. If there is an event of default under the LC Facility, including the Company’s failure to reimburse a draw against an issued letter of credit, the financial institution would assign its claim against the Company, to the extent of the amount due and payable by the Company under the LC Facility, to its noteholders in lieu of their principal repayment on their performance-linked notes. No material amounts have been drawn to date on any letters of credit issued under the LC Facility.

At November 30, 2006, the Company had letters of credit outstanding in the amount of $1.4 billion, which includes $190.8 million outstanding under the LC Facility. The majority of these letters of credit are posted with regulatory bodies to guarantee the Company’s performance of certain development and construction activities or are posted in lieu of cash deposits on option contracts. Of the Company’s total letters of credit outstanding, $496.9 million were collateralized against certain borrowings available under the New Facility.

In November 2006, the Company called its $200 million senior floating-rate notes due 2007 (the “Floating-Rate Notes”). The redemption price was $200.0 million, or 100% of the principal amount of the Floating-Rate Notes outstanding, plus accrued and unpaid interest as of the redemption date.

In April 2006, substantially all the outstanding 5.125% zero-coupon convertible senior subordinated notes due 2021 (the “Convertible Notes”) were converted by the noteholders into 4.9 million Class A common shares. The Convertible Notes were convertible at a rate of 14.2 shares of the Company’s Class A common stock per $1,000 principal amount at maturity. Convertible Notes not converted by the noteholders were not material and were redeemed by the Company on April 4, 2006. The redemption price was $468.10 per $1,000 principal amount at maturity, which represented the original issue price plus accrued original issue discount to the redemption date.

In April 2006, the Company issued $250 million of 5.95% senior notes due 2011 and $250 million of 6.50% senior notes due 2016 (collectively, the “New Senior Notes”) at a price of 99.766% and 99.873%, respectively, in a private placement. Proceeds from the offering of the New Senior Notes, after initial purchaser’s discount and expenses, were $248.7 million and $248.9 million, respectively. The Company added the proceeds to its working capital to be used for general corporate purposes. Interest on the New Senior Notes is due semi-annually. The New Senior Notes are unsecured and unsubordinated, and substantially all of the Company’s subsidiaries other than finance company subsidiaries guarantee the New Senior Notes. In October 2006, the Company completed an exchange of the New Senior Notes for substantially identical notes registered under the Securities Act of 1933 (the “Exchange Notes”), with substantially all of the New Senior Notes being exchanged for Exchange Notes. At November 30, 2006, the carrying value of the Exchange Notes was $499.1 million.

In March 2006, the Company initiated a commercial paper program (the “Program”) under which the Company may, from time-to-time, issue short-term unsecured notes in an aggregate amount not to exceed $2.0 billion. This Program has allowed the Company to obtain more favorable short-term borrowing rates than it would obtain otherwise. The Program is exempt from the registration requirements of the Securities Act of 1933. Issuances under the Program are guaranteed by all of the Company’s wholly-owned subsidiaries that are also guarantors of its New Facility. At November 30, 2006, no amounts were outstanding under the Program.

The Company also has an agreement with a financial institution whereby it can enter into short-term, unsecured, fixed-rate notes from time-to-time. At November 30, 2006, no amounts were outstanding related to these notes.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In September 2005, the Company sold $300 million of 5.125% senior notes due 2010 (the “5.125% Senior Notes”) at a price of 99.905% in a private placement. Proceeds from the offering, after initial purchaser’s discount and expenses, were $298.2 million. The Company added the proceeds to the Company’s working capital to be used for general corporate purposes. Interest on the 5.125% Senior Notes is due semi-annually. The 5.125% Senior Notes are unsecured and unsubordinated. Substantially all of the Company’s subsidiaries other than finance company subsidiaries guaranteed the 5.125% Senior Notes. In 2006, the Company exchanged the 5.125% Senior Notes for registered notes. The registered notes have substantially identical terms as the 5.125% Senior Notes, except that the registered notes do not include transfer restrictions that are applicable to the 5.125% Senior Notes. At November 30, 2006 and 2005, the carrying value of the 5.125% Senior Notes was $299.8 million and $299.7 million, respectively.

In July 2005, the Company sold $200 million of 5.60% Senior Notes due 2015 (the “Senior Notes”) at a price of 101.407%. The Senior Notes were the same issue as the Senior Notes the Company sold in April 2005. Proceeds from the offering, after initial purchaser’s discount and expenses, were $203.9 million. The Company added the proceeds to the Company’s working capital to be used for general corporate purposes. Interest on the Senior Notes is due semi-annually. The Senior Notes are unsecured and unsubordinated. Substantially all of the Company’s subsidiaries other than finance company subsidiaries guaranteed the Senior Notes. At November 30, 2006 and 2005, the carrying value of the Senior Notes sold in April and July 2005 was $502.0 million and $502.1 million, respectively.

In May 2005, the Company redeemed all of its outstanding 9.95% senior notes due 2010 (the “Notes”). The redemption price was $337.7 million, or 104.975% of the principal amount of the Notes outstanding, plus accrued and unpaid interest as of the redemption date. The redemption of the Notes resulted in a $34.9 million pretax loss.

In April 2005, the Company sold $300 million of 5.60% Senior Notes due 2015 (the “Senior Notes”) at a price of 99.771%. Substitute registered notes were subsequently issued for the April and July 2005 Senior Notes. Proceeds from the offering, after initial purchaser’s discount and expenses, were $297.5 million. The Company added the proceeds to the Company’s working capital to be used for general corporate purposes. Interest on the Senior Notes is due semi-annually. The Senior Notes are unsecured and unsubordinated. Substantially all of the Company’s subsidiaries other than finance company subsidiaries guaranteed the Senior Notes.

In August 2004, the Company sold $250 million of 5.50% senior notes due 2014 at a price of 98.842% in a private placement. Proceeds from the offering, after initial purchaser’s discount and expenses, were $245.5 million. The Company used the proceeds to repay borrowings under its Credit Facility. Interest on the 5.50% senior notes is due semi-annually. The 5.50% senior notes are unsecured and unsubordinated. Substantially all of the Company’s subsidiaries, other than finance company subsidiaries, guaranteed the 5.50% senior notes. At November 30, 2006 and 2005, the carrying value of the 5.50% senior notes was $247.6 million and $247.3 million, respectively.

In March and April 2004, the Company issued a total of $300 million of senior floating-rate notes due 2009 (the “Floating Rate Notes”), in a registered offering, which are callable at par beginning in March 2006. Proceeds from the offerings, after underwriting discount and expenses, were $298.5 million. The Company used the proceeds to partially prepay a portion of the Credit Facilities and added the remainder to the Company’s working capital to be used for general corporate purposes. Interest on the Floating Rate Notes is three-month LIBOR plus 0.75% (6.15% as of November 30, 2006) and is payable quarterly. The Floating Rate Notes are unsecured and unsubordinated. Substantially all of the Company’s subsidiaries, other than finance company subsidiaries, guaranteed the Floating Rate Notes. At November 30, 2006 and 2005, the carrying value of the Floating Rate Notes was $300.0 million.

In February 2003, the Company issued $350 million of 5.95% senior notes due 2013 at a price of 98.287%. Substantially all of the Company’s subsidiaries, other than finance company subsidiaries, guaranteed the 5.95% senior notes. At November 30, 2006 and 2005, the carrying value of the 5.95% senior notes was $345.7 million and $345.2 million, respectively.

In February 1999, the Company issued $282 million of 7 ⁵/8% senior notes due 2009. Substantially all of the Company’s subsidiaries, other than finance company subsidiaries, guaranteed the 7 ⁵/8% senior notes. At November 30, 2006 and 2005, the carrying value of the 7 ⁵/8% senior notes was $277.8 million and $276.3 million, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

At November 30, 2006, the Company had mortgage notes on land and other debt bearing interest at rates up to 10.0% with an average interest rate of 6.1%. The notes are due through 2010 and are collateralized by land. At November 30, 2006 and 2005, the carrying value of the mortgage notes on land and other debt was $141.6 million and $264.8 million, respectively.

The minimum aggregate principal maturities of senior notes and other debts payable during the five years subsequent to November 30, 2006 are as follows:

	Debt Maturities
	(In thousands)
2007	$	87,298
2008		35,949
2009		577,991
2010		317,932
2011		249,415

The remaining principal obligations are due subsequent to November 30, 2011. The Company’s debt arrangements contain certain financial covenants with which the Company was in compliance at November 30, 2006.

9.    Other Liabilities

	November 30,
	2006		2005
	(In thousands)
Income taxes currently payable	$	40,259	463,588
Accrued compensation		302,038	396,614
Other		1,248,267	1,137,622
	$	1,590,564	1,997,824

10.    Financial Services Segment

The assets and liabilities related to the Financial Services segment were as follows:

	November 30,
	2006		2005
	(In thousands)
Assets:
Cash	$	116,657	149,786
Receivables, net		633,004	675,877
Loans held-for-sale, net		483,704	562,510
Loans held-for-investment, net		189,638	147,459
Investments held-to-maturity		59,571	32,146
Goodwill		61,205	57,988
Other		69,597	75,869
	$	1,613,376	1,701,635
Liabilities:
Notes and other debts payable	$	1,149,231	1,269,782
Other		212,984	167,918
	$	1,362,215	1,437,700

At November 30, 2006, the Financial Services segment had warehouse lines of credit totaling $1.4 billion to fund its mortgage loan activities. Borrowings under the lines of credit were $1.1 billion and $1.2 billion, respectively, at November 30, 2006 and 2005 and were collateralized by mortgage loans and receivables on loans

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LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

sold but not yet funded by investors with outstanding principal balances of $1.3 billion at November 30, 2006 and 2005. There are several interest rate-pricing options, which fluctuate with market rates. The effective interest rate on the warehouse lines of credit at November 30, 2006 and 2005 was 6.1% and 5.1%, respectively. The warehouse lines of credit mature in September 2007 ($700 million) and in April 2008 ($670 million), at which time the Company expects the facilities to be renewed. At November 30, 2006 and 2005, the segment had advances under a conduit funding agreement with a major financial institution amounting to $1.7 million and $10.7 million, respectively. Borrowings under this agreement are collateralized by mortgage loans and had an effective interest rate of 6.2% and 5.0% at November 30, 2006 and 2005, respectively. The segment also has a $25 million revolving line of credit that matures in May 2007, at which time the segment expects the line of credit to be renewed. The line of credit is collateralized by certain assets of the segment and stock of certain title subsidiaries. Borrowings under the line of credit were $23.7 million and $23.6 million at November 30, 2006 and 2005, respectively, and had an effective interest rate of 6.3% and 4.9% at November 30, 2006 and 2005, respectively.

11.    Income Taxes

The provision (benefit) for income taxes consisted of the following:

From continuing operations
	Years Ended November 30,
	2006			2005		2004
	(In thousands)
Current:
Federal	$	484,731		717,109		440,241
State		62,054		87,955		51,082
		546,785		805,064		491,323
Deferred:
Federal		(173,616	)	9,232		71,615
State		(24,389	)	988		9,917
		(198,005	)	10,220		81,532
	$	348,780		815,284		572,855
From discontinued operations
	Years Ended November 30,
	2006			2005		2004
	(In thousands)
Current:
Federal	$	—		5,791		520
State		—		731		66
		—		6,522		586
Deferred:
Federal		—		(5	)	6
State		—		(1	)	1
		—		(6	)	7
	$	—		6,516		593

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LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The tax effects of significant temporary differences that give rise to the net deferred tax asset were as follows:

	November 30,
	2006		2005
	(In thousands)
Deferred tax assets:
Reserves and accruals	$	227,045	235,744
Inventory valuation adjustments		208,433	—
Capitalized expenses		139,695	83,727
Investments in unconsolidated entities		18,456	35,508
Other		65,227	26,463
Total deferred tax assets		658,856	381,442
Deferred tax liabilities:
Completed contract reporting differences		235,742	190,795
Section 461(f) deductions		34,960	34,960
Other		80,954	44,592
Total deferred tax liabilities		351,656	270,347
Net deferred tax asset	$	307,200	111,095

At November 30, 2006 and 2005, the Homebuilding segments had a net deferred tax asset of $300.2 million and $104.5 million, respectively, which is included in other assets in the consolidated balance sheets.

At November 30, 2006 and 2005, the Financial Services segment had a net deferred tax asset of $7.0 million and $6.6 million, respectively, which is included in the assets of the Financial Services segment.

SFAS 109 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that a portion or all of the deferred tax asset will not be realized. Based on management’s assessment, it is more likely than not that the net deferred tax asset will be realized through future taxable earnings.

The American Jobs Creation Act of 2004 provided a tax deduction on qualified domestic production activities under Internal Revenue Code Section 199. The tax benefit from this deduction resulted in a 0.75% reduction in the effective tax rate for the year ended November 30, 2006.

A reconciliation of the statutory rate and the effective tax rate was as follows:

	Percentage of Pretax Earnings
	2006		2005		2004
Statutory rate	35.00	%	35.00	%	35.00	%
State income taxes, net of federal income tax benefit	2.75	%	2.75	%	2.75	%
Internal Revenue Code Section 199 benefit	(0.75	)%	—		—
Effective rate	37.00	%	37.75	%	37.75	%

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

12.    Earnings Per Share

Basic and diluted earnings per share for the years ended November 30, 2006, 2005 and 2004 were calculated as follows:

	2006		2005	2004
	(In thousands, except per share amounts)
Numerator—Basic earnings per share:
Earnings from continuing operations	$	593,869	1,344,410	944,642
Earnings from discontinued operations		—	10,745	977
Numerator for basic earnings per share—net earnings	$	593,869	1,355,155	945,619
Numerator—Diluted earnings per share:
Earnings from continuing operations	$	593,869	1,344,410	944,642
Interest on 5.125% zero-coupon convertible senior subordinated notes due 2021, net of tax		1,565	7,699	8,557
Numerator for diluted earnings per share from continuing operations		595,434	1,352,109	953,199
Numerator for diluted earnings per share from discontinued operations		—	10,745	977
Numerator for diluted earnings per share—net earnings	$	595,434	1,362,854	954,176
Denominator:
Denominator for basic earnings per share—weighted average shares		158,040	155,398	155,398
Effect of dilutive securities:
Employee stock options and nonvested shares		1,865	2,598	2,973
5.125% zero-coupon convertible senior subordinated notes due 2021		1,466	7,526	8,969
Denominator for diluted earnings per share—adjusted weighted average shares and assumed conversions		161,371	165,522	167,340
Basic earnings per share:
Earnings from continuing operations	$	3.76	8.65	6.08
Earnings from discontinued operations		—	0.07	0.01
Net earnings	$	3.76	8.72	6.09
Diluted earnings per share:
Earnings from continuing operations	$	3.69	8.17	5.70
Earnings from discontinued operations		—	0.06	—
Net earnings	$	3.69	8.23	5.70

Options to purchase 3.1 million shares and 1.7 million shares, respectively, in total of Class A and Class B common stock were outstanding and anti-dilutive for the years ended November 30, 2006 and 2004. For the year ended November 30, 2005, anti-dilutive options outstanding were not material.

In 2001, the Company issued 5.125% zero-coupon convertible senior subordinated notes due 2021, (“Convertible Notes”). The indenture relating to the Convertible Notes provided that the Convertible Notes were convertible into the Company’s Class A common stock during limited periods after the market price of the Company’s Class A common stock exceeds 110% of the accreted conversion price at the rate of 14.2 Class A common shares per $1,000 face amount of notes at maturity, which would total 9.0 million shares. For this purpose, the “market price” is the average closing price of the Company’s Class A common stock over the last twenty trading days of a fiscal quarter.

In April 2006, substantially all of the Company’s outstanding Convertible Notes were converted by the noteholders into 4.9 million Class A common shares. Convertible Notes not converted by the noteholders were not material and were redeemed by the Company on April 4, 2006. During the year ended November 30, 2005, $288.7 million face value of Convertible Notes were converted to 4.1 million shares of the Company’s Class A common stock. The weighted average amount of shares issued upon conversion is included in the calculation of basic earnings per share from the date of conversion. The calculation of diluted earnings per share included

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

1.5 million shares for the year ended November 30, 2006, compared to 7.5 million and 9.0 million shares for the years ended 2005 and 2004, respectively, related to the dilutive effect of the Convertible Notes prior to conversion.

13.    Comprehensive Income

Comprehensive income represents changes in stockholders’ equity from non-owner sources. The components of comprehensive income were as follows:

	Years Ended November 30,
	2006			2005		2004
	(In thousands)
Net earnings	$	593,869		1,355,155		945,619
Unrealized gains arising during period on interest rate swaps, net of tax		2,853		10,049		6,734
Unrealized gains arising during period on available-for-sale investment securities, net of tax		7		185		53
Reclassification adjustment for gains included in net earnings for available-for-sale investment securities, net of tax		(245	)	—		—
Change to the Company’s portion of unconsolidated entity’s minimum pension liability, net of tax		565		(880	)	(386	)
Comprehensive income	$	597,049		1,364,509		952,020

The Company’s effective tax rate was 37.00% in 2006 and 37.75% in both 2005 and 2004.

Accumulated other comprehensive loss consisted of the following at November 30, 2006 and 2005:

	November 30,
	2006			2005
	(In thousands)
Unrealized loss on interest rate swaps	$	(1,340	)	(4,193	)
Unrealized gain on available-for-sale investment securities		—		238
Unrealized loss on Company’s portion of unconsolidated entity’s minimum pension liability		(701	)	(1,266	)
Accumulated other comprehensive loss	$	(2,041	)	(5,221	)

14.    Capital Stock

Preferred Stock

The Company is authorized to issue 500,000 shares of preferred stock with a par value of $10 per share and 100 million shares of participating preferred stock with a par value of $0.10 per share. No shares of preferred stock or participating preferred stock have been issued as of November 30, 2006.

Common Stock

During 2006, 2005 and 2004, Class A and Class B common stockholders received per share annual dividends of $0.64, $0.57 and $0.51, respectively. In September 2005, the Company’s Board of Directors voted to increase the annual dividend rate with regard to the Company’s Class A and Class B common stock to $0.64 per share per year (payable quarterly) from $0.55 per share per year (payable quarterly).

As of November 30, 2006, Stuart A. Miller, the Company’s President, Chief Executive Officer and a Director, directly owned, or controlled through family-owned entities, shares of Class A and Class B common stock, which represented approximately 49% voting power of the Company’s stock.

In June 2001, the Company’s Board of Directors authorized a stock repurchase program to permit the purchase of up to 20 million shares of its outstanding common stock. During 2006, the Company repurchased a

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LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

total of 6.2 million shares of the outstanding common stock under the stock repurchase program for an aggregate purchase price including commissions of $320.1 million, or $51.59 per share. During 2005, the Company repurchased a total of 5.1 million shares of its outstanding Class A common stock under the stock repurchase program for an aggregate purchase price including commissions of $274.9 million, or $53.38 per share. During 2004, the Company granted approximately 2.4 million stock options to employees under the Company’s 2003 Stock Option and Restricted Stock Plan, and repurchased a similar number of shares of its outstanding Class A common stock under the stock repurchase program for an aggregate purchase price including commissions of approximately $109.6 million, or $45.64 per share. As of November 30, 2006, 6.2 million shares of common stock can be repurchased in the future under the program.

In addition to the common shares purchased under the Company’s stock repurchase program, the Company repurchased approximately 0.1 million and 0.2 million Class A common shares during the years ended November 30, 2006 and 2005, respectively, related to the vesting of restricted stock and distributions of common stock from the Company’s deferred compensation plan.

Restrictions on Payment of Dividends

Other than to maintain the financial ratios and net worth required by the New Facility, there are no restrictions on the payment of dividends on common stock by the Company. There are no agreements which restrict the payment of dividends by subsidiaries of the Company other than to maintain the financial ratios and net worth requirements under the Financial Services segment’s warehouse lines of credit.

401(k) Plan

Under the Company’s 401(k) Plan (the “Plan”), contributions made by employees can be invested in a variety of mutual funds or proprietary funds provided by the Plan trustee. The Company may also make contributions for the benefit of employees. The Company records as compensation expense its contribution to the 401(k) Plan. This amount was $19.0 million in 2006, $12.0 million in 2005 and $10.3 million in 2004.

15.    Share-Based Payments

The Company has share-based awards outstanding under four different plans which provide for the granting of stock options and stock appreciation rights and awards of restricted common stock (“nonvested shares”) to key officers, employees and directors. The exercise prices of stock options and stock appreciation rights may not be less than the market value of the common stock on the date of the grant. No options granted under the plans may be exercisable until at least six months after the date of the grant. Thereafter, exercises are permitted in installments determined when options are granted. Each stock option and stock appreciation right will expire on a date determined at the time of the grant, but not more than ten years after the date of the grant.

Prior to December 1, 2005, the Company accounted for stock option awards granted under the plans in accordance with the recognition and measurement provisions of APB 25 and related Interpretations, as permitted by SFAS 123. Share-based employee compensation expense was not recognized in the Company’s consolidated statements of earnings prior to December 1, 2005, as all stock option awards granted under the plans had an exercise price equal to or greater than the market value of the common stock on the date of the grant. Effective December 1, 2005, the Company adopted the provisions of SFAS 123R using the modified-prospective-transition method. Under this transition method, compensation expense recognized during the year ended November 30, 2006 included: (a) compensation expense for all share-based awards granted prior to, but not yet vested as of, December 1, 2005, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123, and (b) compensation expense for all share-based awards granted subsequent to December 1, 2005, based on the grant date fair value estimated in accordance with the provisions of SFAS 123R. In accordance with the modified-prospective-transition method, results for prior periods have not been restated.

As a result of adopting SFAS 123R, the charge to earnings before provision for income taxes for the year ended November 30, 2006 was $25.6 million. The impact of adopting SFAS 123R on net earnings for the year ended November 30, 2006 was $18.5 million. The impact of adopting SFAS 123R on basic and diluted earnings per share for the year ended November 30, 2006 was $0.12 per share and $0.11 per share, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Prior to the adoption of SFAS 123R, the Company presented all tax benefits related to deductions resulting from the exercise of stock options as cash flows from operating activities in the consolidated statements of cash flows. SFAS 123R requires that cash flows resulting from tax benefits related to tax deductions in excess of the compensation expense recognized for those options (excess tax benefits) be classified as financing cash flows. As a result, the Company classified $7.1 million of excess tax benefits as financing cash inflows for the year ended November 30, 2006.

The following table illustrates the effect on net earnings and earnings per share for the years ended November 30, 2005 and 2004, if the Company had applied the fair value recognition provisions of SFAS 123, as amended by SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure, to stock options awards granted under the Company’s share-based payment plans. For purposes of this pro forma disclosure, the value of the stock option awards is estimated using a Black-Scholes option-pricing model and amortized to expense over the options’ vesting periods.

	Years Ended November 30,
	2005			2004
	(In thousands, except per share amounts)
Net earnings, as reported	$	1,355,155		945,619
Add: Total stock-based employee compensation expense included in reported net earnings, net of tax		3,999		1,868
Deduct: Total stock-based employee compensation expense determined under fair market value based method for all awards, net of tax		(16,912	)	(13,086	)
Pro forma net earnings	$	1,342,242		934,401
Earnings per share:
Basic—as reported	$	8.72		6.09
Basic—pro forma	$	8.64		6.01
Diluted—as reported	$	8.23		5.70
Diluted—pro forma	$	8.16		5.63

Compensation expense related to the Company’s share-based awards for the year ended November 30, 2006 was $36.6 million of which $25.6 million related to stock options resulting from the adoption of SFAS 123R and $11.0 million related to nonvested shares. During the years ended November 30, 2005 and 2004, compensation expense related to the Company’s share-based awards was $6.9 million and $3.0 million, respectively, which primarily related to nonvested shares. The total income tax benefit recognized in the consolidated statement of earnings for share-based awards during the year ended November 30, 2006 was $10.0 million of which $7.1 million related to stock options resulting from the adoption of SFAS 123R and $2.9 million related to nonvested shares. During the years ended November 30, 2005 and 2004, the income tax benefit recognized in the consolidated statements of earnings for share-based awards was $2.6 million and $1.1 million, respectively, all of which related to nonvested shares.

Cash received from stock options exercised during the years ended November 30, 2006, 2005 and 2004 was $31.1 million, $38.1 million and $14.5 million, respectively. The tax deductions related to stock options exercised during the years ended November 30, 2006, 2005 and 2004 were $12.1 million, $23.2 million and $8.6 million, respectively.

The fair value of each of the Company’s stock option awards is estimated on the date of grant using a Black-Scholes option-pricing model that uses the assumptions noted in the table below. The fair value of the Company’s stock option awards, which are subject to graded vesting, is expensed on a straight-line basis over the vesting life of the stock options. Expected volatility is based on an average of (1) historical volatility of the Company’s stock and (2) implied volatility from traded options on the Company’s stock. The risk-free rate for periods within the contractual life of the stock option award is based on the yield curve of a zero-coupon U.S. Treasury bond on the date the stock option award is granted with a maturity equal to the expected term of the stock option award granted. The Company uses historical data to estimate stock option exercises and forfeitures within its valuation model. The expected life of stock option awards granted is derived from historical exercise experience under the Company’s share-based payment plans and represents the period of time that stock option awards granted are expected to be outstanding.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The fair value of these options was determined at the date of the grant using the Black-Scholes option-pricing model. The significant weighted average assumptions for the years ended November 30, 2006, 2005 and 2004 were as follows:

	2006	2005	2004
Dividend yield	1.1%	1.0%	1.1%
Volatility rate	31% - 34%	27% - 34%	27% - 36%
Risk-free interest rate	4.1% - 5.0%	3.8% - 4.6%	2.8% - 4.5%
Expected option life (years)	2.0 - 5.0	2.0 - 5.0	2.0 - 5.0

A summary of the Company’s stock option activity for the year ended November 30, 2006 is as follows:

	Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value (In thousands)
Outstanding at November 30, 2005	7,159,548		$	35.92
Grants	1,799,100		$	61.37
Forfeited or expired	(563,860	)	$	48.38
Exercises	(1,194,076	)	$	26.11
Outstanding at November 30, 2006	7,200,712		$	42.93	2.9	$	87,242
Vested and expected to vest in the future at November 30, 2006	6,358,637		$	41.87	2.9	$	83,361
Exercisable at November 30, 2006	2,257,242		$	28.27	2.4	$	54,121
Available for grant at November 30, 2006	3,458,027

A summary of the Company’s stock option activity for the years ended November 30, 2005 and 2004 was as follows:

	2005				2004
	Stock Options		Weighted Average Exercise Price		Stock Options		Weighted Average Exercise Price
Outstanding, beginning of year	8,025,292		$	28.26	6,660,968		$	20.01
Grants	1,581,125		$	55.46	2,478,796		$	46.42
Forfeited or expired	(541,853	)	$	34.02	(240,386	)	$	33.17
Exercises	(1,905,016	)	$	20.01	(874,086	)	$	16.55
Outstanding, end of year	7,159,548		$	35.92	8,025,292		$	28.26
Exercisable, end of year	1,390,848		$	22.36	1,338,425		$	15.87
Available for grant, end of year	5,408,359				7,440,704

The weighted average fair value of options granted during the years ended November 30, 2006, 2005 and 2004 was $17.27, $16.02 and $13.27, respectively. The total intrinsic value of options exercised during the years ended November 30, 2006, 2005 and 2004 was $36.1 million, $70.2 million and $27.6 million, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The fair value of nonvested shares is determined based on the average trading price of the Company’s common stock on the grant date. The weighted average fair value of nonvested shares granted during the years ended November 30, 2006 and 2005 was $57.09 and $61.93, respectively. There were no nonvested shares granted during the year ended November 30, 2004. A summary of the Company’s nonvested shares activity for the year ended November 30, 2006 was as follows:

	Shares		Weighted Average Grant Date Fair Value
Nonvested restricted shares at November 30, 2005	724,000		$	61.65
Grants	661,792		$	57.09
Vested	(72,744	)	$	60.99
Forfeited	(51,280	)	$	59.23
Nonvested restricted shares at November 30, 2006	1,261,768		$	59.40

At November 30, 2006, there was $74.0 million of unrecognized compensation expense related to unvested share-based awards granted under the Company’s share-based payment plans, of which $40.7 million relates to stock options and $33.4 million relates to nonvested shares. That expense is expected to be recognized over a weighted-average period of 3.2 years. During the years ended November 30, 2006, 2005 and 2004, 0.1 million nonvested shares, 0.5 million nonvested shares and 0.5 million nonvested shares, respectively, vested. The tax deductions related to nonvested share activity during 2006, 2005 and 2004 were $3.7 million, $16.0 million and $4.5 million, respectively.

16.    Deferred Compensation Plan

In June 2002, the Company adopted the Lennar Corporation Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan”) that allows a selected group of members of management to defer a portion of their salaries and bonuses and up to 100% of their restricted stock. All participant contributions to the Deferred Compensation Plan are vested. Salaries and bonuses that are deferred under the Deferred Compensation Plan are credited with earnings or losses based on investment decisions made by the participants. The cash contributions to the Deferred Compensation Plan are invested by the Company in various investment securities that are classified as trading.

Restricted stock is deferred under the Deferred Compensation Plan by surrendering the restricted stock in exchange for the right to receive in the future a number of shares equal to the number of restricted shares that are surrendered. The surrender is reflected as a reduction in stockholders’ equity equal to the fair value of the restricted stock when it was issued, with an offsetting increase in stockholders’ equity to reflect a deferral of the compensation expense related to the surrendered restricted stock. Changes in the fair value of the shares that will be issued in the future are not reflected in the consolidated financial statements.

As of November 30, 2006, approximately 172,000 Class A common shares and 17,200 Class B common shares of restricted stock had been surrendered in exchange for rights under the Deferred Compensation Plan, resulting in a reduction in stockholders’ equity of $1.6 million fully offset by an increase in stockholders’ equity to reflect the deferral of compensation in that amount. Shares that the Company is obligated to issue in the future under the Deferred Compensation Plan are treated as outstanding shares in both the Company’s basic and diluted earnings per share calculations for the years ended November 30, 2006, 2005 and 2004.

17.    Financial Instruments

The following table presents the carrying amounts and estimated fair values of financial instruments held by the Company at November 30, 2006 and 2005, using available market information and what the Company believes to be appropriate valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies might have a material effect on the estimated fair value amounts. The table excludes cash, restricted cash, receivables and accounts payable, which had fair values approximating their carrying values due to the short maturities of these instruments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	November 30,
	2006					2005
	Carrying Amount			Fair Value		Carrying Amount	Fair Value
	(In thousands)
ASSETS
Homebuilding:
Investments—trading	$	8,544		8,544		8,660	8,660
Investments—available-for-sale		—		—		8,883	8,883
Financial services:
Loans held-for-sale, net	$	483,704		483,704		562,510	562,510
Loans held-for-investment, net		189,638		187,672		147,459	145,219
Investments—held-to-maturity		59,571		59,546		32,146	32,149
LIABILITIES
Homebuilding:
Senior notes and other debts payable	$	2,613,503		2,626,235		2,592,772	2,700,893
Financial services:
Notes and other debts payable	$	1,149,231		1,149,231		1,269,782	1,269,782
OTHER FINANCIAL INSTRUMENTS
Homebuilding liabilities:
Interest rate swaps	$	2,128		2,128		6,737	6,737
Financial services liabilities:
Commitments to originate loans	$	626		626		112	112
Forward commitments to sell loans and option contracts		(3,444	)	(3,444	)	477	477

The following methods and assumptions are used by the Company in estimating fair values:

Homebuilding—Since there are no quoted market prices for investments classified as available-for-sale, the fair value is estimated from available yield curves for investments of similar quality and terms. The fair value for investments classified as trading is based on quoted market prices. For senior notes and other debts payable, the fair value of fixed-rate borrowings is based on quoted market prices. Variable-rate borrowings are tied to market indices and therefore approximate fair value. The fair value for interest rate swaps is based on dealer quotations and generally represents an estimate of the amount the Company would pay or receive to terminate the agreement at the reporting date.

Financial services—The fair values are based on quoted market prices, if available. The fair values for instruments that do not have quoted market prices are estimated by the Company on the basis of discounted cash flows or other financial information.

The Homebuilding operations utilize interest rate swap agreements to manage interest costs and hedge against risks associated with changing interest rates. Counterparties to these agreements are major financial institutions. Credit losses from counterparty non-performance are not anticipated. A majority of the Homebuilding operations’ variable interest rate borrowings are based on the LIBOR index. At November 30, 2006, the Homebuilding operations had three interest rate swap agreements outstanding with a total notional amount of $200 million, which will mature at various dates through fiscal 2008. These agreements fixed the LIBOR index at an average interest rate of 6.8% at November 30, 2006. The effect of interest rate swap agreements on interest incurred and on the average interest rate was an increase of $3.8 million and 0.10%, respectively, for the year ended November 30, 2006, an increase of $11.0 million and 0.40%, respectively, for the year ended November 30, 2005 and an increase of $16.5 million and 0.89%, respectively, for the year ended November 30, 2004.

The Financial Services segment had a pipeline of loan applications in process of $2.9 billion at November 30, 2006. Loans in process for which interest rates were committed to the borrowers totaled approximately $323.9 million as of November 30, 2006. Substantially all of these commitments were for periods of 60 days or less. Since a portion of these commitments is expected to expire without being exercised by the borrowers, the total commitments do not necessarily represent future cash requirements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Financial Services segment uses mandatory mortgage-backed securities (“MBS”) forward commitments and MBS option contracts to hedge its interest rate exposure during the period from when it extends an interest rate lock to a loan applicant until the time at which the loan is sold to an investor. These instruments involve, to varying degrees, elements of credit and interest rate risk. Credit risk is managed by entering into MBS forward commitments and MBS option contracts only with investment banks with primary dealer status and loan sales transactions with permanent investors meeting the segment’s credit standards. The segment’s risk, in the event of default by the purchaser, is the difference between the contract price and current fair value. At November 30, 2006, the segment had open commitments amounting to $335.0 million to sell MBS with varying settlement dates through January 2007.

18.    Consolidation of Variable Interest Entities

The Company follows FIN 46(R), which requires the consolidation of certain entities in which an enterprise absorbs a majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity.

Unconsolidated Entities

At November 30, 2006, the Company had investments in and advances to unconsolidated entities established to acquire and develop land for sale to the Company in connection with its homebuilding operations, for sale to third parties or for the construction of homes for sale to third-party homebuyers. The Company evaluated all agreements under FIN 46(R) during 2006 that were entered into or had reconsideration events and it consolidated entities that at November 30, 2006 had total combined assets and liabilities of $167.8 million and $123.3 million, respectively.

At November 30, 2006 and 2005, the Company’s recorded investment in unconsolidated entities was $1.4 billion and $1.3 billion, respectively. The Company’s estimated maximum exposure to loss with regard to unconsolidated entities was primarily its recorded investments in these entities and the exposure under the guarantees discussed in Note 6.

Option Contracts

In the Company’s homebuilding operations, the Company has access to land through option contracts, which generally enables it to defer acquiring portions of properties owned by third parties (including land funds) and unconsolidated entities until the Company is ready to build homes on them.

At November 30, 2006, the Company had access through option contracts to 189,279 homesites, of which 94,758 were through option contracts with third parties and 94,521 were through option contracts with unconsolidated entities in which the Company has investments. At November 30, 2005, the Company had access through option contracts to 222,119 homesites, of which 127,013 were through option contracts with third parties and 95,106 were through option contracts with unconsolidated entities in which the Company has investments.

A majority of the Company’s option contracts require a non-refundable cash deposit or irrevocable letter of credit based on a percentage of the purchase price of the land. These options are generally rolling options, in which the Company acquires homesites based on pre-determined take-down schedules. The Company’s option contracts often include price escalators, which adjust the purchase price of the land to its approximate fair value at time of the acquisition. The exercise periods of the Company’s option contracts vary on a case-by-case basis, but generally range from one to ten years.

The Company’s investments in option contracts are recorded at cost unless those investments are determined to be impaired, in which case the Company’s investments are written down to fair value. The Company reviews option contracts for impairment during each reporting period in accordance with SFAS 144. The most significant indicator of impairment is a decline in the fair value of the optioned property such that the purchase and development of the optioned property would no longer meet the Company’s targeted return on investment. Such declines could be caused by a variety of factors including increased competition, decreases in demand or changes in local regulations that adversely impact the cost of development. Changes in any of these factors would cause the Company to re-evaluate the likelihood of exercising its land options.

75

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Each option contract contains a predetermined take-down schedule for the optioned land parcels. However, in almost all instances, the Company is not required to purchase land in accordance with those take-down schedules. In substantially all instances, the Company has the right and ability to not exercise its option and forfeit its deposit without further penalty, other than termination of the option and loss of any unapplied portion of its deposit and pre-acquisition costs. Therefore, in substantially all instances, the Company does not consider the take-down price to be a firm contractual obligation. When the Company permits an option to terminate or walks away from an option, it writes-off any unapplied deposit and pre-acquisition costs. For the year ended November 30, 2006, the Company wrote-off $152.2 million of option deposits and pre-acquisition costs related to 24,235 homesites under option that it does not intend to purchase, compared to $15.1 million in 2005.

In very limited cases, the land seller can enforce the take-down schedule by requiring the Company to exercise its option. The Company records the option contract as a financing arrangement when required in accordance with SFAS No. 49, Accounting for Product Financing Arrangements, and records the optioned property and related take-down liability in its consolidated financial statements.

The Company evaluated all option contracts for land when entered into or upon a reconsideration event and determined it was the primary beneficiary of certain of these option contracts. Although the Company does not have legal title to the optioned land, under FIN 46(R), the Company, if it is deemed to be the primary beneficiary, is required to consolidate the land under option at the purchase price of the optioned land. During 2006 and 2005, the effect of the consolidation of these option contracts was an increase of $548.7 million and $516.3 million, respectively, to consolidated inventory not owned with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying consolidated balance sheets as of November 30, 2006 and 2005. This increase was offset primarily by the Company exercising its options to acquire land under certain contracts previously consolidated under FIN 46(R), resulting in a net increase in consolidated inventory not owned of $1.8 million. To reflect the purchase price of the inventory consolidated under FIN 46(R), the Company reclassified $80.7 million of related option deposits from land under development to consolidated inventory not owned in the accompanying consolidated balance sheet as of November 30, 2006. The liabilities related to consolidated inventory not owned represent the difference between the purchase price of the optioned land and the Company’s cash deposits.

At November 30, 2006 and 2005, the Company’s exposure to loss related to its option contracts with third parties and unconsolidated entities consisted of its non-refundable option deposits and advanced costs totaling $785.9 million and $741.6 million, respectively. Additionally, the Company posted $553.4 million of letters of credit in lieu of cash deposits under certain option contracts as of November 30, 2006.

19.    Commitments and Contingent Liabilities

The Company is party to various claims, legal actions and complaints arising in the ordinary course of business. In the opinion of management, the disposition of these matters will not have a material adverse effect on the financial condition, results of operations or cash flows of the Company.

The Company is subject to the usual obligations associated with entering into contracts (including option contracts) for the purchase, development and sale of real estate, which it does in the routine conduct of its business. Option contracts for the purchase of land generally enable the Company to defer acquiring portions of properties owned by third parties and certain unconsolidated entities until the Company is ready to build homes on them. The use of option contracts allows the Company to reduce the financial risks associated with long-term land holdings. At November 30, 2006, the Company had access to acquire 189,279 homesites through option contracts with third parties and agreements with unconsolidated entities in which the Company had investments. At November 30, 2006, the Company had $785.9 million of non-refundable option deposits and advanced costs related to certain of these homesites, which were included in inventories in the consolidated balance sheet.

At November 30, 2006 and 2005, the Company had $124.5 million and $69.3 million, respectively, of reserves recorded in accordance with SFAS No. 5, Accounting for Contingencies, for income tax filing positions and related interest based on the Company’s evaluation that uncertainty exists in sustaining the deductions. This reserve is included in other liabilities in the consolidated balance sheets.

76

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company has entered into agreements to lease certain office facilities and equipment under operating leases. Future minimum payments under the non-cancelable leases in effect at November 30, 2006 are as follows:

	Lease Payments
	(In thousands)
2007	$	92,481
2008		60,018
2009		47,195
2010		33,381
2011		24,097
Thereafter		27,274

Rental expense for the years ended November 30, 2006, 2005 and 2004 was $140.6 million, $116.0 million and $84.7 million, respectively.

The Company is committed, under various letters of credit, to perform certain development and construction activities and provide certain guarantees in the normal course of business. Outstanding letters of credit under these arrangements totaled $1.4 billion at November 30, 2006. The Company also had outstanding performance and surety bonds related to site improvements at various projects with estimated costs to complete of $1.8 billion. The Company does not believe there will be any draws upon these bonds, but if there were any, they would not have a material effect on the Company’s financial position, results of operations or cash flows.

77

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

20.    Supplemental Financial Information

The Company’s obligations to pay principal, premium, if any, and interest under its New Facility, senior floating-rate notes due 2009, 7 ⁵/8% senior notes due 2009, 5.125% senior notes due 2010, 5.95% senior notes due 2011, 5.95% senior notes due 2013, 5.50% senior notes due 2014, 5.60% senior notes due 2015 and 6.50% senior notes due 2016 are guaranteed by substantially all of the Company’s subsidiaries other than finance company subsidiaries. The guarantees are full and unconditional and the guarantor subsidiaries are 100% directly or indirectly owned by Lennar Corporation. The guarantees are joint and several, subject to limitations as to each guarantor designed to eliminate fraudulent conveyance concerns. The Company has determined that separate, full financial statements of the guarantors would not be material to investors and, accordingly, supplemental financial information for the guarantors is presented as follows:

Consolidating Balance Sheet

November 30, 2006

	Lennar Corporation			Guarantor Subsidiaries	Non-Guarantor Subsidiaries		Eliminations		Total
	(In thousands)
ASSETS
Homebuilding:
Cash, restricted cash and receivables, net	$	422,373		395,261	27,867		—		845,501
Inventories		—		7,523,554	307,929		—		7,831,483
Investments in unconsolidated entities		—		1,435,346	11,832		—		1,447,178
Goodwill		—		196,638	—		—		196,638
Other assets		360,708		104,200	9,182		—		474,090
Investments in subsidiaries		7,839,517		486,461	—		(8,325,978	)	—
		8,622,598		10,141,460	356,810		(8,325,978	)	10,794,890
Financial services		—		25,108	1,588,268		—		1,613,376
Total assets	$	8,622,598		10,166,568	1,945,078		(8,325,978	)	12,408,266
LIABILITIES AND STOCKHOLDERS’ EQUITY
Homebuilding:
Accounts payable and other liabilities	$	605,834		1,644,304	91,922		—		2,342,060
Liabilities related to consolidated inventory not owned		—		333,723	—		—		333,723
Senior notes and other debts payable		2,471,928		53,720	87,855		—		2,613,503
Intercompany		(156,536	)	288,570	(132,034	)	—		—
		2,921,226		2,320,317	47,743		—		5,289,286
Financial services		—		6,734	1,355,481		—		1,362,215
Total liabilities		2,921,226		2,327,051	1,403,224		—		6,651,501
Minority interest		—		—	55,393		—		55,393
Stockholders’ equity		5,701,372		7,839,517	486,461		(8,325,978	)	5,701,372
Total liabilities and stockholders’ equity	$	8,622,598		10,166,568	1,945,078		(8,325,978	)	12,408,266

78

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Balance Sheet

November 30, 2005

	Lennar Corporation			Guarantor Subsidiaries	Non-Guarantor Subsidiaries		Eliminations		Total
	(In thousands)
ASSETS
Homebuilding:
Cash, restricted cash and receivables, net	$	401,467		816,971	13,032		—		1,231,470
Inventories		—		7,619,470	244,061		—		7,863,531
Investments in unconsolidated entities		—		1,282,686	—		—		1,282,686
Goodwill		—		195,156	—		—		195,156
Other assets		80,838		121,354	64,555		—		266,747
Investments in subsidiaries		7,150,775		500,342	—		(7,651,117	)	—
		7,633,080		10,535,979	321,648		(7,651,117	)	10,839,590
Financial services		—		29,341	1,672,294		—		1,701,635
Total assets	$	7,633,080		10,565,320	1,993,942		(7,651,117	)	12,541,225
LIABILITIES AND STOCKHOLDERS’ EQUITY
Homebuilding:
Accounts payable and other liabilities	$	1,026,281		1,783,582	64,791		—		2,874,654
Liabilities related to consolidated inventory not owned		—		306,445	—		—		306,445
Senior notes and other debts payable		2,328,016		250,642	14,114		—		2,592,772
Intercompany		(972,628	)	1,066,147	(93,519	)	—		—
		2,381,669		3,406,816	(14,614	)	—		5,773,871
Financial services		—		7,729	1,429,971		—		1,437,700
Total liabilities		2,381,669		3,414,545	1,415,357		—		7,211,571
Minority interest		—		—	78,243		—		78,243
Stockholders’ equity		5,251,411		7,150,775	500,342		(7,651,117	)	5,251,411
Total liabilities and stockholders’ equity	$	7,633,080		10,565,320	1,993,942		(7,651,117	)	12,541,225

79

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Statement of Earnings

Year Ended November 30, 2006

	Lennar Corporation			Guarantor Subsidiaries		Non-Guarantor Subsidiaries	Eliminations		Total
	(In thousands)
Revenues:
Homebuilding	$	—		15,314,843		308,197	—		15,623,040
Financial services		—		9,497		687,091	(52,966	)	643,622
Total revenues		—		15,324,340		995,288	(52,966	)	16,266,662
Costs and expenses:
Homebuilding		—		14,431,385		255,720	(9,540	)	14,677,565
Financial services		—		28,310		523,959	(58,450	)	493,819
Corporate general and administrative		193,307		—		—	—		193,307
Total costs and expenses		193,307		14,459,695		779,679	(67,990	)	15,364,691
Equity in loss from unconsolidated entities		—		(12,536	)	—	—		(12,536	)
Management fees and other income, net		15,024		62,387		4,242	(15,024	)	66,629
Minority interest expense, net		—		—		13,415	—		13,415
Earnings (loss) before provision (benefit) for income taxes		(178,283	)	914,496		206,436	—		942,649
Provision (benefit) for income taxes		(65,965	)	338,364		76,381	—		348,780
Equity in earnings from subsidiaries		706,187		130,055		—	(836,242	)	—
Net earnings	$	593,869		706,187		130,055	(836,242	)	593,869

Consolidating Statement of Earnings

Year Ended November 30, 2005

	Lennar Corporation			Guarantor Subsidiaries	Non-Guarantor Subsidiaries	Eliminations		Total
	(Dollars in thousands)
Revenues:
Homebuilding	$	—		12,908,793	395,806	—		13,304,599
Financial services		—		9,109	586,424	(33,161	)	562,372
Total revenues		—		12,917,902	982,230	(33,161	)	13,866,971
Costs and expenses:
Homebuilding		—		10,922,398	297,221	(4,375	)	11,215,244
Financial services		—		11,915	471,728	(26,039	)	457,604
Corporate general and administrative		187,257		—	—	—		187,257
Total costs and expenses		187,257		10,934,313	768,949	(30,414	)	11,860,105
Equity in earnings from unconsolidated entities		—		133,814	—	—		133,814
Management fees and other income (expense), net		(2,747	)	97,588	1,364	2,747		98,952
Minority interest expense, net		—		—	45,030	—		45,030
Loss on redemption of 9.95% senior notes		34,908		—	—	—		34,908
Earnings (loss) from continuing operations before provision (benefit) for income taxes		(224,912	)	2,214,991	169,615	—		2,159,694
Provision (benefit) for income taxes		(84,904	)	836,159	64,029	—		815,284
Earnings (loss) from continuing operations		(140,008	)	1,378,832	105,586	—		1,344,410
Earnings from discontinued operations, net of tax		—		—	10,745	—		10,745
Equity in earnings from subsidiaries		1,495,163		116,331	—	(1,611,494	)	—
Net earnings	$	1,355,155		1,495,163	116,331	(1,611,494	)	1,355,155

80

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Statement of Earnings

Year Ended November 30, 2004

	Lennar Corporation			Guarantor Subsidiaries	Non-Guarantor Subsidiaries		Eliminations		Total
	(In thousands)
Revenues:
Homebuilding	$	—		9,688,964	311,668		—		10,000,632
Financial services		—		18,000	510,322		(27,986	)	500,336
Total revenues		—		9,706,964	821,990		(27,986	)	10,500,968
Costs and expenses:
Homebuilding		—		8,385,081	247,681		(2,995	)	8,629,767
Financial services		—		14,736	399,860		(24,991	)	389,605
Corporate general and administrative		141,722		—	—		—		141,722
Total costs and expenses		141,722		8,399,817	647,541		(27,986	)	9,161,094
Equity in earnings from unconsolidated entities		—		90,739	—		—		90,739
Management fees and other income (expense), net		—		97,959	(279	)	—		97,680
Minority interest expense, net		—		—	10,796		—		10,796
Earnings (loss) from continuing operations before provision (benefit) for income taxes		(141,722	)	1,495,845	163,374		—		1,517,497
Provision (benefit) for income taxes		(53,500	)	564,681	61,674		—		572,855
Earnings (loss) from continuing operations		(88,222	)	931,164	101,700		—		944,642
Earnings from discontinued operations, net of tax		—		—	977		—		977
Equity in earnings from subsidiaries		1,033,841		102,677	—		(1,136,518	)	—
Net earnings	$	945,619		1,033,841	102,677		(1,136,518	)	945,619

81

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Statement of Cash Flows

Year Ended November 30, 2006

	Lennar Corporation			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total
	(Dollars in thousands)
Cash flows from operating activities:
Net earnings from continuing operations	$	593,869		706,187		130,055		(836,242	)	593,869
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities		(623,428	)	(764,757	)	512,724		836,242		(39,219	)
Net cash provided by (used in) operating activities		(29,559	)	(58,570	)	642,779		—		554,650
Cash flows from investing activities:
Increase in investments in unconsolidated entities, net		—		(407,694	)	—		—		(407,694	)
Acquisitions, net of cash acquired		—		(30,329	)	(2,884	)	—		(33,213	)
Other		(5,927	)	(6,766	)	47,131		—		34,438
Net cash provided by (used in) investing activities		(5,927	)	(444,789	)	44,247		—		(406,469	)
Cash flows from financing activities:
Net repayments under financial services debt		—		—		(120,858	)	—		(120,858	)
Net proceeds from 5.95% senior notes		248,665		—		—		—		248,665
Net proceeds from 6.50% senior notes		248,933		—		—		—		248,933
Redemption of senior floating-rate notes due 2007		(200,000	)	—		—		—		(200,000	)
Net repayments under other debt		(2,336	)	(138,161	)	(7,807	)	—		(148,304	)
Net payments related to minority interests		—		—		(71,351	)	—		(71,351	)
Excess tax benefits from share-based awards		7,103		—		—		—		7,103
Common stock:
Issuances		31,131		—		—		—		31,131
Repurchases		(323,229	)	—		—		—		(323,229	)
Dividends		(101,295	)	—		—		—		(101,295	)
Intercompany		145,892		364,892		(510,784	)	—		—
Net cash provided by (used in) financing activities		54,864		226,731		(710,800	)	—		(429,205	)
Net increase (decrease) in cash		19,378		(276,628	)	(23,774	)	—		(281,024	)
Cash at beginning of year		401,467		495,081		162,795		—		1,059,343
Cash at end of year	$	420,845		218,453		139,021		—		778,319

82

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Statement of Cash Flows

Year Ended November 30, 2005

	Lennar Corporation			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total
	(Dollars in thousands)
Cash flows from operating activities:
Net earnings from continuing operations	$	1,355,155		1,495,163		105,586		(1,611,494	)	1,344,410
Net earnings from discontinued operations		—		—		10,745		—		10,745
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities		(1,091,091	)	(1,325,709	)	(226,874	)	1,611,494		(1,032,180	)
Net cash provided by (used in) operating activities		264,064		169,454		(110,543	)	—		322,975
Cash flows from investing activities:
Increase in investments in unconsolidated entities, net		—		(453,017	)	—		—		(453,017	)
Acquisitions, net of cash acquired		—		(414,079	)	(1,970	)	—		(416,049	)
Other		(5,463	)	(22,151	)	(106,893	)	—		(134,507	)
Net cash used in investing activities		(5,463	)	(889,247	)	(108,863	)	—		(1,003,573	)
Cash flows from financing activities:
Net borrowings under financial services short-term debt		—		—		372,849		—		372,849
Net proceeds from 5.125% senior notes		298,215		—		—		—		298,215
Net proceeds from 5.60% senior notes		501,460		—		—		—		501,460
Redemption of 9.95% senior notes		(337,731	)	—		—		—		(337,731	)
Net repayments under other borrowings		—		(75,209	)	(61,833	)	—		(137,042	)
Net payments related to minority interests		—		—		(33,181	)	—		(33,181	)
Common stock:
Issuances		38,069		—		—		—		38,069
Repurchases		(289,284	)	—		—		—		(289,284	)
Dividends		(89,229	)	—		—		—		(89,229	)
Intercompany		(1,090,578	)	1,146,903		(56,325	)	—		—
Net cash provided by (used in) financing activities		(969,078	)	1,071,694		221,510		—		324,126
Net increase (decrease) in cash		(710,477	)	351,901		2,104		—		(356,472	)
Cash at beginning of year		1,111,944		143,180		160,691		—		1,415,815
Cash at end of year	$	401,467		495,081		162,795		—		1,059,343

83

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Statement of Cash Flows

Year Ended November 30, 2004

	Lennar Corporation			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total
	(Dollars in thousands)
Cash flows from operating activities:
Net earnings from continuing operations	$	945,619		1,033,841		101,700		(1,136,518	)	944,642
Net earnings from discontinued operations		—		—		977		—		977
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities		(576,392	)	(857,956	)	(227,597	)	1,136,518		(525,427	)
Net cash provided by (used in) operating activities		369,227		175,885		(124,920	)	—		420,192
Cash flows from investing activities:
Increase in investments in unconsolidated entities, net		—		(420,597	)	—		—		(420,597	)
Acquisitions, net of cash acquired		—		(93,082	)	(12,648	)	—		(105,730	)
Other		(15,110	)	17,955		(10,625	)	—		(7,780	)
Net cash used in investing activities		(15,110	)	(495,724	)	(23,273	)	—		(534,107	)
Cash flows from financing activities:
Net borrowings under financial services debt		—		—		162,277		—		162,277
Net proceeds from senior floating-rate notes due 2007		199,300		—		—		—		199,300
Net proceeds from senior floating-rate notes due 2009		298,500		—		—		—		298,500
Net proceeds from 5.50% senior notes		245,480		—		—		—		245,480
Net repayments under term loan B and other borrowings		(296,000	)	(74,721	)	(33,368	)	—		(404,089	)
Net payments related to minority interests		—		—		(18,396	)	—		(18,396	)
Common stock:
Issuances		14,537		—		—		—		14,537
Repurchases		(113,582	)	—		—		—		(113,582	)
Dividends		(79,945	)	—		—		—		(79,945	)
Intercompany		(403,966	)	274,080		129,886		—		—
Net cash provided by (used in) financing activities		(135,676	)	199,359		240,399		—		304,082
Net increase (decrease) in cash		218,441		(120,480	)	92,206		—		190,167
Cash at beginning of year		893,503		263,660		68,485		—		1,225,648
Cash at end of year	$	1,111,944		143,180		160,691		—		1,415,815

84

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

21.    Quarterly Data (unaudited)

	First		Second	Third	Fourth
	(In thousands, except per share amounts)
2006
Revenues	$	3,240,659	4,577,503	4,182,435	4,266,065
Gross profit from sales of homes	$	727,923	946,508	729,198	336,812
Earnings (loss) before provision (benefit) for income taxes	$	409,606	515,472	328,055	(310,484	)
Net earnings (loss)	$	258,052	324,747	206,675	(195,605	)
Earnings (loss) per share:
Basic	$	1.64	2.04	1.31	(1.24	)
Diluted	$	1.58	2.00	1.30	(1.24	)
2005
Revenues	$	2,405,731	2,932,974	3,498,332	5,029,934
Gross profit from sales of homes	$	544,443	654,082	846,448	1,256,473
Earnings from continuing operations before provision for income taxes	$	309,645	374,689	541,772	933,588
Earnings from discontinued operations before provision for income taxes	$	726	16,535	—	—
Net earnings	$	193,206	243,537	337,253	581,159
Basic earnings per share:
Earnings from continuing operations	$	1.25	1.51	2.18	3.70
Earnings from discontinued operations	$	—	0.07	—	—
Net earnings	$	1.25	1.58	2.18	3.70
Diluted earnings per share:
Earnings from continuing operations	$	1.17	1.42	2.06	3.54
Earnings from discontinued operations	$	—	0.06	—	—
Net earnings	$	1.17	1.48	2.06	3.54

Quarterly and year-to-date computations of per share amounts are made independently. Therefore, the sum of per share amounts for the quarters may not agree with per share amounts for the year.

22.    Subsequent Event

On December 29, 2006, the Company and LNR reached a definitive agreement to admit a new strategic partner into their LandSource joint venture (See Note 6 for additional information related to the LandSource joint venture). The transaction will result in a cash distribution to the Company and its current partner, LNR, of approximately $660 million each. For financial statement purposes, the transaction is expected to generate earnings of approximately $500 million for the Company, of which approximately $125 million will be recognized at closing and a potential of approximately $375 million could be realized over future years. The new partner will contribute cash and property with a combined value of approximately $900 million. Subsequent to the transaction, in addition to options the Company will have on certain LandSource assets, the Company will also have $153 million of specific performance options on other LandSource assets. Following the contribution and refinancing, the Company’s and LNR’s interest in LandSource will be diluted to 19% each, and the new partner will be issued a 62% interest in LandSource. The transaction is expected to close during the Company’s first quarter of 2007.

85

Item 9.    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Not applicable.

Item 9A.    Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer participated in an evaluation by our management of the effectiveness of our disclosure controls and procedures as of the end of our fiscal quarter that ended on November 30, 2006. Based on their participation in that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of November 30, 2006 to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities Exchange Commissions’s rules and forms, and to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosures.

Our CEO and CFO also participated in an evaluation by our management of any changes in our internal control over financial reporting that occurred during the quarter ended November 30, 2006. That evaluation did not identify any changes that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Annual Report on Internal Control Over Financial Reporting and the Report of Independent Registered Public Accounting Firm obtained from Deloitte & Touche LLP are included elsewhere in this document.

Item 9B.    Other Information.

Not applicable.

86

PART III

Item 10.    Directors and Executive Officers of the Registrant.

The information required by this item for executive officers is set forth under the heading “Executive Officers of Lennar Corporation” in Part I. The other information called for by this item is incorporated by reference to our definitive proxy statement, which will be filed with the Securities and Exchange Commission not later than March 30, 2007 (120 days after the end of our fiscal year).

Item 11.    Executive Compensation.

The information required by this item is incorporated by reference to our definitive proxy statement, which will be filed with the Securities and Exchange Commission not later than March 30, 2007 (120 days after the end of our fiscal year).

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this item is incorporated by reference to our definitive proxy statement, which will be filed with the Securities and Exchange Commission not later than March 30, 2007 (120 days after the end of our fiscal year), except for the information required by Item 201(d) of Regulation S-K, which is provided below.

The following table summarizes our equity compensation plans as of November 30, 2006:

Plan category	Number of shares to be issued upon exercise of outstanding options, warrants and rights (a)(1)	Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of shares remaining available for future issuance under equity compensation plans (excluding shares reflected in column (a)) (c)(2)
Equity compensation plans approved by stockholders	7,200,712	$	42.93	3,458,027
Equity compensation plans not approved by stockholders	—		—	—
Total	7,200,712	$	42.93	3,458,027

(1) This amount includes approximately 239,000 shares of Class B common stock that may be issued under our equity compensation plans.

(2) Both Class A and Class B common stock may be issued.

Item 13.    Certain Relationships and Related Transactions.

The information required by this item is incorporated by reference to our definitive proxy statement, which will be filed with the Securities and Exchange Commission not later than March 30, 2007 (120 days after the end of our fiscal year).

Item 14.    Principal Accountant Fees and Services.

The information required by this item is incorporated by reference to our definitive proxy statement, which will be filed with the Securities and Exchange Commission not later than March 30, 2007 (120 days after the end of our fiscal year).

87

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a) Documents filed as part of this Report.

1. The following financial statements are contained in Item 8:

Financial Statements	Page in this Report
Report of Independent Registered Public Accounting Firm	44
Consolidated Balance Sheets as of November 30, 2006 and 2005	45
Consolidated Statements of Earnings for the Years Ended November 30, 2006, 2005 and 2004	46
Consolidated Statements of Stockholders’ Equity for the Years Ended November 30, 2006, 2005 and 2004	47
Consolidated Statements of Cash Flows for the Years Ended November 30, 2006, 2005 and 2004	49
Notes to Consolidated Financial Statements	51

2. The following financial statement schedule is included in this Report:

Financial Statement Schedule	Page in this Report
Report of Independent Registered Public Accounting Firm	92
Schedule II—Valuation and Qualifying Accounts	93

Information required by other schedules has either been incorporated in the consolidated financial statements and accompanying notes or is not applicable to us.

3. The following exhibits are filed with this Report or incorporated by reference:

  2.1 Separation and Distribution Agreement, dated June 10, 1997, between Lennar and LNR Property Corporation—Incorporated by reference to Exhibit 10.1 of the Registration Statement on Form 10 of LNR Property Corporation filed with the Commission on July 31, 1997.

  2.2 Agreement and Plan of Merger dated July 21, 2003, among Lennar, The Newhall Land and Farming Company, LNR Property Corporation, NWHL Investment LLC and NWHL Acquisition, L.P.—Incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K dated January 27, 2004.

  3.1 Amended and Restated Certificate of Incorporation, dated April 28, 1998—Incorporated by reference to Exhibit 3(a) of the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2004.

  3.2 Certificate of Amendment to Certificate of Incorporation, dated April 9, 1999—Incorporated by reference to Exhibit 3(a) of the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 1999.

  3.3 Certificate of Amendment to Certificate of Incorporation, dated April 8, 2003—Incorporated by reference to Annex IV of the Company’s Proxy Statement on Schedule 14A dated March 10, 2003.

  3.4 Bylaws of the Company, as amended through June 28, 2005—Incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2005.

  4.1 Indenture, dated as of December 31, 1997, between Lennar and Bank One Trust Company, N.A., as trustee—Incorporated by reference to Exhibit 4 of the Company’s Registration Statement on Form S-3, Registration No. 333-45527, filed with the Commission on February 3, 1998.

  4.2 Second Supplemental Indenture, dated as of February 19, 1999, between Lennar and Bank One Trust Company, N.A., as trustee (relating to Lennar’s 7 ⁵/8% Senior Notes due 2009)—Incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K, dated February 19, 1999.

88

  4.3 Third Supplemental Indenture, dated May 3, 2000, between Lennar and Bank One Trust Company, N.A., as successor trustee (relating to Lennar’s 7 ⁵/8% Senior Notes due 2009)—Incorporated by reference to Exhibit 4(d) of the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2000.

  4.4 Sixth Supplemental Indenture, dated February 5, 2003, between Lennar and Bank One Trust Company, N.A., as trustee (relating to 5.950% Senior Notes due 2013)—Incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K, dated January 31, 2003.

  4.5 Eighth Supplemental Indenture, dated January 21, 2005, between Lennar and J.P. Morgan Trust Company, N.A., as trustee (relating to Lennar’s Senior Floating-Rate Notes due 2009)—Incorporated by reference to Exhibit 4.3 of the Company’s Registration Statement on Form S-4, Registration No. 333-116975, filed with the Commission on June 29, 2004.

  4.6 Indenture, dated August 12, 2004, between Lennar and J.P. Morgan Trust Company, N.A., as trustee (relating to Lennar’s 5.50% Senior Notes due 2014)—Incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement on Form S-4, Registration No. 333-121130, filed with the Commission on December 10, 2004.

  4.7 Indenture, dated April 28, 2005, between Lennar and J.P. Morgan Trust Company, N.A., as trustee (relating to Lennar’s 5.60% Senior Notes due 2015)—Incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement on Form S-4, Registration No. 333-127839, filed with the Commission on August 25, 2005.

  4.8 Indenture, dated September 15, 2005, between Lennar and J.P. Morgan Trust Company, N.A., as trustee (relating to Lennar’s 5.125% Senior Notes due 2010)—Incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement on Form S-4, Registration No. 333-130923, filed with the Commission on January 9, 2006.

  4.9 Indenture, dated April 26, 2006, between Lennar and J.P. Morgan Trust Company, N.A., as trustee (relating to Lennar’s 5.95% Senior Notes due 2011)—Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, dated April 26, 2006.

  4.10 Indenture, dated April 26, 2006, between Lennar and J.P. Morgan Trust Company, N.A., as trustee (relating to Lennar’s 6.50% Senior Notes due 2016)—Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, dated April 26, 2006.

10.1* Amended and Restated Lennar Corporation 1997 Stock Option Plan—Incorporated by reference to Exhibit 10(a) of the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 1997.

10.2* Lennar Corporation 2000 Stock Option and Restricted Stock Plan—Incorporated by reference to Exhibit 10 of the Company’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2001.

10.3* Lennar Corporation 2003 Stock Option and Restricted Stock Plan—Incorporated by reference to Annex VI of the Company’s Proxy Statement on Schedule 14A dated March 10, 2003.

10.4* Lennar Corporation 1991 Stock Option Plan—Incorporated by reference to the Company’s Registration Statement on Form S-8, Registration No. 33-45442.

10.5* Lennar Corporation Employee Stock Ownership Plan and Trust—Incorporated by reference to the Company’s Registration Statement on Form S-8, Registration No. 2-89104.

10.6* Amendment dated December 13, 1989 to Lennar Corporation Employee Stock Ownership Plan—Incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 1990.

10.7* Lennar Corporation Employee Stock Ownership/401(k) Trust Agreement dated December 13, 1989—Incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 1990.

10.8* Amendment dated April 18, 1990 to Lennar Corporation Employee Stock Ownership/401(k) Plan—Incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 1990.

89

10.9* Lennar Corporation Nonqualified Deferred Compensation Plan—Incorporated by reference to Exhibit 10 of the Company’s Quarterly Report on Form 10-Q for the quarter ended August 31, 2002.

10.10 Credit Agreement, dated June 17, 2005 among Lennar and the lenders named therein—Incorporated by reference to Exhibit 10 of the Company’s Current Report on Form 8-K, dated June 17, 2005.

10.11 First Amendment to Credit Agreement dated as of March 9, 2006—Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2006.

10.12 Credit Agreement dated July 21, 2006 among Lennar and the lenders named therein—Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, dated July 21, 2006.

10.13 Parent Company Guarantee dated January 27, 2004 by Lennar Corporation and LNR Property Corporation in favor of Bank One, N.A., for the benefit of the lenders under the Credit Agreement referred to therein—Incorporated by reference to Exhibit 10(p) of the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2003.

10.14 Amended and Restated Loan Agreement dated September 25, 2006 between UAMC Capital, LLC and the lenders named therein.

10.15* Aircraft Time-Sharing Agreement, dated August 17, 2005, between U.S. Home Corporation and Stuart Miller—Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, dated August 17, 2005.

10.16* Amendment No. 1 to Aircraft Time-Sharing Agreement, dated September 1, 2005, between U.S. Home Corporation and Stuart Miller—Incorporated by reference to Exhibit 10.16 of the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2005.

10.17 Second Amended and Restated Warehousing Credit and Security Agreement dated April 21, 2005, by and among, Universal American Mortgage Company, LLC, the other Borrowers named in the agreement, and the Lender Parties named in the agreement and Residential Funding Corporation—Incorporated by reference to Exhibit 10.17 of the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2005.

10.18 Third Amended and Restated Warehousing Credit and Security Agreement dated April 30, 2006, by and among, Universal American Mortgage Company, LLC, the other Borrowers named in the agreement, the Lender Parties named in the agreement and Residential Funding Corporation.

10.19 Master Issuing and Paying Agency Agreement, dated March 29, 2006, between Lennar Corporation and JPMorgan Chase Bank, N.A.—Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, dated March 29, 2006.

14.1 Code of Business Conduct and Ethics of Lennar Corporation, as revised August 4, 2006—Incorporated by reference to Exhibit 14.1 of the Company’s Current Report on Form 8-K, dated August 4, 2006.

21 List of subsidiaries.

23 Consent of Independent Registered Public Accounting Firm.

31.1 Rule 13a-14a/15d-14(a) Certification of Stuart A. Miller.

31.2 Rule 13a-14a/15d-14(a) Certification of Bruce E. Gross.

32 Section 1350 Certifications of Stuart A. Miller and Bruce E. Gross.

* Management contract or compensatory plan or arrangement.

90

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

LENNAR CORPORATION

/s/                        STUART A. MILLER

Stuart A. Miller

President, Chief Executive Officer and Director

Date: February 8, 2007

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Principal Executive Officer:
Stuart A. Miller	/s/	STUART A. MILLER
President, Chief Executive Officer and Director	Date:	February 8, 2007

Principal Financial Officer:
Bruce E. Gross	/s/	BRUCE E. GROSS
Vice President and Chief Financial Officer	Date:	February 8, 2007

Principal Accounting Officer:
Diane J. Bessette	/s/	DIANE J. BESSETTE
Vice President and Controller	Date:	February 8, 2007

    Directors:

Irving Bolotin	/s/	IRVING BOLOTIN
	Date:	February 8, 2007

Steven L. Gerard	/s/	STEVEN L. GERARD
	Date:	February 8, 2007

R. Kirk Landon	/s/	R. KIRK LANDON
	Date:	February 8, 2007

Sidney Lapidus	/s/	SIDNEY LAPIDUS
	Date:	February 8, 2007

Donna Shalala	/s/	DONNA SHALALA
	Date:	February 8, 2007

Jeffrey Sonnenfeld	/s/	JEFFREY SONNENFELD
	Date:	February 8, 2007

91

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Lennar Corporation

We have audited the consolidated financial statements of Lennar Corporation and subsidiaries (the “Company”) as of November 30, 2006 and 2005, and for each of the three years in the period ended November 30, 2006, management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of November 30, 2006, and the effectiveness of the Company’s internal control over financial reporting as of November 30, 2006, and have issued our reports thereon dated February 8, 2007; such reports are included elsewhere in this Form 10-K. Our audits also included the consolidated financial statement schedule of the Company listed in Item 15. This consolidated financial statement schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ DELOITTE & TOUCHE LLP

Certified Public Accountants

Miami, Florida

February 8, 2007

92

LENNAR CORPORATION AND SUBSIDIARIES

Schedule II—Valuation and Qualifying Accounts

Years Ended November 30, 2006, 2005 and 2004

	Beginning balance		Additions		Deductions		Ending balance
Description			Charged to costs and expenses	Charged to other accounts
	(In thousands)
Year ended November 30, 2006
Allowances deducted from assets to which they apply:
Allowances for doubtful accounts and notes receivable	$	2,782	2,190	154	(1,344	)	3,782
Allowance for loan losses	$	1,180	2,390	158	(1,918	)	1,810
Year ended November 30, 2005
Allowances deducted from assets to which they apply:
Allowances for doubtful accounts and notes receivable	$	1,784	1,803	—	(805	)	2,782
Allowance for loan losses	$	1,407	269	32	(528	)	1,180
Year ended November 30, 2004
Allowances deducted from assets to which they apply:
Allowances for doubtful accounts and notes receivable	$	2,088	737	43	(1,084	)	1,784
Allowance for loan losses	$	3,090	51	149	(1,883	)	1,407

93

EXHIBIT INDEX

Exhibit No	Exhibit Description
10.14	Amended and Restated Loan Agreement dated September 25, 2006 between UAMC Capital, LLC and the lenders named therein.
10.18	Third Amended and Restated Warehousing Credit and Security Agreement dated April 30, 2006, by and among, Universal American Mortgage Company, LLC, the other Borrowers named in the agreement, the Lender Parties named in the agreement and Residential Funding Corporation.
21	List of subsidiaries.
23	Consent of Independent Registered Public Accounting Firm.
31.1	Rule 13a-14a/15d-14(a) Certification of Stuart A. Miller.
31.2	Rule 13a-14a/15d-14(a) Certification of Bruce E. Gross.
32	Section 1350 Certifications of Stuart A. Miller and Bruce E. Gross.

EX-10.14

Exhibit 10.14

AMENDED AND RESTATED LOAN AGREEMENT

By and Among:

UAMC CAPITAL, LLC

As Borrower,

ATLANTIC ASSET SECURITIZATION LLC

As an Issuer,

LA FAYETTE ASSET SECURITIZATION LLC

As an Issuer,

GRESHAM RECEIVABLES (NO. 6) LIMITED

As an Issuer,

JUPITER SECURITIZATION COMPANY LLC

As an Issuer,

CALYON NEW YORK BRANCH

As the Administrative Agent,

as a Bank and as a Managing Agent,

LLOYDS TSB BANK PLC

As a Bank and a Managing Agent,

JPMORGAN CHASE BANK, N.A.

As a Bank and as a Managing Agent,

and

UNIVERSAL AMERICAN MORTGAGE COMPANY, LLC

As the Servicer

Dated as of September 25, 2006

TABLE OF CONTENTS

		Page
ARTICLE I	GENERAL TERMS	2
1.1.	Certain Definitions	2
1.2.	Other Definitional Provisions	35
ARTICLE II	AMOUNT AND TERMS OF COMMITMENT	36
2.1.	Maximum Facility Amount	36
2.2.	Promissory Notes	37
2.3.	Notice and Manner of Obtaining Borrowings	38
2.4.	Fees	40
2.5.	Prepayments	40
2.6.	Business Days	41
2.7.	Payment Procedures	41
2.8.	The Reserve Account	44
2.9.	Interest Allocations	46
2.10.	Interest Rates	46
2.11.	Quotation of Rates	46
2.12.	Default Rate	46
2.13.	Interest Recapture	47
2.14.	Interest Calculations	47
2.15.	Interest Period	47
2.16.	Additional Costs	48
2.17.	Additional Interest on Advances Bearing a Eurodollar Rate	50
2.18.	Consequential Loss	50
2.19.	Replacement Banks	50
ARTICLE III	COLLATERAL	51
3.1.	Collateral	51
3.2.	Delivery of Collateral to Collateral Agent	51
3.3.	Redemption of Mortgage Collateral	53
3.4.	Correction of Mortgage Notes	56
3.5.	Collateral Reporting	57
3.6.	Hedge and Commitment Reports	57
3.7.	Investor Concentration Reporting	57
3.8.	Servicer Monthly Reporting	57
3.9.	Servicer Weekly Report	58
3.10.	[Reserved]	58
ARTICLE IV	CONDITIONS PRECEDENT	58
4.1.	Initial Borrowing	58
4.2.	All Borrowings	60
ARTICLE V	REPRESENTATIONS AND WARRANTIES	61
5.1.	Representations of the Borrower and the Servicer	61
5.2.	Additional Representations of the Borrower	64

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5.3.	Additional Representations and Warranties of the Servicer	66
5.4.	Survival of Representations	67
ARTICLE VI	AFFIRMATIVE COVENANTS	67
6.1.	Financial Statements and Reports	67
6.2.	Taxes and Other Liens	69
6.3.	Maintenance	69
6.4.	Further Assurances	69
6.5.	Compliance with Laws	69
6.6.	Insurance	69
6.7.	Accounts and Records	70
6.8.	Right of Inspection; Audit	70
6.9.	Notice of Certain Events	71
6.10.	Performance of Certain Obligations	71
6.11.	Use of Proceeds; Margin Stock	71
6.12.	Notice of Default	72
6.13.	Compliance with Transaction Documents	72
6.14.	Compliance with Material Agreements	72
6.15.	Operations and Properties	72
6.16.	Performance Guarantor Credit Rating	72
6.17.	Take-Out Commitments	72
6.18.	Collateral Proceeds	73
6.19.	Environmental Compliance	73
6.20.	Closing Instructions	73
6.21.	Special Affirmative Covenants Concerning Collateral	73
6.22.	Entity Separateness	73
6.23.	Approved Investor Concentration Limits	74
6.24.	MERS Designated Mortgage Loans	75
6.25.	Electronic Tracking Agreement	75
ARTICLE VII	NEGATIVE COVENANTS	75
7.1.	Limitations on Mergers and Acquisitions	76
7.2.	Fiscal Year	76
7.3.	Business	76
7.4.	Use of Proceeds	76
7.5.	Actions with Respect to Collateral	76
7.6.	Liens	77
7.7.	Employee Benefit Plans	77
7.8.	Change of Principal Office	77
7.9.	No Commercial, A&D, Etc. Loans	77
7.10.	Maximum Leverage	77
7.11.	Indebtedness	77
7.12.	Deposits to Collection Account	77
7.13.	Transaction Documents	77
7.14.	Distributions, Etc	78
7.15.	Charter	78
7.16.	Default Ratio	78
7.17.	Excess Spread	78

ii

7.18.	Minimum Tangible Net Worth	78
7.19.	Limitation on Debt	78
ARTICLE VIII	EVENTS OF DEFAULT	78
8.1.	Nature of Event	78
8.2.	Default Remedies.	83
8.3.	Paydowns	84
8.4.	Waivers of Notice, Etc	84
ARTICLE IX	THE ADMINISTRATIVE AGENT	85
9.1.	Authorization	85
9.2.	Reliance by Agent	85
9.3.	Agent and Affiliates	85
9.4.	Lender Decision	86
9.5.	Rights of the Administrative Agent	86
9.6.	Indemnification of Administrative Agent	86
9.7.	UCC Filings	86
ARTICLE X	INDEMNIFICATION	87
10.1.	Indemnities by the Borrower	87
ARTICLE XI	ADMINISTRATION AND COLLECTION OF MORTGAGE LOANS	87
11.1.	Designation of Servicer	87
11.2.	Duties of Servicer.	87
11.3.	Certain Rights of the Administrative Agent	88
11.4.	Rights and Remedies.	89
11.5.	Indemnities by the Servicer	89
ARTICLE XII	THE MANAGING AGENTS	90
12.1.	Authorization	90
12.2.	Reliance by Agent	90
12.3.	Agent and Affiliates	91
12.4.	Notices	91
12.5.	Lender Decision	91
ARTICLE XIII	THE MERS AGENT	91
13.1.	Authorization	91
13.2.	Reliance by Agent	92
13.3.	Agent and Affiliates	92
13.4.	Rights of the MERS Agent	92
13.5.	Indemnification of MERS Agent	92
ARTICLE XIV	MISCELLANEOUS	93
14.1.	Notices	93
14.2.	Amendments, Etc	97
14.3.	Invalidity	98
14.4.	Restrictions on Informal Amendments	98

iii

14.5.	Cumulative Rights	98
14.6.	Construction; Governing Law	98
14.7.	Interest	98
14.8.	Right of Offset	99
14.9.	Successors and Assigns.	99
14.10.	Survival of Termination	101
14.11.	Exhibits	101
14.12.	Titles of Articles, Sections and Subsections	101
14.13.	Counterparts	101
14.14.	No Proceedings	102
14.15.	Confidentiality	102
14.16.	No Recourse Against Directors, Officers, Etc	102
14.17.	Waiver of Jury Trial	103
14.18.	Consent to Jurisdiction; Waiver of Immunities	103
14.19.	Costs, Expenses and Taxes	103
14.20.	Entire Agreement	104
14.21.	Excess Funds	104

SCHEDULES AND EXHIBITS

Schedule I	Bank Commitments Percentages
Schedule II	Approved Investors - §§ 3.7 and 6.23
Schedule III	Litigation - §5.1(g)(i)
Exhibit A	Form of Amended and Restated Assignment and Acceptance - §1.1
Exhibit B	Form of Amended and Restated Subordination Agreement - §1.1
Exhibit C	Form of Borrowing Request - §1.1
Exhibit D	Form of Amended and Restated Collateral Agency Agreement - §1.1
Exhibit D-1	Definitions - §1.1
Exhibit D-2	Form of Amended and Restated Security Agreement - §3.1(a)
Exhibit D-3(a)	Form of Amended and Restated Collection Account Control Agreement - §3.1(b)
Exhibit D-3(b)	Form of Amended and Restated Reserve Account Control Agreement - §3.1(b)
Exhibit D-4	Form of Assignment - §3.2(a)
Exhibit D-5	Form of Transfer Request - § 3.4(a)
Exhibit D-5A	Form of Shipping Request - §3.4(b)

iv

Exhibit D-6(a)	Form of Bailee and Security Agreement Letter - § 3.4(b)(i)
Exhibit D-6(b)	Form of Bailee and Security Agreement Letter for Pool Custodian § 3.4(b)(i)
Exhibit D-7	Form of Trust Receipt and Security Agreement Letter- §3.5
Exhibit D-8	Form of Collateral Agent Daily Report - §3.8(a)
Exhibit D-9	Form of Pay Option ARM Report - §3.8(a)
Exhibit D-10	UCC Financing Statements - §3.1(c)
Exhibit D-11	Form of Collection Account Release Notice - § 3.4(c)
Exhibit D-12	Form of Lost Note Affidavit - § 4.2(b)
Exhibit D-13	Form of Hedge and Commitment Report - § 3.12
Exhibit D-14	Form of Servicer Weekly Report - § 3.12
Exhibit E-1	Form of Promissory Note of Calyon New York Group - § 2.2
Exhibit E-2	Form of Promissory Note of JPMorgan Chase Group - § 2.2
Exhibit E-3	Form of Promissory Note of Lloyds Group - § 2.2
Exhibit F	Form of Servicer Monthly Report - § 3.8
Exhibit G-1	Form of Amended and Restated Servicer Performance Guaranty - § 4.1(d)
Exhibit G-2	Form of Amended and Restated Originator Performance Guaranty - § 4.1(d)
Exhibit H-1	Form of Servicer’s Quarterly Officer’s Certificate - § 6.1(e)
Exhibit H-2	Form of Borrower’s Quarterly Officer’s Certificate - § 6.1(e)
Exhibit H-3	Form of Performance Guarantor’s Quarterly Officer’s Certificate - §§ 4.1(t) and 4.2(h)
Exhibit I-1	Form of Corporate and Limited Liability Company Opinion
Exhibit I-2	Form of Security Interest Opinion
Exhibit J	Form of Bankruptcy Opinion
Exhibit K	[Reserved]
Exhibit L	Form of Investor Concentration Report - § 3.7

v

Exhibit M	[Reserved]
Exhibit N	Form of Amended and Restated Reserve Account Control Agreement - § 1.1
Exhibit O	Each of the Originator’s Credit and Collection Policy - § 1.1
Exhibit P	Form of Electronic Tracking Agreement - § 1.1
Exhibit Q	Form of Servicer Weekly Report - § 3.9

vi

LOAN AGREEMENT

Dated as of September 25, 2006

THIS LOAN AGREEMENT (this “Agreement”), among

UAMC CAPITAL, LLC, a Delaware limited liability company (hereinafter, together with its successors and assigns, the “Borrower”), as the Borrower,

ATLANTIC ASSET SECURITIZATION LLC, a Delaware limited liability company (hereinafter, together with its successors and assigns, “Atlantic”), as an Issuer,

LA FAYETTE ASSET SECURITIZATION LLC, a Delaware limited liability company (hereinafter, together with its successors and assigns, “La Fayette”), as an Issuer,

GRESHAM RECEIVABLES (NO. 6) LIMITED, a foreign corporation (hereinafter, together with its successors and assigns, “Gresham”), as an Issuer,

JUPITER SECURITIZATION COMPANY LLC, a Delaware limited liability company (hereinafter, together with its successors and assigns, “Jupiter”), as an Issuer,

CALYON NEW YORK BRANCH (“hereinafter, together with its successors and assigns, Calyon New York”), as a Bank, as the Administrative Agent and as a Managing Agent,

LLOYDS TSB BANK PLC (hereinafter, together with its successors and assigns, “Lloyds”), as a Bank and as a Managing Agent.

JPMORGAN CHASE BANK, N.A., a national bank (hereinafter, together with its successors and assigns, “JPMorgan Chase”), as a Bank and as a Managing Agent, and

UNIVERSAL AMERICAN MORTGAGE COMPANY, LLC, as the Servicer, a Florida limited liability company (hereinafter, together with its successors and assigns, the “Servicer”).

RECITALS

1. Capitalized terms used in these Recitals and not defined in the preamble above have the meanings set forth in Article I.

2. The Borrower, Atlantic Asset Securitization LLC, La Fayette Asset Securitization LLC, Jupiter Securitization Corporation (predecessor in interest to Jupiter Securitization LLC), Calyon New York Branch, JPMorgan Chase Bank, N.A. and the Servicer entered into that certain loan agreement, dated as of May 23, 2003 as heretofore amended (the “Original Loan Agreement”). This Loan Agreement amends, restates and supersedes in its entirety the Original Loan Agreement, but does not satisfy the Obligations outstanding thereunder, which Obligations shall hereafter be outstanding hereunder so that this Loan Agreement constitutes a renewed borrowing facility heretofore evidenced by the Original Loan Agreement.

1

3. The Originators are engaged in the business of originating, acquiring, investing in, marketing and selling, for their own account, mortgage loans that are made either to finance the purchase of one- to four-family homes or to refinance loans secured by such properties.

4. The Borrower has purchased, and may continue to purchase, Eligible Mortgage Loans from the Originators, as determined from time to time by the Borrower and the Originators.

5. In order to finance such purchases, the Borrower has requested that the Lenders provide the Borrower with credit in the form of revolving loans on the terms and conditions set forth herein.

6. Issuer (except for Gresham) may, in their sole discretion, and the Banks (other than the Banks in the Lloyds Group) and Gresham shall, in each case subject to the terms and conditions contained in this Agreement, make Advances to the Borrower secured by a lien on, and security interest in, the Mortgage Loans and certain other Collateral.

7. The Lenders have appointed the Administrative Agent as their agent to perform certain administrative duties for the Lenders including, among other things, the administration of the funding of the transactions hereunder and the making of certain determinations hereunder and in connection herewith.

AGREEMENTS

In consideration of the recitals and the representations, warranties, conditions, covenants and agreements made in this Agreement, the sufficiency of which are acknowledged by all parties hereto, the Borrower, the Lenders, the Servicer, the Managing Agents and the Administrative Agent, intending to be legally bound, hereby establish a warehouse line of credit in the amount of the Maximum Facility Amount. Accordingly, the Borrower, the Lenders, the Administrative Agent, the Managing Agents and the Servicer covenant and agree as follows:

ARTICLE I

GENERAL TERMS

1.1. Certain Definitions. As used in this Agreement, the following terms have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“ABR Allocation” is defined in Section 2.9.

“Accepted Servicing Standards” means the same manner in which the Servicer services and administers similar mortgage loans for its own portfolio, giving due consideration to customary and usual standards of practice of mortgage lenders and loan servicers administering similar mortgage loans but without regard to any relationship that the Servicer or any Affiliate of the Servicer may have with the related Obligor, or the Servicer’s right to receive compensation for its services hereunder.

2

“Administrative Agent” means Calyon New York, in its capacity as administrative agent for the Lenders, or any successor administrative agent.

“Administrative Agent Fee Letter” means the letter agreement pertaining to fees among the Borrower and Calyon New York, as a Managing Agent and as the Administrative Agent, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“Administrative Agent’s Account” means, the special account (account number 01-50576-0001-00-001, ABA No. 026008073) of Calyon New York maintained at the office of Calyon New York Branch at 1301 Avenue of the Americas, New York, New York.

“Advance” means with respect to any Lender any amount disbursed by such Lender to the Borrower pursuant to Section 2.1, or Section 2.20 (or any conversion or continuation thereof).

“Advance Rate” means (i) with respect to a Conforming Loan, ninety-eight percent (98%); (ii) with respect to an Alt-A Loan, ninety-seven percent (97%) or, if an Alt-A FICO Score Trigger Event has occurred and is continuing, as reported to the Collateral Agent by the Administrative Agent, ninety-five percent (95%); (iii) with respect to a Jumbo Loan (other than a Super Jumbo Loan), ninety-seven percent (97%) or, if a Jumbo FICO Score Trigger Event has occurred and is continuing, as reported to the Collateral Agent by the Administrative Agent, then ninety-five percent (95%); (iv) with respect to a Subprime Loan or Second-Lien Loan, ninety-five percent (95%); (v) with respect to a Super Jumbo Loan, ninety-five percent (95%) or, if a Jumbo FICO Score Trigger Event has occurred and is continuing, as reported to the Collateral Agent by the Administrative Agent, then ninety percent (90%); and (vi) with respect to Uncovered Mortgage Loans, ninety-five percent (95%).

“Affected Party” means each Lender, the Related CP Issuer, the Administrative Agent, each Managing Agent, any bank party to a Liquidity Agreement and any permitted assignee or participant of any such bank, and any holding company of an Affected Party.

“Affiliate” of any Person means (a) any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such Person, or (b) any other Person who is a director, officer or employee (i) of such Person, or (ii) of any Person described in the preceding clause (a). For purposes of this definition, the term “control” (and the terms “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession or ownership, directly or indirectly, of the power either (x) to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise, or (y) vote 10% or more of the securities having ordinary power in the election of directors of such Person.

“Agent” means each of the Administrative Agent and the Managing Agents.

3

“Agreement” means this Loan Agreement, dated as of the date hereof, by and among the Borrower, Atlantic, La Fayette, Gresham, Jupiter, Calyon New York, Lloyds, JPMorgan Chase and the Servicer (as may be amended, restated or modified from time to time).

“Alt-A FICO Score Trigger Event” means that (i) the Alt-A Pool Weighted Average FICO Score has been reported, in a Servicer Weekly Report, as less than 690, (ii) a period of seven Business Days has elapsed from the date of receipt of such report by the Administrative Agent and (iii) the Servicer has not provided to the Administrative Agent a revised Alt-A Pool Weighted Average FICO Score that is equal to or exceeds 690.

“Alt-A Loan” means a Mortgage Loan (other than a Conforming Loan, a Jumbo Loan or a Subprime Loan) that (1) does not conform to the conventional underwriting standards of Fannie Mae, Freddie Mac or Ginnie Mae but that is underwritten by an Approved Investor (other than Fannie Mae, Freddie Mac or Ginnie Mae), within guidelines generally acceptable to industry norms for “Alt-A” loans and (2) has a demonstrated secondary market.

“Alt-A Pool Weighted Average FICO Score” means, as of the relevant date set forth in a Servicer Weekly Report, the ratio of (a) the sum, for all Alt-A Loans, of the product for each Alt-A Loan of (i) its FICO Score and (ii) its original principal balance to (b) the sum of the original principal balances of all Alt-A Loans.

“Alternate Base Rate” means:

(a) for the Calyon New York Group, on any date, a fluctuating rate of interest per annum equal to the higher of:

(i) a rate per annum equal to the prime rate of interest announced from time to time by Calyon New York or its parent (which is not necessarily the lowest rate charged to any customer), changing when and as said prime rate changes; and

(ii) the Federal Funds Rate (as defined below) most recently determined by the Calyon New York plus 1.0% per annum;

(b) for the JPMorgan Chase Group, on any date, a fluctuating rate of interest per annum equal to the higher of:

(i) a rate per annum equal to the prime rate of interest announced from time to time by JPMorgan Chase or its parent (which is not necessarily the lowest rate charged to any customer), changing when and as said prime rate changes; and

(ii) the Federal Funds Rate (as defined below) most recently determined by JPMorgan Chase plus 1.0% per annum.

4

(c) for the Lloyds Group, on any date, a fluctuating rate of interest per annum equal to the higher of:

(i) a rate per annum equal to the prime rate of interest in the United States announced from time to time by Lloyds or its parent (which is not necessarily the lowest rate charged to any customer), changing when and as said prime rate changes; and

(ii) the Federal Funds Rate (as defined below) most recently determined by Lloyds plus 1.0% per annum.

For purposes of this definition, “Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal (for each day during such period) to (i) the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York; or (ii) if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it. The Alternate Base Rate is not necessarily intended to be the lowest rate of interest determined by any Group Bank in connection with extensions of credit.

“Approved Investor” means, with respect to a Loan Specific Take-Out Commitment or a Hedge:

(a) Fannie Mae, Freddie Mac or Ginnie Mae, or

(b) any Person with short-term ratings of at least A-1, P-1 and F1 from S&P, Moody’s and Fitch, respectively, or long-term unsecured debt ratings (or in the case of a bank without such ratings that is the principal subsidiary of a bank holding company, the rating of the bank holding company) of at least AA, Aa2 and AA from S&P, Moody’s and Fitch, respectively, or

(c) all other Persons as may be approved by the Managing Agents, which approvals may be subject to certain concentration limits but may not be unreasonably withheld or delayed;

provided that (i) if an Approved Investor has a short-term rating or a long-term unsecured debt rating at the time such Person first becomes an “Approved Investor” and such Person’s short-term ratings or long-term unsecured debt ratings are subsequently downgraded or withdrawn, such Person shall cease to be an “Approved Investor”; provided, further, that with respect to any Take-Out Commitments issued by such Person prior to the date of such downgrade or withdrawal, such Person shall cease to be an “Approved Investor” 60 days following such downgrade or withdrawal; and (ii) if an Approved Investor does not have a short-term rating or a long-term unsecured debt rating, such Person shall cease to be an “Approved Investor” upon prior written notice from any Managing Agent if such Managing Agent has good faith concerns about the

5

future performance of such Person; provided, further, that with respect to any Take-Out Commitments issued by such Person prior to such notice, such Person shall cease to be an “Approved Investor” 60 days following such notice.

As of the date of this Agreement, Schedule II hereto sets forth the Approved Investors pursuant to the preceding clauses (b) and (c) (and any applicable concentration limits). Schedule II shall be updated from time to time as Approved Investors are added or deleted or concentration limits are changed pursuant to the preceding clauses (b) and (c). The parties hereto agree that, with respect to Subprime Loans, “Approved Investor” means only those Persons specifically designated on Schedule II hereto (as it may be updated from time to time) as an Approved Investor for Subprime Loans.

“Assignment” is defined in the Collateral Agency Agreement.

“Assignment and Acceptance” means an assignment and acceptance agreement entered into by a Bank, an Eligible Assignee and the Administrative Agent, pursuant to which such Eligible Assignee may become a party to this Agreement, in substantially the form of Exhibit A hereto.

“Atlantic” has the meaning set forth in the preamble to this Agreement.

“Availability” means, at the time determined, the Maximum Facility Amount minus the Principal Debt owed to the Lenders.

“Available Collateral Value” means, at the time determined, the excess of the Collateral Value of all Eligible Mortgage Collateral over the Principal Debt.

“Bailee and Security Agreement Letter” is defined in Section 3.4(b)(i) of the Collateral Agency Agreement.

“Bank” means each of Calyon New York, Lloyds, JPMorgan Chase and each respective Eligible Assignee that shall become a party to this Agreement pursuant to an Assignment and Acceptance.

“Bank Commitment” means (a) with respect to Calyon New York, Lloyds and JPMorgan Chase, in its capacity as a Bank, the amount set forth on Schedule I hereto, and (b) with respect to a Bank that has entered into an Assignment and Acceptance, the amount set forth therein as such Bank’s Bank Commitment, in each case as such amount may be reduced by each Assignment and Acceptance entered into between such Bank and an Eligible Assignee, and as may be further reduced (or terminated) pursuant to the next sentence. Any reduction (or termination) of the Maximum Facility Amount pursuant to the terms of this Agreement shall (unless otherwise agreed by all the Banks) reduce ratably (or terminate) each Bank’s Bank Commitment. At no time shall the aggregate Bank Commitments of all Banks exceed the Maximum Facility Amount. Notwithstanding anything to the contrary herein, the Group Banks related to Gresham shall have no commitment hereunder to make Advances, but Gresham shall have a commitment to make advances equal to the Bank Commitment of its related Group Banks.

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“Bank Commitment Percentage” means, for any Bank, as of any date, the amount obtained by dividing such Bank’s Bank Commitment on such date by the aggregate Bank Commitments of all Banks on such date. As of the date of this Agreement, the Bank Commitment Percentage for each Bank is as set forth on Schedule I hereto.

“Bank Spread” means the margin set forth in the Fee Letter.

“Base Rate Advance” means an Advance that bears interest at a rate per annum determined on the basis of the Alternate Base Rate.

“Borrower” has the meaning specified in the preamble of this Agreement.

“Borrowing” means a borrowing of Advances consisting of Advances having the same Interest Period made hereunder by each of the Lenders on the same Business Day.

“Borrowing Date” means the date, identified by the Borrower in the relevant Borrowing Request, as the date on which a Borrowing is to be made.

“Borrowing Request” means a request, in the form of Exhibit C to this Agreement, for a Borrowing pursuant to Article II. As of the date of each such Borrowing Request pursuant to Article II, the Borrower shall automatically be deemed to have made the following representations and warranties:

(1) The Borrower represents and warrants for the benefit of the Lenders and the Administrative Agent that:

(i) The Borrower is entitled to receive the Requested Borrowing under the terms and conditions of this Agreement (and pursuant to the Assignment, if any, executed in connection herewith, the Borrower grants to the Administrative Agent a security interest in the Collateral described in such Assignment);

(ii)(a) if the Borrowing requested hereunder is not a Special Borrowing, all Principal Mortgage Documents required under Section 3.2(b) of this Agreement and which relate to the Mortgage Loans identified on Schedule I to the Assignment, if any, executed in connection herewith have been delivered to the Collateral Agent, and (b) if the Borrowing requested hereunder is a Special Borrowing, either (1) all such documents which relate to Schedule II to the Assignment shall be delivered to the Collateral Agent within 9 Business Days after the Borrowing Date set forth in the Borrowing Request, as required under Section 2.3(c) of this Agreement, or (2) the Principal Debt that has been borrowed against such Mortgage Loans shall be repaid in full as and to the extent required under Section 2.3(d) of this Agreement;

(iii) all Mortgage Loans, Principal Mortgage Documents and Other Mortgage Documents in which the Administrative Agent is granted a security interest pursuant to the Assignment, if any, in connection herewith, comply in all material respects with the applicable requirements set forth in this Agreement and the Security Agreement;

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(iv) at all times relevant to this Agreement, total Collateral Value attributable to the types or categories of Collateral referred to in the definition of subparagraphs (a) through (g) of Collateral Value has not, and does not now, exceed the limitations established in such definition;

(v) no Default or Event of Default has occurred or is continuing; and

(vi) no change or event which constitutes a Material Adverse Effect as to the Borrower has occurred.

(2) The representations and warranties of the Borrower contained in this Agreement and those contained in each other Transaction Document to which the Borrower is a party are true and correct in all material respects on and as of the date of each Borrowing Request (other than those representations and warranties that, by their express terms, are limited to the effective date of the document or agreement in which they are initially made).

(3) All of the conditions applicable to the Requested Borrowing pursuant to Section 4.2 of this Agreement are and will be satisfied immediately before and after giving effect to the Requested Borrowing.

“Business Day” means (a) a day on which (i) commercial banks in New York City, New York, Miami, Florida, and Chicago, Illinois are not authorized or required to be closed and (ii) commercial banks in the State in which the Collateral Agent has its principal office are not authorized or required to be closed, and (b) if this definition of “Business Day” is utilized in connection with a Eurodollar Advance, a day on which dealings in United States dollars are carried out in the London interbank market.

“Calyon New York” has the meaning set forth in the preamble of this Agreement and its successors and assigns.

“Calyon New York Group” means Atlantic, La Fayette, Calyon, and each other Group Bank of Atlantic and La Fayette.

“Charter” means the Borrower’s articles of organization, as amended through the date of this Agreement.

“Closing Protection Rights” means any rights of the Originators or the Borrower to or under (i) a letter issued by a title insurance company to any of the Originators assuming liability for certain acts or failure to act on behalf of a named closing escrow agent, approved attorney or similar Person in connection with the closing of a Mortgage Loan transaction, (ii) a bond, insurance or trust fund established to protect a mortgage lender against a loss or damage resulting from certain acts or failure to act of a closing escrow agent, approved attorney, title insurance company or similar Person, or (iii) any other right or claim that any of the Originators or the Borrower may have against any Person for any loss or damage resulting from such Person’s acts or failure to act in connection with the closing of a Mortgage Loan and the delivery of the related Mortgage Loan Collateral to the Collateral Agent, any of the Originators or to the Borrower.

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“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Collateral” means Property that is subject to a Lien for the benefit of the holders of the Obligations.

“Collateral Agency Agreement” means the Amended and Restated Collateral Agency Agreement, dated as of the date hereof, among the Borrower, the Collateral Agent and the Administrative Agent, substantially in the form of Exhibit D hereto, as amended, supplemented, restated or otherwise modified from time to time.

“Collateral Agent” means Residential Funding Corporation, and its successors and assigns.

“Collateral Agent Daily Report” is defined in Section 3.8(a) of the Collateral Agency Agreement.

“Collateral Deficiency” means, at any time, the amount by which the Principal Debt exceeds the Collateral Value of all Eligible Mortgage Collateral.

“Collateral Proceeds” means all amounts received by the Borrower, the Servicer, the Administrative Agent, the Lenders, the Collateral Agent or any other Person, in respect of the Collateral, whether in respect of principal, interest, fees or other amounts, including, without limitation, (i) all amounts received pursuant to Take-Out Commitments, and (ii) with respect to any Mortgage Loan, all funds that are received from or on behalf of the related Obligors in payment of any amounts owed (including, without limitation, purchase prices, finance charges, escrow payments, interest and all other charges) in respect of such Mortgage Loan, or applied to such amounts owed by such Obligors (including, without limitation, insurance payments that Borrower or Servicer applies in the ordinary course of its business to amounts owed in respect of such Mortgage Loan and net proceeds of sale or other disposition of Property of the Obligor or any other party directly or indirectly liable for payment of such Mortgage Loan and available to be applied thereon).

“Collateral Value” means

(A) with respect to the Collection Account, the balance of collected funds therein that is not subject to any Lien in favor of any Person other than the Lien in favor of the Administrative Agent for the benefit of the holders of the Obligations; and

(B) with respect to each Eligible Mortgage Loan and at all times, an amount equal to the Advance Rate for such Eligible Mortgage Loan times the least of:

(1) the lesser of the original principal amount of such Eligible Mortgage Loan or the acquisition price paid by the related Originator on the closing and funding of such Eligible Mortgage Loan;

(2) for each Eligible Mortgage Loan, as of any date of determination, the lesser of

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(a) if, as of the second Business Day of the week of such determination, the Eligible Mortgage Loan was a Hedged Loan but with respect to which there was no Loan Specific Take-Out Commitment, a ratable amount determined by multiplying (i) the weighted average purchase price (expressed as a percentage of par) that Approved Investors are obligated to pay, pursuant to Take-Out Commitments (other than any Loan Specific Take-Out Commitments), for all Eligible Mortgage Loans, as shown on the Hedge and Commitment Report provided on the first Business Day of the week in which such Mortgage Loan was assigned to the Administrative Agent, times (ii) the original principal amount of such Eligible Mortgage Loan, or

(b) if, as of the second Business Day of the week of such determination, there was a Loan Specific Take-Out Commitment attributable to such Eligible Mortgage Loan, the purchase price to be paid by the Approved Investor for such Mortgage Loan, including any servicing release premium; and

(3) while a Default or Event of Default is continuing, or upon request of any of the Managing Agents at any other time, the Market Value of such Eligible Mortgage Loan;

provided, however, that

(a) at any time, the portion of total Collateral Value that may be attributable to Jumbo Loans shall not exceed thirty-five percent (35%) of the Maximum Facility Amount; provided, that (i) no Obligor on any Jumbo Loan shall have a FICO Score of less than 650, and (ii) each of the Jumbo Loans shall have a Loan-to-Value Ratio of no more than 95% and a Combined Loan-to-Value Ratio of no more than 100%;

(b) at any time, the portion of total Collateral Value that may be attributable to Super Jumbo Loans shall not exceed ten percent (10%) of the Maximum Facility Amount, which represents 28.57% of the limit for Jumbo Loans; provided, that (i) no Obligor on any Super Jumbo Loan shall have a FICO Score of less than 650, and (ii) each of the Super Jumbo Loans shall have a Loan-to-Value Ratio of no more than 80% and a Combined Loan-to-Value Ratio of no more than 100%;

(c) at any time, the portion of total Collateral Value that may be attributable to Mortgage Loans for which the Mortgage Notes have been withdrawn for correction pursuant to Section 3.4 shall not exceed 3.5% of the Maximum Facility Amount as determined in accordance with said Section 3.4;

(d) at any time, the portion of the total Collateral Value that may be attributable to Subprime Loans shall not exceed ten percent (10%) of the Maximum Facility Amount; provided, that (a) no Obligor on any Subprime Loan shall have a FICO Score of less than 600 and (b) each of the Subprime Loans shall have a Loan-to-Value Ratio of no more than ninety percent (90%);

(e)(A) at any time, the portion of the total Collateral Value that may be attributable to Alt-A Loans shall not exceed forty-five percent (45%) of the Maximum

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Facility Amount and (B) at any time, the portion of total Collateral Value that may be attributable to Pay Option ARMs shall not exceed fifteen percent (15%) of the Maximum Facility Amount, which represents one-third of the limit of 45% in Sub-clause (A) above; provided, that (i) no Obligor on any Alt-A Loan shall have a FICO Score of less than 650, and (ii) each of the Alt-A Loans shall have a Loan-to-Value Ratio of no more than 95% and a Combined Loan-to-Value Ratio of no more than 100%;

(f) at any time, (A) the portion of total Collateral Value that may be attributable to Mortgage Loans that have been Eligible Mortgage Loans owned by the Borrower for more than 120 days shall not exceed ten percent (10%) of the Maximum Facility Amount (for purposes of this subparagraph (f), the Collateral Agent may assume that the date on which the Borrower acquired such Eligible Mortgage Loans is the date on which such Eligible Mortgage Loans are assigned to the Administrative Agent under this Agreement, which date shall be the date reflected on the electronic transmission in lieu of an Assignment provided to the Collateral Agent) and (B) the portion of total Collateral Value that may be attributable to Mortgage Loans that have been Eligible Mortgage Loans that have been owned by the Borrower for more than 180 days shall be zero;

(g) a Mortgage Loan that ceases to be an Eligible Mortgage Loan shall have a Collateral Value of zero; and

(h) at any time, (A) except the first five and last five Business Days of any month, the portion of total Collateral Value that may be attributable to Special Mortgage Loans shall not exceed thirty-five percent (35%) of the Maximum Facility Amount and (B) during the first five and last five Business Days of any month, the portion of total Collateral Value that may be attributable to Special Mortgage Loans shall not exceed fifty percent (50%) of the Maximum Facility Amount; and

(i) at any time, the portion of total Collateral Value that may be attributable to Second-Lien Loans shall not exceed twenty-five percent (25%) of the Maximum Facility Amount; provided, that (A) no Obligor on any Second-Lien Loan shall have a FICO Score of less than 660 and (B) each of the Second-Lien Loans shall have a Combined Loan-to-Value Ratio of no more than 100%.

(j) at the end of a weekly period that is the subject of a Hedge and Commitment Report, the portion of total Collateral Value that may be attributable to Uncovered Mortgage Loans shall not exceed ten percent (10%) of the Maximum Facility Amount; provided that any Uncovered Mortgage Loan shall have a Collateral Value of zero if (i) it has a FICO Score of less than 660 and (ii) is not a Second-Lien Loan, Pay Option ARM, Subprime Loan or HELOC; provided, further, that any Mortgage Loan that is not subject to significant interest rate volatility and is approved by the Administrative Agent may be included in the portion of total Collateral Value that may be attributable to Uncovered Mortgage Loans.

“Collection Account” means the account established pursuant to Section 2.7(b) to be used for (i) the deposit of proceeds from the sale of Mortgage Loans; and (ii) the payment of the Obligations, it being understood that such account is controlled by the

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Administrative Agent pursuant to the Collection Account Control Agreement and the Administrative Agent has the authority to direct the transfer of all funds in the Collection Account.

“Collection Account Bank” means, initially, JPMorgan Chase Bank, N.A. and, at any time, the institution then holding the Collection Account in accordance with the terms of the Collection Account Control Agreement.

“Collection Account Control Agreement” means the Amended and Restated Collection Account Control Agreement, dated as of the date hereof, among the Borrower, the Servicer, the Administrative Agent and the Collection Account Bank, substantially in the form of Exhibit D-3 hereto, as amended, modified or supplemented from time to time.

“Collection Account Release Notice” is defined in Section 3.3(a).

“Collection Period” means each calendar month, beginning on the first day of each month and including the last day of the month.

“Collections” means, with respect to any Mortgage Asset, all cash collections (other than in respect of escrows for taxes and insurance premiums payable under the related Mortgage Loan) and other cash proceeds of such Mortgage Asset.

“Combined Loan-to-Value Ratio” means, with respect to any Mortgage Loan, the fraction, expressed as a percentage found by dividing the original principal balance of all Mortgage Loans secured by a particular property by the value of such property, such value being measured by (i) the appraised value of such property at such time, if a Mortgage Loan is a refinance of an existing loan or (ii) the lower of the sales price of the related property at the time of origination of a Mortgage Loan or the appraised value of such property at such time, if a Mortgage Loan is a purchase money loan.

“Commercial Paper Notes” means short-term promissory notes issued or to be issued by the Issuers or in the case of Gresham, the Related CP Issuer to fund or maintain their Advances or investments in other financial assets.

“Commercial Paper Rate” for any Interest Period for the related Advance means:

(a) with respect to the portion of such Advance funded by Atlantic or La Fayette, a rate per annum equal to the sum of:

(i) the rate or, if more than one rate, the weighted average of the rates, determined by converting to an interest-bearing equivalent rate per annum the discount rate (or rates) at which Commercial Paper Notes having a term equal to such Interest Period and to be issued to fund or to maintain such Advance by Atlantic or La Fayette (including, without limitation, Principal Debt and accrued and unpaid interest), may be sold by any placement agent or commercial paper dealer selected by the Managing Agent for Atlantic, as agreed between each such agent or dealer and the Managing Agent for Atlantic or La Fayette, plus

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(ii) the commissions and charges charged by such placement agent or commercial paper dealer with respect to such Commercial Paper Notes expressed as a percentage of such face amount and converted to an interest-bearing equivalent rate per annum, plus

(iii) the Conduit Spread; or

(iv) such other rate as Atlantic, La Fayette and the Borrower shall agree to in writing.

(b) with respect to the portion of any Advance funded by Jupiter for any Interest Period, the per annum rate that reflects:

(i) the rate (or, if more than one rate, the weighted average of the rates) at which Commercial Paper Notes having a term equal to such Interest Period (or portion thereof) may be sold by any placement agent or commercial paper dealer selected by Jupiter, as agreed between each such agent or dealer and Jupiter, provided, however, that if the rate (or rates) as agreed between any such agent or dealer and Jupiter is a discount rate (or rates), the “Commercial Paper Rate” for such Interest Period (or portion thereof) shall be the rate (or if more than one rate, the weighted average of the rates) resulting from Jupiter’s converting such discount rate (or rates) to an interest-bearing equivalent rate per annum, plus

(ii) accrued commissions in respect of placement agents and commercial paper dealers and issuing and paying agent fees incurred, in respect of such Commercial Paper Notes, minus

(iii) any payment received on such date net of expenses in respect of Consequential Losses related to the prepayment of any purchased interest of Jupiter pursuant to the terms of any receivable purchase facilities funded substantially with such Commercial Paper Notes, plus

(iv) the Conduit Spread; or

(v) such other rate as Jupiter and the Borrower shall agree to in writing.

(c) with respect to any Advances funded by Gresham, for any Interest Period, the per annum rate that reflects:

(i) the rate or, if more than one rate, the weighted average of the rates, determined by converting to an interest-bearing equivalent rate per annum the discount rate (or rates) at which Commercial Paper Notes having a term equal to such Interest Period and to be issued to fund or to maintain such Advance by Gresham (including, without limitation, Principal Debt and accrued and unpaid interest), may be sold by any placement agent or commercial paper dealer selected by the Related CP Issuer, as agreed between each such agent or dealer and the Related CP Issuer, plus

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(ii) the commissions and charges charged by such placement agent or commercial paper dealer with respect to such Commercial Paper Notes expressed as a percentage of such face amount and converted to an interest-bearing equivalent rate per annum, plus

(iii) the Conduit Spread; or

(iv) such other rate as Gresham and the Borrower shall agree to in writing.

Notwithstanding anything to the contrary in this definition, to the extent that any Advance is funded by issuing Commercial Paper Notes denominated in a currency other than United States Dollars, the costs of any currency exchange contracts entered into in connection with such issuance of Commercial Paper Notes shall be included in the rate determined hereunder and the interest rate (or if any component of such rate is a discount rate, the rate resulting from converting such discount rate to an interest rate bearing equivalent rate per annum for such component) with respect to such Commercial Paper Notes may be calculated with reference to the amounts received and payable by the Issuer, or Related CP Issuer, under currency exchange contracts entered into in connection with the issuance of such Commercial Paper Notes; provided, however, that any such costs shall only be included in the calculation of “CP Rate” to the extent that the issuance of such Commercial Paper Notes in a currency other than U.S. dollars would result (as reasonably determined by the applicable Managing Agent at the time the applicable Issuer, or its Related CP Issuer, became obligated under the related currency exchange contracts) in a lower “CP Rate” (including for this purpose the cost of such currency exchange contracts) than would have been obtained through the issuance of such Commercial Paper Notes in U.S. dollars.

“Conduit Spread” means the margin set forth in the Fee Letter.

“Conforming Loan” means (i) a Mortgage Loan that complies with all applicable requirements for purchase under a Fannie Mae, Freddie Mac or similar Governmental Authority standard form of conventional mortgage loan purchase contract, then in effect, or (ii) an FHA Loan or a VA Loan. The term Conforming Loan shall not include Subprime Loans.

“Consequential Loss” means any loss or expense that any Affected Party may reasonably incur in respect of a Borrowing as a consequence of (a) any failure or refusal of Borrower (for any reasons whatsoever other than a default by the Administrative Agent, any Lender or any Affected Party) to take such Borrowing after Borrower shall have requested it under this Agreement, (b) any prepayment or payment of such Borrowing that is a Eurodollar Advance or CP Advance on a day other than the last day of the Interest Period applicable to such Borrowing, (c) any prepayment of any Borrowing that is not made in compliance with the provisions of Section 2.5(a); provided, that so long as an Event of Default shall not have occurred, the Borrower shall not be responsible for any Consequential Loss resulting from changes in the Settlement

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Date made by the Administrative Agent, as described in the proviso contained in the definition of “Settlement Date,” or (d) Borrower’s failure to make a prepayment after giving notice under Section 2.5(a) that a prepayment will be made.

“CP Allocation” is defined in Section 2.9.

“Debt” means (a) all indebtedness or other obligations of a Person that, in accordance with GAAP consistently applied, would be included in determining total liabilities as shown on the liabilities side of a balance sheet of the Person on the date of determination, plus (b) all indebtedness or other obligations of the Person for borrowed money or for the deferred purchase price of property or services. For purposes of calculating a Person’s Debt, deferred taxes arising from capitalized excess servicing fees and capitalized servicing, rights may be excluded from a Person’s indebtedness. For purposes of calculating Borrower’s Debt, letters of credit outstanding on the date hereof naming Lennar Corporation and its subsidiaries as beneficiary shall, to the extent otherwise included, be excluded.

“Debtor Laws” means all applicable liquidation, conservatorship, bankruptcy, fraudulent transfer or conveyance, moratorium, arrangement, receivership, insolvency, reorganization or similar laws from time to time in effect affecting the rights of creditors generally.

“Default” means any condition or event that, with the giving of notice or lapse of time or both and unless cured or waived, would constitute an Event of Default.

“Default Rate” means a per annum rate of interest equal from day to day to the lesser of (a) the sum of the Alternate Base Rate plus two percent and (b) the Maximum Rate.

“Default Ratio” means as of the end of any Collection Period, the ratio of (i) the principal amount of all Mortgage Loans that were Defaulted Mortgage Loans at such time, to (ii) the aggregate principal amount of all Mortgage Loans at such time.

“Defaulted Mortgage Loan” means a Mortgage Asset under which the Obligor is 30 or more days in payment default or has taken any action, or suffered any event of the type described in Section 8.1(f), 8.1(g) or 8.1(h) or is in foreclosure.

“Deferred Income” means the amount of income that any of the Originators or Borrower has deferred, for accounting purposes, pending the sale of Mortgage Loans, in accordance with Statement of Financial Accounting Standards Number 91 (“SFAS 91”) and Statement of Financial Accounting Standards Number 122 (“SFAS 122”), each as currently published by the Financial Accounting Standards Board.

“Drawdown Termination Date” means the earliest to occur of:

(a) September 24, 2007, unless extended pursuant to Section 2.1(b), or

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(b) the date on which the Maximum Facility Amount is terminated by the Borrower pursuant to Section 2.1(d), and

(c) the date, on or after the occurrence of an Event of Default, determined pursuant to Section 8.1.

“Effective Date” means September 25, 2006.

“Electronic Agent” means MERSCORP, Inc., a Delaware corporation.

“Electronic Tracking Agreement” means the Electronic Tracking Agreement, dated as of the date hereof, among the Borrower, the Servicer, the Electronic Agent, MERS and JPMorgan Chase, as MERS Agent, substantially in the form attached as Exhibit P hereto.

“Eligible Assignee” means (i) Calyon New York or any of its Affiliates, Lloyds or any of its Affiliates or JPMorgan Chase or any of its Affiliates, (ii) any Person managed by Calyon New York or any of its Affiliates, Lloyds or any of its Affiliates or JPMorgan Chase or any of its Affiliates, respectively, or (iii) any financial or other institution.

“Eligible Institution” means any depository institution, organized under the laws of the United States or any state, having capital and surplus in excess of $200,000,000, the deposits of which are insured to the full extent permitted by law by the Federal Deposit Insurance Corporation and that is subject to supervision and examination by federal or state banking authorities; provided that such institution also must have a rating of A or higher with respect to long-term deposit obligations from Moody’s, A2 or higher with respect to long-term deposit obligations from S&P and A or higher with respect to long-term deposit obligations from Fitch. If such depository institution publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

“Eligible Mortgage Collateral” means Eligible Mortgage Loans and the Collection Account.

“Eligible Mortgage Loan” means a Mortgage Loan:

(a) that (i) is a closed and funded Mortgage Loan, (ii) has a maximum term to maturity of 30 years (or with respect to a Conforming Loan, 40 years) and the proceeds of which were used either to finance a portion of the purchase price of a Property encumbered by the related Mortgage or to refinance a loan secured by such Property, (iii) is secured by a perfected first-priority Lien on residential real Property consisting of land and a one-to-four family dwelling thereon which is completed and ready for owner occupancy, including townhouses and condominiums and (iv) was underwritten according to the applicable Originator’s Credit and Collection Policy;

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(b) that is a Conforming Loan, a Jumbo Loan, a Second-Lien Loan, a Subprime Loan or an Alt-A Loan;

(c) in which the Administrative Agent has been granted and continues to hold a perfected first-priority, security interest for the benefit of the holders of the Obligations;

(d) for which the Mortgage Note is endorsed (without recourse) in blank and each of such Mortgage Loan and the related Mortgage Note is a legal, valid and binding obligation of the Obligor thereof;

(e) for which, other than in respect of Special Mortgage Loans, the Principal Mortgage Documents have been received by the Collateral Agent as of the date that the original principal amount of the Mortgage Loan was first reported in the Collateral Agent Daily Report for such Business Day, and are in form and substance acceptable to the Collateral Agent;

(f) that, if such Loan has been delivered to an Approved Investor, no more than 45 days have lapsed since the date on which Mortgage Loan Collateral relating to such Mortgage Loan was shipped to the related Approved Investor;

(g) that, simultaneously with the pledge thereof under the Collateral Agency Agreement, together with the related Mortgage Loan Collateral, is owned beneficially by Borrower free and clear of any Lien of any other Person other than the Administrative Agent for the benefit of the holders of the Obligations;

(h) that, together with the related Mortgage Loan Collateral, does not contravene any Governmental Requirements applicable thereto (including, without limitation, the Real Estate Settlement Procedures Act of 1974, as amended, and all laws, rules and regulations relating to usury, truth-in-lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices, privacy and other applicable federal, state and local consumer protection laws) and with respect to which no party to the related Mortgage Loan Collateral is in violation of any Governmental Requirements (or procedure prescribed thereby) if such violation would impair the collectability of such Mortgage Loan or the saleability of such Mortgage Loan under the applicable Take-Out Commitment;

(i) that, (i) is not a Defaulted Mortgage Loan; (ii) has not previously been sold to an Approved Investor or any of the Originators and repurchased by Borrower; and (iii) is a Mortgage Loan with respect to which the Principal Mortgage Documents relating to such Mortgage Loan were delivered to the Collateral Agent within the time frame set forth in Section 2.3(c); provided, however, that, upon delivery of such Principal Mortgage Documents to the Collateral Agent, such Mortgage Loans shall subsequently qualify as Eligible Mortgage Loans to support Borrowings subsequent to such delivery; or (iv) has an original principal balance not in excess of $3,000,000.00;

(j) that if the Mortgage Loan Collateral has been withdrawn for correction pursuant to Section 3.4 such Mortgage Loan Collateral has been returned to the Collateral Agent within 14 calendar days after withdrawal as required by Section 3.4;

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(k) that is denominated and payable in U.S. dollars in the United States and the Obligor of which is a natural person who is a U.S. citizen or resident alien or a corporation or other legal entity organized under the laws of the United States or any State thereof or the District of Columbia;

(l) that is not subject to any right of rescission, setoff, counterclaim or other dispute whatsoever;

(m) that was acquired by the Borrower from any of the Originators within 60 days after its Mortgage Origination Date;

(n) that is covered by the types and amounts of insurance required by Section 6.6(b);

(o) with respect to which all representations and warranties made by the related Originator in the Repurchase Agreement are true and correct in all material respects and with respect to which all loan level covenants made in the Repurchase Agreement have been complied with;

(p) that is subjected to the following “Quality Control” measures by personnel of any of the Originators before the Mortgage Note is funded by such Originator:

(i) for those Mortgage Loans not originated by any of the Originators, is underwritten by any of the Originators prior to funding thereof and after performance of all underwriting procedures, is submitted to any of the Originators for closing where it is reviewed for thoroughness and compliance (including truth-in-lending, good faith estimates and other disclosures) and a verbal verification of employment and in-file credit report are obtained; and

(ii) with respect to which, all Mortgage Loan Collateral is prepared or delivered by any of the Originators and submitted to the closing agent at the time of funding the related Mortgage Loans; and

(q) that is not, at the then present time, a Special Mortgage Loan financed as a “wet loan” pursuant to a credit agreement other than this Agreement.

“Employee Plan” means an employee pension benefit plan covered by Title IV of ERISA and established or maintained by any of the Originators.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ERISA Affiliate” means any corporation, trade or business that is, along with the Performance Guarantor, a member of a controlled group of corporations or a controlled group of trades or businesses, as described in Sections 414(b), (c), (m) and (o) of the Code, or Section 4001 of ERISA.

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“Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D of the Federal Reserve Board, as in effect from time to time.

“Eurodollar Advance” means an Advance that bears interest at a rate per annum determined on the basis of the Eurodollar Rate.

“Eurodollar Rate” means, for any Interest Period for any Eurodollar Advance, for each Lender, an interest rate per annum (expressed as a decimal and rounded upwards, if necessary, to the nearest one hundredth of a percentage point) equal to the offered rate per annum for deposits in U.S. Dollars in a principal amount of not less than $10,000,000 for such Interest Period as of 11:00 A.M., London time, two Business Days before (and for value on) the first day of such Interest Period, that appears on the display designated as “Page 3750” on the Telerate Service (or such other page as may replace “Page 3750” on that service for the purpose of displaying London interbank offered rates of major banks); provided, that if such rate is not available on any date when the Eurodollar Rate is to be determined, then an interest rate per annum determined by the Administrative Agent equal to the rate at which it would offer deposits in United States dollars to prime banks in the London interbank market for a period equal to such Interest Period and in a principal amount of not less than $10,000,000 at or about 11:00 A.M. (London time) on the second Business Day before (and for value on) the first day of such Interest Period.

“Eurodollar Reserve Percentage” means, with respect to any Bank and for any Interest Period for such Bank’s Eurodollar Advance, the reserve percentage applicable during such Interest Period (or, if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) under regulations issued from time to time by the Federal Reserve Board (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for such Bank with respect to liabilities or assets consisting of or including Eurocurrency Liabilities having a term equal to such Interest Period.

“Event of Default” is defined in Section 8.1.

“Excess Spread” means, as of the last day of each Collection Period, an amount equal to the Portfolio Yield for such Collection Period minus the weighted average applicable interest rate on the Advances at such time minus the weighted average Conduit Spread (to the extent not included in the interest rate for Advances) and/or Bank Spread (to the extent not included in the interest rate for Advances), as applicable during such Collection Period, minus the Servicing Fee for such Collection Period determined in accordance with clause (a) of the definition of Portfolio Yield.

“Facility” means the borrowing facility provided by the Lenders as described in Section 2.1 of this Agreement.

“Fannie Mae” means the government sponsored enterprise formerly known as the Federal National Mortgage Association, or any successor thereto.

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“Federal Reserve Board” means the Board of Governors of the Federal Reserve System, or any successor thereto.

“Fee Letter” means the Administrative Agent Fee Letter or the Managing Agent Fee Letter.

“FHA” means the Federal Housing Administration, or any successor thereto.

“FHA Loan” means a Mortgage Loan, the ultimate payment of which is partially or completely insured by the FHA or with respect to which there is a current, binding and enforceable commitment for such insurance issued by the FHA.

“FICO Score” means, with respect to the Obligor under a particular Mortgage Loan, a credit rating established by Fair Isaac Corporation, as provided by Fair Isaac Corporation or a comparable provider of such ratings.

“Financial Officer” means with respect to the Servicer, any of the Originators or the Borrower, the chief financial officer, treasurer or a vice president having the knowledge and authority necessary to prepare and deliver the financial statements and reports required pursuant to Sections 6.1(b) and Section 3.8 and (ii) with respect to the Performance Guarantor, the chief financial officer, the vice president treasurer or the senior vice president finance.

“Fitch” means Fitch, Inc., and any successor thereto.

“Freddie Mac” means the Federal Home Loan Mortgage Corporation, or any successor thereto.

“GAAP” means generally accepted accounting principles as in effect in the United States from time to time.

“Ginnie Mae” means the Government National Mortgage Association, or any successor thereto.

“Governmental Authority” means any nation or government, any agency, department, state or other political subdivision thereof, or any instrumentality thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. Governmental Authority shall include, without limitation, each of Freddie Mac, Fannie Mae, FHA, HUD, VA and Ginnie Mae.

“Governmental Requirement” means any law, statute, code, ordinance, order, rule, regulation, judgment, decree, injunction, franchise, permit, certificate, license, authorization or other requirement (including, without limitation, any of the foregoing that relate to energy regulations and occupational, safety and health standards or controls and any hazardous materials laws) of any Governmental Authority that has jurisdiction over the Originators, the Servicer, the Collateral Agent or the Borrower or any of their respective Properties.

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“Gresham” has the meaning set forth in the preamble of this Agreement.

“Group” means the Calyon New York Group, the Lloyds Group and the JPMorgan Chase Group.

“Group Bank” means (1) with respect to Atlantic and LaFayette, Calyon New York, each Bank that has entered into an Assignment and Acceptance with Calyon New York, and each assignee (directly or indirectly) of any such Bank, which assignee has entered into an Assignment and Acceptance; (2) with respect to Gresham, Lloyds, each Bank that has entered into an Assignment and Acceptance with Lloyds and each assignee (directly or indirectly) of any such Bank, which assignee has entered into an Assignment and Acceptance; and (3) with respect to Jupiter, JPMorgan Chase, each Bank that has entered into an Assignment and Acceptance with JPMorgan Chase and each assignee (directly or indirectly) of any such Bank, which assignee has entered into an Assignment and Acceptance.

“Group Bank Commitment Percentage” means, the sum of all of the Bank Commitment Percentages of all of the Banks in a Group.

“Hedge” means, with respect to any Mortgage Loan (other than a Subprime Loan) for which the Originator does not have Loan Specific Take-Out Commitments, either (A) a current, valid, binding, enforceable, written commitment, including, without limitation, a forward purchase commitment, issued by an Approved Investor, to purchase Mortgage Loans from the Originator from time to time at a specified price (or a specified spread to an agreed-upon index), which commitment is not subject to any term or condition (i) that is not customary in commitments of like nature or (ii) that, in the reasonably anticipated course of events, cannot be fully complied with prior to the expiration thereof, in which a perfected security interest has been granted to the Administrative Agent, or (B) a hedge of the market value risk of such Mortgage Loan pursuant to a forward sale of mortgage-backed securities or a sale of Eurodollar futures contracts, with an Approved Investor, in which a perfected security interest has been granted to the Administrative Agent.

“Hedge and Commitment Report” means a report prepared by the Servicer and pursuant to Section 3.6 hereof, showing, as of the close of business on the last Business Day of the preceding week, all Uncovered Mortgage Loans and all Take-Out Commitments, (either in the form of a Loan Specific Take-Out Commitment or a Hedge) that have been assigned to the Administrative Agent, for the benefit of holders of the Obligations, and the following information with respect to such Take-Out Commitments: (i) trade counterparty, (ii) trade amount, (iii) coupon, (iv) price, (v) type of security, (vi) date of trade, and (vii) such other information as the Administrative Agent may reasonably request, in the form of Exhibit D-13; provided, however, that any Loan Specific Take-Out Commitments may be reflected and delivered to the Collateral Agent on an electronic loan commitment file as in the form of Schedule I to Exhibit D-13.

“Hedged Loan” means a Mortgage Loan that is covered by a Hedge.

“HELOC” means a Mortgage Loan that is a home equity line of credit.

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“HUD” means the Department of Housing and Urban Development, or any successor thereto.

“Indebtedness” means, for any Person, without duplication, and at any time, (a) all obligations required by GAAP to be classified on such Person’s balance sheet as liabilities, (b) obligations secured (or for which the holder of the obligations has an existing contingent or other right to be so secured) by any Lien existing on property owned or acquired by such Person, (c) obligations that have been (or under GAAP should be) capitalized for financial reporting purposes, and (d) all guaranties, endorsements, and other contingent obligations with respect to obligations of others.

“Indemnified Amounts” is defined in Section 10.1.

“Indemnified Party” is defined in Section 10.1.

“Initial Funding Date” is defined in Section 4.1.

“Interest Period” is defined in Section 2.15.

“Issuer” means any of Atlantic, La Fayette, Gresham, Jupiter and their successors and assigns.

“Issuer Facility Amount” means (a) with respect to Atlantic and La Fayette on an aggregate basis, $350,000,000, (b) with respect to Gresham on an aggregate basis, $100,000,000 and (c) with respect to Jupiter on an aggregate basis, $250,000,000. Any reduction (or termination) of the Maximum Facility Amount pursuant to the terms of this Agreement shall reduce ratably (or terminate) the Issuer Facility Amount of each Issuer.

“JPMorgan Chase” has the meaning as set forth in the preamble to this Agreement

“JPMorgan Chase Group” means Jupiter, JPMorgan Chase and each other Group Bank of Jupiter.

“Jumbo FICO Score Trigger Event” means that (i) the Jumbo Pool Weighted Average FICO Score has been reported, in a Servicer Weekly Report, as less than 690, (ii) a period of seven Business Days has elapsed from the date of receipt of such report by the Administrative Agent and (iii) the Servicer has not provided to the Administrative Agent a revised Jumbo Pool Weighted Average FICO Score that is equal to or exceeds 690.

“Jumbo Loan” means a Mortgage Loan that has a principal balance that exceeds the limit set for Conforming Loans by Fannie Mae or Freddie Mac from time to time, but is less than or equal to $1,000,000; provided that a Jumbo Loan having an original principal balance in excess of $1,000,000 but not more than $3,000,000 will be eligible as a Super Jumbo Loan. The term Jumbo Loans includes Super Jumbo Loans.

“Jumbo Pool Weighted Average FICO Score” means, as of the relevant date set forth in a Servicer Weekly Report, the ratio of (a) the sum, for all Jumbo Loans, of the product for each Jumbo Loan of (i) its FICO Score and (ii) its original principal balance to (b) the sum of the original principal balances of all Jumbo Loans.

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“Jupiter” has the meaning set forth in the preamble of this Agreement.

“La Fayette” has the meaning set forth in the preamble of this Agreement.

“Lenders” means, collectively, the Issuers and the Banks.

“Lennar Corporation” means Lennar Corporation, a Delaware corporation, and its successors and assigns.

“Lennar Revolver” means, the Credit Agreement among Lennar Corporation, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, Bank of America, N.A., Barclays Bank PLC, Calyon New York Branch, The Royal Bank of Scotland PLC and Wachovia Bank, N.A. as document agents, Lloyds TSB Bank plc, USB Loan Finance LLC, BNP Paribas and SunTrust Bank as senior managing agents, Citicorp North America, Inc., HSBC Bank USA, N.A., Comercia Bank, Guaranty Bank and U.S. Bank National Association as managing agents, Washington Mutual Bank, Bankunited, FSB, PNC Bank, National Association, Societie Generale and Sumitomo Mitsui Banking Corporation as co-agents, Deutsche Bank Securities Inc., as syndication agent and together with J.P. Morgan Securities as joint lead arrangers and joint bookrunners, dated as of July 21, 2006, as may be supplemented, amended or restated from time to time.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (whether statutory, consensual or otherwise), or other security arrangement of any kind (including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the uniform commercial code or comparable law of any jurisdiction in respect of any of the foregoing).

“Liquidity Agreement” means, with respect to an Issuer, a liquidity loan agreement, liquidity asset purchase agreement or similar agreement entered into by the related Group Banks and providing for the making of loans to such Issuer, or the purchase of Advances (or interests therein) from such Issuer, to support the Issuer’s payment obligations under its Commercial Paper Notes.

“Lloyds” has the meaning set forth in the preamble of this Agreement and its successors and assigns.

“Lloyds Group” means Gresham, Lloyds and each other Group Bank of Gresham.

“Loan Specific Take-Out Commitment” means with respect to Mortgage Loans that are included in the Eligible Mortgage Collateral, a current, valid, binding, enforceable, written, telephonic or electronic (email) commitment, issued by an Approved Investor, to purchase loans with characteristics of such Mortgage Loans from

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the Originator from time to time at a specified price (or a specified spread to an agreed-upon index) and in amounts, and upon terms, satisfactory to the Administrative Agent, which commitment is not subject to any term or condition (i) that is not customary in commitments of like nature or (ii) that, in the reasonably anticipated course of events, cannot be fully complied with prior to the expiration thereof, in which a perfected and first-priority security interest has been granted by the Borrower to the Administrative Agent.

“Loan-to-Value Ratio” means, with respect to any Mortgage Loan, the fraction, expressed as a percentage found by dividing (a) the original principal balance of a Mortgage Loan, by (b) the value of the property, such value being measured by (i) the appraised value of such property at such time, if the Mortgage Loan is a refinance of an existing lien or (ii) the lower of the sales price of the related property at the time of origination of the Mortgage Loan or the appraised value of such property at such time, if the Mortgage Loan is a purchase money loan.

“Majority Banks” means, at any time, Banks, including Banks that have become party to this Agreement pursuant to an Assignment and Acceptance, having outstanding Bank Commitments equal to more than 50% of the aggregate outstanding Bank Commitments.

“Majority Group Banks” means, as to any Group Banks included in the related Group having outstanding Bank Commitments equal to more than 50% of the aggregate outstanding Bank Commitments of the Banks in such Group .

“Managing Agent” means, with respect to Atlantic and La Fayette, Calyon New York or any successor managing agent designated by such party; with respect to Gresham, Lloyds or any successor managing agent designated by such party and, with respect to Jupiter, JPMorgan Chase or any successor managing agent designated by such party.

“Managing Agent’s Account” means, (a) with respect to Calyon New York, the special account (account number 01-25680-001-00-001, ABA No. 026008073) of Calyon New York maintained at Calyon New York Branch, 1301 Avenue of the Americas, New York, New York, (b) with respect to Lloyds, the special account (account number 001-0-962009, ABA No. 021-000-021) maintained at JPMorgan Chase Bank, London Branch for further credit to Gresham Receivables (No. 6) Limited Account Number 32636202 and (c) with respect to JPMorgan Chase, the special account (account number 5948118, ABA No. 071000013) of Jupiter maintained at JPMorgan Chase Bank, N.A., One JPMorgan Chase Plaza, Chicago, Illinois 60670.

“Managing Agent Fee Letter” means the fee letter among the Managing Agents and the Borrower dated the date hereof, as the same may be amended, restated, supplemented or otherwise modified from time to time.

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Market Value” means at the time determined, for any Mortgage Loan

(a) the market value of such Mortgage Loan determined by the Servicer based upon the then most recent posted net yield for 30-day mandatory future delivery furnished by Fannie Mae, Freddie Mac, Ginnie Mae or another entity deemed most appropriate by the Servicer and published and distributed by Telerate Mortgage Services, or, if such posted net yield is not available from Telerate Mortgage Services, such posted net yield obtained directly from Fannie Mae, Freddie Mac, Ginnie Mae or another entity deemed most appropriate by the Servicer,

(b) if the posted rate is not available, the value determined by the Servicer in good faith; provided that, if (x) the Administrative Agent and/or the Managing Agents shall have obtained a different market valuation (an “Additional Determination”) as of any determination date (which Additional Determination may be from any Managing Agent or any Affiliate thereof) and (y) the amount of the Additional Determination as of such determination date is more than 0.50% less than the amount of the aggregate Market Values determined by the Servicer on such determination date, then, the amount of the Additional Determination shall be used as the Market Value for purposes of clause (A)(3) of the definition of “Collateral Value.” The Borrower shall be solely responsible for the costs incurred with respect to such Additional Determinations. The Administrative Agent shall notify the Servicer of the variance between the Servicer’s determination of the Market Value and the Additional Determinations and the source(s) used by the Administrative Agent and/or the Managing Agents to determine the Additional Determinations. Following such notice and prior to the next determination date, either (i) the Servicer and the Administrative Agent will determine a mutually acceptable, reasonable, alternative valuation for the Market Value of such Mortgage Loan or (ii) the Servicer shall use an amount equal to the Additional Determination as the Market Value of such Mortgage Loan for subsequent determination dates until clause (i) is satisfied or

(c) in the case of an Uncovered Mortgage Loan (i) if no Default or Event of Default is continuing, the value determined by the Servicer in good faith, which determination shall be updated on a monthly basis the fair value for which shall be derived from the specific daily market price files distributed by the various investors to which guidelines and standards the loan has been underwritten or (ii) if a Default or Event of Default is continuing, the Market Value determined in accordance with clause (b) of this definition.

“Material Adverse Effect” means, with respect to any Person, any material adverse effect on (i) the validity or enforceability of this Agreement, the Notes or any other Transaction Document, (ii) the business, operations, total Property or financial condition of such Person, (iii) the Collateral taken as a whole, (iv) the enforceability or priority of the Lien in favor of the Administrative Agent on any significant portion of the Collateral, or (v) the ability of such Person to fulfill its obligations under this Agreement, the Notes or any other Transaction Document.

“Maximum Facility Amount” means $700,000,000, as such amount may be reduced pursuant to Section 2.1(c) of this Loan Agreement.

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“Maximum Rate” means the maximum non-usurious rate of interest that, under applicable law, each of the Lenders is permitted to contract for, charge, take, reserve, or receive on the Obligations.

“MERS” means Mortgage Electronic Registration Systems, Inc., a Delaware corporation.

“MERS Agent” means JPMorgan Chase, as agent for the Lenders under the Electronic Tracking Agreement.

“MERS Designated Mortgage Loan” means a Mortgage Loan registered to or by the related Originator on the MERS electronic mortgage registration system.

“Moody’s” means Moody’s Investors Service, Inc., and any successor thereto.

“Mortgage” means a mortgage or deed of trust or other security instrument creating a Lien on real property, on a standard form as approved by Fannie Mae, Freddie Mac or Ginnie Mae or such other form as any of the Originators determine is satisfactory for any Approved Investor unless otherwise directed by the Administrative Agent and communicated to the Collateral Agent.

“Mortgage Assets” means, collectively:

(a) any and all Mortgage Loans in which the Administrative Agent, as secured party, for the benefit of the holders of the Obligations, is granted a security interest pursuant to any Assignment or other document (whether or not the Principal Mortgage Documents related thereto are delivered) heretofore or hereafter from time to time executed by the Borrower;

(b) any and all instruments, documents and other property of every kind or description, of or in the name of the Borrower, now or hereafter for any reason or purpose whatsoever, in the possession or control of, or in transit to, the Collateral Agent;

(c) any and all general intangibles and Mortgage Loan Collateral that relate in any way to the Mortgage Assets;

(d) any and all Take-Out Commitments identified on Hedge and Commitment Reports from time to time prepared by the Servicer on behalf of any of the Originators and the Borrower;

(e) any and all contract rights, chattel paper, certificated securities, uncertificated securities, financial assets, securities accounts or investment property which constitute proceeds of the Mortgage Assets;

(f) this Agreement, the Performance Guaranties and the Subordination Agreement, including all moneys due or to become due thereunder, claims of the Borrower arising out of or for breach or default thereunder, and the right of the Borrower to compel performance and otherwise exercise all remedies thereunder; and

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(g) any and all proceeds of any of the foregoing.

“Mortgage Loan” means a loan evidenced by a Mortgage Note and secured by a Mortgage, the beneficial interest of which has been acquired by the Borrower from any of the Originators by purchase pursuant to the Repurchase Agreement (with the record owner thereof being such Originator or, in the case of a MERS Designated Mortgage Loan, MERS as nominee for such Originator, and its successors and assigns).

“Mortgage Loan Collateral” means all Mortgage Notes and related Principal Mortgage Documents, Other Mortgage Documents, and other Collateral.

“Mortgage Note” means a promissory note, on a standard form approved by Fannie Mae, Freddie Mac or Ginnie Mae or such other form as the Originators determine is satisfactory for any Approved Investor unless otherwise directed by the Administrative Agent and communicated to the Collateral Agent.

“Mortgage Origination Date” means, with respect to each Mortgage Loan, the date of the Mortgage Note.

“Mortgagor Credit Rating” means a credit rating assigned to an Obligor by the related Originator based on such Originator’s established underwriting guidelines in effect as of the date of origination and that is in conformity with accepted secondary market standards for the applicable type of mortgage loan.

“Multiemployer Plan” means a multiemployer plan defined in Sections 3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code to which Borrower or any ERISA Affiliate is making or has made (or is accruing or has accrued an obligation to make) contributions.

“Non-Conforming Loan” means a Jumbo Loan, a Subprime Loan , an Alt-A Loan or a Second-Lien Loan.

“Note” means each or any of the promissory notes executed by the Borrower, substantially in the form of Exhibit E hereto, together with all renewals, extensions, and replacements for any such note.

“Obligations” means any and all present and future indebtedness, obligations, and liabilities of the Borrower to any of the Lenders, the Collateral Agent, the Managing Agents, each Affected Party, each Indemnified Party and the Administrative Agent, and all renewals, rearrangements and extensions thereof, or any part thereof, arising pursuant to this Agreement or any other Transaction Document, and all interest accrued thereon, and attorneys’ fees and other costs incurred in the drafting, negotiation, enforcement or collection thereof, regardless of whether such indebtedness, obligations, and liabilities are direct, indirect, fixed, contingent, joint, several or joint and several.

“Obligor” means (i) with respect to each Mortgage Note included in the Collateral, the obligor on such Mortgage Note and (ii) with respect to any other agreement included in the Collateral, any person from whom any of the Originators or the Borrower is entitled to performance.

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“Originator Performance Guaranty” means the Originator Performance Guaranty, in the form attached hereto as Exhibit G-2, made by the Performance Guarantor in favor of the Originators, and assigned to the Administrative Agent for the benefit of the Lenders.

“Originators” means, together, Universal American Mortgage Company, LLC, a Florida limited liability company and Universal American Mortgage Company of California, a California corporation, and their successors and assigns.

“Originator’s Credit and Collection Policy” means with respect to each Originator the Originator’s Credit and Collection Policy, attached hereto as Exhibit O.

“Other Company” means the Performance Guarantor and all of its Subsidiaries except the Borrower.

“Other Mortgage Documents” is defined in Section 3.2(c).

“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.

“Pay Option ARM” means an Alt-A Loan or a Jumbo Loan that (a) a minimum monthly payment amount, which may or may not fully amortize the original principal balance, is offered in conjunction with additional payment options, (b) the interest rate is calculated on a monthly basis, by adding 30-day LIBOR, or other such commercially reasonable index to a margin determined first at closing, and subsequently adjusted at regular intervals in order to ensure deficit interest is capitalized in an amount not exceeding 115% of the original principal balance thereof.

“Performance Guarantor” means Lennar Corporation, a Delaware corporation, and its successors and assigns.

“Performance Guarantor Quarterly Certificate” means the form of certificate attached hereto as Exhibit H-3.

“Performance Guaranty” means, collectively, the Servicer Performance Guaranty, in the form attached hereto as Exhibit G-1, made by the Performance Guarantor in favor of the Administrative Agent for the benefit of the Lenders, and the Originator Performance Guaranty, in the form attached hereto as Exhibit G-2, made by the Performance Guarantor in favor of the Borrower and assigned to the Administrative Agent for the benefit of the Lenders.

“Permitted Investments” means book-entry securities, negotiable instruments or securities represented by instruments in bearer or registered form that evidence any of the following:

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(a) direct obligations of, and obligations fully guaranteed by, the United States of America or any agency or instrumentality of the United States of America, the obligations of which are backed by the full faith and credit of the United States of America;

(b) (i) demand and time deposits in, certificates of deposits of, bankers’ acceptances issued by, or federal funds sold by, any depository institution or trust company incorporated under the laws of the United States of America, any State thereof or the District of Columbia or any foreign depository institution with a branch or agency licensed under the laws of the United States of America or any State, subject to supervision and examination by Federal and/or State banking authorities and having a rating of P-1 by Moody’s, a rating of at least A-1 by S&P and a rating of at least F1 by Fitch at the time of such investment or contractual commitment providing for such investment or otherwise approved in writing by each Rating Agency or (ii) any other demand or time deposit or certificate of deposit that is fully insured by the Federal Deposit Insurance Corporation;

(c) repurchase obligations with respect to (i) any security described in clause (a) above or (ii) any other security issued or guaranteed by an agency or instrumentality of the United States of America, in either case entered into with a depository institution or trust company (acting as principal) described in clause (b)(i) above;

(d) short-term securities bearing interest or sold at a discount issued by any corporation incorporated under the laws of the United States of America or any State, the short-term unsecured obligations of which have a rating of at least P-1 by Moody’s, a rating of at least A-1 by S&P and a rating of at least F1 by Fitch at the time of such investment; provided, however, that securities issued by any particular corporation will not be Permitted Investments to the extent that investment therein will cause the then outstanding principal amount of securities issued by such corporation and held in the Reserve Account to exceed 10% of amounts held in the Reserve Account;

(e) commercial paper having a rating of at least P-1 by Moody’s, a rating of at least A-1 by S&P and a rating of least F1 by Fitch at the time of such investment or pledge as security;

(f) money market funds whose investments consist solely of one of the foregoing; or

(g) any other investments approved in writing by each Rating Agency.

“Person” means any individual, corporation (including a business trust), limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization, Governmental Authority, or any other form of entity.

“Portfolio Yield” means, with respect to any Collection Period, the percentage equivalent to the amount computed as of the last day of such Collection Period by multiplying (i) 12 by (ii) (a) the aggregate amount of interest accrued (whether or not paid) with respect to all Eligible Mortgage Loans included in the Collateral during such Collection Period divided by (b) the daily average outstanding principal amount of all Eligible Mortgage Loans included in the Collateral during such Collection Period.

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“Principal Debt” means, at the time determined, the unpaid principal balance of all Advances under this Agreement.

“Principal Mortgage Documents” is defined in Section 3.2(b).

“Program Documents” means, in the case of the Issuers, each Liquidity Agreement relating to this Agreement and the other documents executed and delivered in connection therewith, as each may be amended, supplemented or otherwise modified from time to time.

“Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

“Rating Agency” means S&P, Moody’s and Fitch.

“Regulation T, U, X and Z,” respectively, mean Regulation T, U, X and Z promulgated by the Federal Reserve Board as in effect from time to time, or any successor regulations thereto.

“Regulatory Change” means, relative to any Affected Party:

(a) any change in (or the adoption, implementation, change in the phase-in or commencement of effectiveness of) any:

(i) United States federal or state law or foreign law applicable to such Affected Party;

(ii) regulation, guideline, interpretation, directive, requirement or request, including without limitation the interpretation, administration or application thereof, (whether or not having the force of law) applicable to such Affected Party of (A) any court, government authority charged with the interpretation or administration of any law referred to in clause (a)(i) or (B) any accounting board or fiscal, monetary or other authority having jurisdiction over such Affected Party, including any authority in clause (A) and (B) that is also responsible for the establishment and interpretation of national or international accounting principles, in each case whether foreign or domestic (whether or not having the force of law); or

(iii) GAAP or regulatory accounting principles applicable to such Affected Party and affecting the application to such Affected Party of any law, regulation, interpretation, directive, requirement or request referred to in clause (a)(i) or (a)(ii) above;

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(b) any change in the application to such Affected Party of any existing law, regulation, interpretation, directive, requirement, request or accounting principles referred to in clause (a)(i), (a)(ii) or (a)(iii) above; or

(c) the issuance, publication or release of any regulation, interpretation, directive, requirement or request of a type described in clause (a)(ii) above to the effect that the obligations of any Bank under the applicable Liquidity Agreement are not entitled to be included in the zero percent category of off-balance sheet assets for purposes of any risk-weighted capital guidelines applicable to such Bank or any related Affected Party.

For the avoidance of doubt, any interpretation of Accounting Research Bulletin No. 51 by the Financial Accounting Standards Board or any other change in national or international generally accepted principles of accounting (whether foreign or domestic) that would require the consolidation of some or all of the assets and liabilities of any Lender, including the assets and liabilities that are the subject of this Agreement and/or other Transaction Documents, with those of any Affected Person (other than such Lender), shall constitute a change in the interpretation, application or administration of a law, regulation, guideline, interpretation, directive, requirement or request subject to clauses (a), (b) and (c), whether or not such interpretation has been announced as of the date hereof.

“Related CP Issuer” means, with respect to Gresham, Cancara Asset Securitization Limited or any other commercial paper conduit approved by the Administrative Agent which advances funds to Gresham for the purpose of funding or maintaining its interest in the Advances, together with their successors and permitted assigns.

“Repurchase Agreement” means the Master Repurchase Agreement, dated May 23, 2003, and the Amended and Restated Addendum to the Master Repurchase Agreement, dated as of the date of this Agreement, between the Originators, as sellers, and the Borrower, as purchaser, as the same may be amended, modified or restated from time to time.

“Required Ratings” means a rating of BB+ or higher by S&P, a rating of Ba1 or higher by Moody’s and a rating of BB+ or higher by Fitch.

“Required Reserve Account Amount” on any date of determination means 0.50% of the Maximum Facility Amount on such date.

“Requirement of Law” as to any Person means the articles of incorporation and by-laws, articles of organization and limited liability company agreement or other organizational or governing documents of such Person, and any law, statute, code, ordinance, order, rule, regulation, judgment, decree, injunction, franchise, permit, certificate, license, authorization or other determination, direction or requirement (including, without limitation, any of the foregoing that relate to energy regulations and occupational, safety and health standards or controls and any hazardous materials laws) of any Governmental Authority, in each case applicable to or binding upon such Person or any of its Property or to which such Person or any of its Property is subject.

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“Reserve Account” is defined in Section 2.8, it being understood that such account is assigned to the Administrative Agent pursuant to the Reserve Account Control Agreement and the Administrative Agent has the authority to direct the transfer of all funds in the Reserve Account.

“Reserve Account Bank” means the institution then holding the Reserve Account pursuant to Section 2.8.

“Reserve Account Control Agreement” means the Reserve Account Control Agreement, dated as of even date herewith, between the Borrower, the Servicer, the Administrative Agent and the Reserve Account Bank, substantially in the form attached hereto as Exhibit N, as amended, modified, supplemented or replaced.

“S&P” means Standard & Poor’s Rating Services, a Division of The McGraw-Hill Companies, Inc., and any successor thereto.

“Second-Lien Loan” means a Mortgage Loan secured by particular property with respect to which at least one other higher-priority Mortgage Loan exists secured by the same property.

“Security Agreement” is defined in the Collateral Agency Agreement.

“Security Instruments” means (a) the Collateral Agency Agreement, (b) the Security Agreement, (c) the Collection Account Control Agreement, (d) the Reserve Account Control Agreement, and (e) such other executed documents as are or may be necessary to grant to the Administrative Agent a perfected first, prior and continuing security interest in and to the Collateral and any and all other agreements or instruments now or hereafter executed and delivered by or on behalf of the Borrower in connection with, or as security for the payment or performance of, all or any of the Obligations, as amended, modified or supplemented.

“Servicer” means at any time the Person then authorized pursuant to Section 11.1 to administer and collect Mortgage Loans on behalf of the Lenders. The initial Servicer shall be Universal American Mortgage Company, LLC, a Florida limited liability company.

“Servicer Default” means (a) any Event of Default, to the extent relating to the Servicer, arising under Sections 8.1(a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l), (m), (n), (o), (u), (v) or, (w) in each case, without giving effect to any provisions in such sections that make such sections applicable only so long as the Servicer is one of the Originators, (b) if the Servicer is one of the Originators, the Performance Guarantor shall cease to own, directly or indirectly, at least 90% of all of the membership interests in the Servicer, or (c) if the Servicer is one of the Originators, the Servicer’s Tangible Net Worth shall be less than the amount set forth in Section 7.18.

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“Servicer Weekly Report” means the weekly report sent by the Servicer to the Managing Agents and the Collateral Agent in the form of Exhibit Q attached hereto pursuant to Section 3.9.

“Servicer Fee” is defined in Section 2.4(b).

“Servicer Monthly Report” is defined in Section 3.8.

“Servicer Performance Guaranty” means the Amended and Restated Servicer Performance Guaranty, in the form attached hereto as Exhibit G-1, made by the Performance Guarantor in favor of the Administrative Agent for the benefit of the Lenders.

“Settlement Date” means the 10th day of each calendar month, commencing October 10, 2006 or, if such day is not a Business Day, the next succeeding Business Day, provided, however, the Administrative Agent may, with the consent of the Managing Agents, by notice to the Borrower and the Servicer, select other days to be Settlement Dates (including days occurring more frequently than once per month).

“Shipping Request” means the shipping request presented by the Borrower or the Servicer to the Collateral Agent substantially in the form attached as Exhibit D-5A (as amended, modified or supplemented from time to time as agreed to by the Administrative Agent, the Borrower and the Collateral Agent).

“Shortfall Amount” means, with respect to the last day of any Interest Period or any Settlement Date, the excess, if any, of (a) all amounts due pursuant to (i) Section 2.7(c)(iii)(B) or Section 2.7(c)(iv)(C) on the last day of such Interest Period occurring prior to, on or after the Drawdown Termination Date, as applicable, (ii) Section 2.7(c)(iii)(A), (C), (D), or (G) on any such Settlement Date occurring prior to the Drawdown Termination Date or (iii) Section 2.7(c)(iv)(A), (B), (D), or (F) on any such Settlement Date occurring on or after the Drawdown Termination Date, over (b) the sum of the collections then held by the Servicer for the Lenders and the Administrative Agent pursuant to Section 2.7(c)(ii) plus collected funds then on deposit in the Collection Account.

“Sixty-Day Default Ratio” means as of the end of any Collection Period, the ratio of (i) the principal amount of all Mortgage Loans with respect to which the Obligor is 60 or more days in payment default or has taken any action, or suffered any event of the type described in Section 8.1(f), (g) or (h) or is in foreclosure at such time, to (ii) the aggregate principal amount of all Mortgage Loans at such time.

“Special Borrowing” is defined in Section 2.3(c).

“Special Indemnified Amounts” is defined in Section 11.5.

“Special Indemnified Party” is defined in Section 11.5.

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“Special Mortgage Loans” is defined in Section 2.3(c). For purposes of clarification, a Special Mortgage Loan shall not include any Mortgage Loan under this Agreement or a mortgage loan financed under any other credit agreement with respect to which the Principal Mortgage Documents have been shipped to an Approved Investor or any other take-out investor.

“Specific Covered Loan” means a Mortgage Loan that matches all the requirements for purchase under a Loan Specific Take-Out Commitment.

“Subordination Agreement” means the amended and restated agreement, substantially in the form attached as Exhibit B hereto, executed by the Performance Guarantor and certain of its Affiliates in favor of the Borrower and the Administrative Agent for the benefit of the holders of the Obligations.

“Subprime Loan” means a Mortgage Loan (other than a Conforming Loan, a Jumbo Loan or an Alt-A Loan) that (1) is underwritten by an Approved Investor, (2)(A) is a Specific Covered Loan; or (B) if such Mortgage Loan is an Uncovered Mortgage Loan , it has a FICO Score of 660 or greater, and (3) differs from a Conforming Loan because of the credit quality of the Obligor, and is originated by the Originator or by a correspondent of the Originator using the established underwriting guidelines for subprime loans of the Originator, which are the same underwriting guidelines that the Originator uses to originate subprime loans for sales into the secondary mortgage market.

“Subsidiary” means, with respect to any Person, any corporation or other entity of which securities having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person, or one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries.

“Super Jumbo Loan” means a Jumbo Loan having an original principal balance in excess of $1,000,000 but not more than $3,000,000.

“Take-Out Commitment” means (A) a Hedge, or (B) a Loan Specific Take-Out Commitment.

“Tangible Net Worth” has the meaning given it under the UAMC Revolver.

“Transaction Documents” means this Agreement, the Notes, the Security Agreement, the Collateral Agency Agreement, Electronic Tracking Agreement, the Repurchase Agreement, the Managing Agent Fee Letter, the Administrative Agent Fee Letter, the Subordination Agreement, the Control Agreements and any and all other agreements or instruments now or hereafter executed and delivered by or on behalf of the Borrower in connection with, or as security for the payment or performance of any or all of the Obligations, as any of such documents may be renewed, amended, restated or supplemented from time to time.

“Transfer Request” is defined in Section 3.3(a).

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“UAMC Capital, LLC” has the meaning set forth in the preamble to this Agreement.

“UAMC Revolver” means, solely as it applies to this Agreement, the Third Amended and Restated Warehousing Credit and Security Agreement by and among Universal American Mortgage Company, LLC, Eagle Home Mortgage Inc., Eagle Home Mortgage Company of California, Inc., UAMC Asset Corp. II, Universal American Mortgage Company of Pennsylvania, Inc., Eagle Home Mortgage, LLC, the lenders party thereto and Residential Funding Corporation dated as of April 30, 2006, with such amendments that have been approved by Calyon, as Administrative Agent hereunder from time to time.

“UCC” means the Uniform Commercial Code as adopted in the applicable state, as the same may hereafter be amended.

“Uncovered Mortgage Loan” means a Mortgage Loan that is not a Hedged Loan or a Specific Covered Loan.

“Unidentified Payments” is defined in Section 3.3(a).

“VA” means the Department of Veterans Affairs, or any successor thereto.

“VA Loan” means a Mortgage Loan, the payment of which is partially or completely guaranteed by the VA under the Servicemen’s Readjustment Act of 1944, as amended, or Chapter 37 of Title 38 of the United States Code or with respect to which there is a current binding and enforceable commitment for such a guaranty issued by the VA.

1.2. Other Definitional Provisions.

(a) Unless otherwise specified therein, all terms defined in this Agreement have the above-defined meanings when used in the Notes or any other Transaction Document, certificate, report or other document made or delivered pursuant hereto.

(b) The words “hereof,” “herein,” “hereunder” and similar terms when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, subsection, schedule and exhibit references herein are references to articles, sections, subsections, schedules and exhibits to this Agreement unless otherwise specified.

(c) As used herein, in the Notes or in any other Transaction Document, certificate, report or other document made or delivered pursuant hereto, accounting terms relating to any Person and not specifically defined in this Agreement or therein shall have the respective meanings given to them under GAAP.

(d) All accounting and financial terms used – and compliance with each financial covenant – in the Transaction Documents shall be determined under GAAP; however, unless the Administrative Agent has agreed (in writing) to the contrary, the determinations

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concerning the financial covenants found in Sections 7.1 and 7.10 and the Tangible Net Worth of the Servicer (so long as the Servicer is one of the Originators), including determinations of Deferred Income under SFAS 91 and SFAS 122, shall be made under GAAP, and SFAS 91 and SFAS 122, as in effect on the date of this Agreement. All accounting principles shall be applied on a consistent basis so that the accounting principles in a current period are comparable in all material respects to those applied during the preceding comparable period.

ARTICLE II

AMOUNT AND TERMS OF COMMITMENT

2.1. Maximum Facility Amount.

(a) Subject to the terms of this Agreement and so long as (i) the total Principal Debt does not exceed the Maximum Facility Amount, (ii) the Principal Debt owed to the Lenders shall not exceed the total Collateral Value of all Eligible Mortgage Collateral, (iii) no Borrowing ever exceeds the Availability, and (iv) Borrowings are only made on Business Days before the Drawdown Termination Date, each Issuer (other than Gresham, and in the case of the Calyon Group, either Atlantic or La Fayette or both) may, each in its sole discretion, and Gresham shall make an Advance ratably in accordance with the Bank Commitment of its Group Bank, and, except in the case of the Lloyds Group, to the extent that an Issuer does not make such Advance (or, in the case of Atlantic and La Fayette, to the extent neither such Issuer makes such Advance), its Group Banks shall, ratably in accordance with their Bank Commitments, make such Advance, to the Borrower from time to time in such amounts as may be requested by the Borrower pursuant to Section 2.3, so long as (A) each Borrowing is the least of (x) the Availability, and (y) the Available Collateral Value as of such date, and (B) such Borrowing is at least $15,000,000 and in integral multiples of $10,000 in excess thereof. Within the limits of the Maximum Facility Amount, the Borrower may borrow, prepay (whether pursuant to Section 2.5 or Section 3.3(a) of this Agreement or otherwise), and reborrow under this Section 2.1. Notwithstanding anything to the contrary contained in this Agreement, subject to the terms of this Agreement, Gresham shall not decline to make any Advance requested by the Borrower as long as the conditions set forth in the first sentence of this paragraph are satisfied; provided further that Gresham, will fund such Advance by either the issuance of commercial paper (in accordance with Section 8.09(e) of its Liquidity Agreement) or will fund such Advance by drawing under its Liquidity Agreement.

(b) The Borrower may request an extension of the Drawdown Termination Date to a date occurring up to 364 days after the date the extension is granted, by written request to the Lenders, the Managing Agents and the Administrative Agent given at least 60 days and no more than 225 days, prior to the then Drawdown Termination Date. If the Lenders, the Managing Agents and the Administrative Agent shall in their sole discretion consent to such extension within 45 (it being understood that it shall be deemed denied if no consent is given within 45 days) days of the request, then the date set forth in clause (a) of the definition of Drawdown Termination Date shall be extended to the requested date (occurring up to 364 days after the date such request is granted by such Persons). If any Lender declines to consent to an extension requested pursuant to this Section 2.1, but the other Lenders nevertheless desire to consent to the extension or confirmation, then the extension shall be granted, and at the option of

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the Managing Agent(s) of the extending Lenders, either (a) the Maximum Facility Amount shall be reduced by the Bank Commitments of such non-extending Lender on what would have been the Drawdown Termination Date but for the extension, or (b) the Managing Agent(s) of the extending Lenders shall find a replacement for such non-extending Lender. If Calyon New York and Issuers in the Calyon New York Group decline to consent to the extension, but the other Lenders nevertheless desire to consent to the extension, then the extension shall be granted, and Calyon New York shall cease to be the Administrative Agent and the Borrower, with the consent of the Lenders, shall appoint another Bank as the Administrative Agent hereunder. To the extent that any Lender declines to extend the Drawdown Termination Date, the Obligations of such non-extending Lender will be repaid pursuant to Section 2.7(c)(iii) hereof. Any extension of the Drawdown Termination Date may be accompanied by such additional fees as the parties shall mutually agree. Any failure of any party to respond to the Borrower’s request for an extension shall be deemed a denial of such request by such party. The Lenders, Managing Agents and the Administrative Agent agree to use commercially reasonable efforts to respond to any request by the Borrower for an extension; provided that under no circumstances shall the Lenders, the Managing Agents or the Administrative Agent have any liability to the Borrower for any failure to respond and a failure to respond shall not be deemed to be a consent to any request.

(c) The Borrower may, upon at least thirty (30) days prior irrevocable notice to the Managing Agents and the Administrative Agent, but no more than once every three months, reduce the Maximum Facility Amount; provided, however, that each partial reduction shall be in the aggregate amount of $10,000,000 and in integral multiples of $1,000,000 in excess thereof; provided further, however that no such reduction shall reduce the Maximum Facility Amount below the greater of (i) the total Principal Debt owed to the Lenders and (ii) $300,000,000. Any partial reduction in the Maximum Facility Amount will reduce the Bank Commitment of each Group Bank ratably.

(d) The Borrower may, upon at least thirty (30) days’ prior irrevocable notice to the Administrative Agent, the Managing Agents and the Collateral Agent, and payment in full of all Obligations, terminate the Bank Commitments and reduce the Maximum Facility Amount to zero.

2.2. Promissory Notes. The Advances made by each of the Lenders, with the exception of Lloyds, related to each Group pursuant to this Article II shall be evidenced by separate Notes each substantially in the form set forth in Exhibit E-1 (in the case of Lenders in the Calyon New York Group), Exhibit E-2 (in the case of Lenders in the JPMorgan Chase Group) or Exhibit E-3 (in the case of Lenders in the Lloyds Group, with the exception of Lloyds) hereto, each in the maximum principal amount of such Group’s related Issuer Facility Amount. Each Managing Agent on behalf of the Lenders in its Group shall record in its records the date and amount of each Advance to the Borrower and each repayment thereof. The information so recorded shall be rebuttable presumptive evidence of the accuracy thereof. The failure to so record, in the absence of manifest error, any such information or any error in so recording any such information shall not, however, limit or otherwise affect the obligations of the Borrower hereunder or under the Notes to pay the principal of all Advances, together with interest accruing thereon.

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2.3. Notice and Manner of Obtaining Borrowings.

(a) Borrowings.

(i) The Borrower shall give the Administrative Agent and each Managing Agent notice of each request for a Borrowing, pursuant to a Borrowing Request, and in accordance with the provisions of Section 4.2 hereof. On the Borrowing Date specified in the Borrowing Request and subject to all other terms and conditions of this Agreement, each Issuer may, in its sole discretion (except that Gresham shall), make available to its Managing Agent at the office of its Managing Agent set forth in Section 13.1, in immediately available funds, its pro rata share of the Borrowing.

(ii) In the event that an Issuer (other than Gresham) shall elect not to fund an Advance requested by the Borrower, each Group Bank of such Issuer agrees that it shall, on the Borrowing Date specified in the Borrowing Request and subject to all other terms and conditions of this Agreement, make available to its Managing Agent at the office of its Managing Agent set forth in Section 13.1, in immediately available funds, an amount equal to the product of (x) such Bank’s Bank Commitment Percentage multiplied by (y) the portion of such Borrowing that such Issuer has elected not to fund.

(iii) After each Managing Agent’s receipt of funds pursuant to the preceding paragraph (i) or (ii) and upon fulfillment of the applicable conditions set forth in Article IV, each Managing Agent will make such funds available to the Borrower a like amount of immediately available funds. So long as the Borrower is otherwise entitled to make a specific Borrowing, Borrowing Requests that are received by each Managing Agent by 3:00 p.m. (eastern time) on a Business Day will be funded on the date that is two Business Days following receipt of the Borrowing Request.

(iv) Notwithstanding the foregoing, a Bank shall not be obligated to make Advances under this Section 2.3 at any time to the extent that the principal amount of all Advances made by such Bank would exceed such Bank’s Bank Commitment less the outstanding and unpaid principal amount of any loans or purchases made by such Bank under a Liquidity Agreement. In addition, notwithstanding the foregoing, Gresham shall not be obligated to make Advances under this Section 2.3(a)(iv) at any time to the extent that the principal amount of all Advances made by Gresham would exceed Gresham’s Issuer Facility Amount less the outstanding and unpaid principal amount of any loans or purchases made by the related Group Banks under the related Liquidity Agreement. Each Bank’s obligation shall be several, such that the failure of any Bank to make available to the Borrower any funds in connection with any Borrowing shall not relieve any other Group Bank of its obligation, if any, hereunder to make funds available on the date of such Borrowing, but no Group Bank shall be responsible for the failure of any other Group Bank to make funds available in connection with any Borrowing.

(b) Type of Loan.

(i) Each Advance by an Issuer shall initially be funded by the issuance of Commercial Paper Notes by such Issuer (or in the case of Gresham, by the issuance of

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Commercial Paper Notes by the Related CP Issuer); provided, further, that Advances made by Gresham shall be initially funded by the issuance of Commercial Paper Notes or by assigning such Advances to the related Group Bank.

(ii) Each Advance by or funded by a Bank, as applicable, shall be either a Base Rate Advance or a Eurodollar Advance, as determined pursuant to Section 2.15(b).

(c) Special Borrowings. The Borrower may from time to time request that certain Borrowings be funded prior to the delivery to the Collateral Agent of the corresponding Principal Mortgage Documents (individually, a “Special Borrowing”; collectively, “Special Borrowings”). Advances in respect of Special Borrowings shall be made in accordance with Section 2.3(a), subject to the terms and conditions of this Agreement, including, without limitation, the following additional terms and conditions:

(i) Pursuant to an Assignment, the Borrower shall grant to the Administrative Agent for the benefit of the holders of the Obligations, from the Borrowing Date of each Special Borrowing, a perfected, first-priority security interest in the Mortgage Loans identified in Schedule II to said Assignment (such Mortgage Loans being sometimes called “Special Mortgage Loans”);

(ii) The Assignment delivered by the Borrower to the Collateral Agent in connection with any Special Mortgage Loan shall describe the Mortgage Note or Mortgage Notes to be delivered to the Collateral Agent in connection therewith by the loan number assigned by one of the Originators, original principal amount, the amount funded (minus discount points paid to such Originator) by one of the Originators, Obligor’s name and interest rate;

(iii) Within nine (9) Business Days after the date that each Assignment is delivered (and inclusion of the related Special Mortgage Loan within the computation of Collateral Value as reported on the Collateral Agent Daily Report), to Collateral Agent, the Borrower shall deliver to the Collateral Agent the Principal Mortgage Documents pertaining to any Special Mortgage Loan identified on Schedule II of such Assignment; and

(iv) The Borrower shall not request any Special Borrowing, and no Special Borrowing shall be made, in respect of any Mortgage Loan that is closed with an escrow agent other than the relevant title insurance company, unless at the time of such request, the Borrower is entitled to the benefit of Closing Protection Rights (it being understood that pursuant to the Security Agreement, the Administrative Agent has a security interest in all Closing Protection Rights).

Each request by the Borrower for a Special Borrowing shall be automatically deemed to constitute a representation and warranty by the Borrower to the effect that immediately before and after giving effect to such Borrowing, the terms and conditions specified in the foregoing clauses (i) through (iv) and specified in Section 4.2 are and shall be satisfied in full as of the related Borrowing Date.

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(d) Failure to Deliver Principal Mortgage Documents. The failure to deliver Principal Mortgage Documents by the ninth Business Day, as required by subparagraph (iii) of Section 2.3(c) and elsewhere in this Agreement, shall not be treated as a Default or an Event of Default so long as each Managing Agent is satisfied that each such failure, when considered in the light of past and other contemporaneous failures, does not have a Material Adverse Effect; however, (i) if any such Principal Mortgage Documents related to such Special Mortgage Loans are not so delivered on a timely basis, the Borrower shall make a mandatory prepayment or shall deliver additional Mortgage Assets so that after giving effect thereto, the Collateral Value of Eligible Mortgage Collateral (excluding such Special Mortgage Loans) shall equal or exceed the Principal Debt, and (ii) the Special Mortgage Loan shall not be an Eligible Mortgage Loan and shall have a Collateral Value of zero until such Principal Mortgage Documents shall have been delivered to the Collateral Agent in connection with a subsequent Borrowing.

The Borrower diligently shall pursue delivery to the Collateral Agent of all Principal Mortgage Documents pertaining to any Special Borrowings.

2.4. Fees.

(a) The Borrower shall pay to the Administrative Agent and each Managing Agent (for itself and the Lenders for which it acts) the fees set forth in the related Fee Letter, such fees to be payable pursuant to Section 2.7(c).

(b) The Borrower shall pay to the Servicer a fee (the “Servicer Fee”) of 0.5% per annum on the aggregate outstanding principal balance of the Eligible Mortgage Loans from the date hereof until the Principal Debt is paid in full, payable monthly in arrears on each Settlement Date. The Servicer Fee shall be payable only from Collections pursuant to, and subject to the priority of payments set forth in, Section 2.7(c).

2.5. Prepayments.

(a) Optional Prepayments. The Borrower may, at any time and from time to time with five (5) Business Days’ notice to the Administrative Agent and each Managing Agent, prepay the Advances in whole or in part, in the aggregate amount of $1,000,000 and in integral multiples of $100,000 in excess thereof, without premium or penalty; provided, that the Borrower may not prepay any Advance bearing interest at the Commercial Paper Rate on any day other than the last day of the Interest Period with respect thereto. Notwithstanding the foregoing, any prepayment made hereunder shall be accompanied by accrued interest on the principal amount being prepaid. After giving notice that a prepayment will be made, the Borrower shall be liable to each Affected Party for any Consequential Loss resulting from such prepayment or the failure to make a prepayment designated in any such notice.

(b) Mandatory Prepayments. The Borrower shall, within one (1) Business Day, make a mandatory prepayment on the Principal Debt owed to the Lenders if, at any time, and to the extent that, (i) the Principal Debt owed to the Lenders exceeds the Maximum Facility Amount or (ii) the Principal Debt exceeds the total Collateral Value of all Eligible Mortgage Collateral. The Borrower shall be liable for any Consequential Loss resulting from any such prepayment.

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2.6. Business Days. If the date for any payment under this Agreement falls on a day that is not a Business Day, then for all purposes of the Notes and this Agreement the same shall be deemed to have fallen on either (a) the next following Business Day, and such extension of time shall in such case be included in the computation of payments of interest and fees or (b) if the next following Business Day is in another calendar month and payment is being made with respect to a Eurodollar Advance, then on the immediately previous Business Day.

2.7. Payment Procedures.

(a) In General. Subject to the provisions of this Section 2.7, all payments on the Principal Debt and interest and fees under the Notes and this Agreement shall be made by the Borrower (or the Collateral Agent or the Servicer on behalf of the Borrower) to the related Managing Agent for the account of the Lenders represented by such Managing Agent. All such payments shall be made before 1:00 p.m. (eastern time) on the respective due dates in federal or other funds immediately available by that time of day and at each Managing Agent’s Account. Funds received after 1:00 p.m. (eastern time) shall be treated for all purposes as having been received by a Managing Agent on the Business Day next following the date of receipt of such funds from the Borrower. All payments made by the Borrower under this Agreement and the Notes shall be without setoff, deduction or counterclaim and the Borrower agrees to pay on demand any present or future stamp or documentary taxes or any other taxes, levies, imposts, duties, charges or fees which arise from payment made hereunder or under the Notes or from the execution or delivery or otherwise with respect to this Agreement or the Notes.

(b) The Borrower shall establish and maintain an account (the “Collection Account”) with the Collection Account Bank. The Collection Account shall be a fully segregated trust account, unless the Collection Account Bank shall be an Eligible Institution having short-term debt ratings from S&P, Moody’s and Fitch no lower than A-1/P-1/F1, in which case the account need not be a trust account. The Collection Account shall be under the control of the Administrative Agent pursuant to the Collection Account Control Agreement, and the Borrower shall have no right to withdraw any amount from, the Collection Account until the Obligations are indefeasibly paid in full. The Servicer shall have no right to access the Collection Account except as otherwise contemplated in Section 2.7(c).

(c) Collections.

(i) The Servicer shall administer Collections in accordance with the provisions of this Section 2.7. Approved Investors shall be instructed to pay proceeds from the sale of Mortgage Loans into the Collection Account, and such amounts may be released in accordance with the procedures set forth in Section 3.3 hereof.

(ii) The Servicer acknowledges that Collections and/or other Collateral Proceeds received by it with respect to any Mortgage Asset belong to the Borrower and have been pledged to the Administrative Agent, on behalf of the Lenders. From such Collections and/or other Collateral Proceeds, the Servicer, on behalf of the Borrower, shall deposit amounts necessary to make payments on the following Settlement Date (or end of the related Interest Period) pursuant to Section 2.7(c)(iii) or (iv), as applicable, into the Collection Account no later than such Settlement Date or at the end of such

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Interest Period, or, on or after the Drawdown Termination Date or upon the occurrence and during the continuation of an Event of Default, within one Business Day after receipt by the Servicer. Until deposited into the Collection Account, the Servicer may commingle Collections and other Collateral Proceeds with its own funds and use such funds for its own business purposes.

(iii) Prior to the Drawdown Termination Date, the Servicer shall withdraw funds from the Collection Account (to the extent of collected funds therein) and shall make payments from the Collection Account at the following times and in the following order of priority:

(A) To the extent not previously paid, on each Settlement Date, the Servicer shall deposit an amount equal to the costs, fees and expenses then due and payable to the Collateral Agent to an account designated by the Collateral Agent.

(B) On the last day of each Interest Period for any Advance that bears interest at the Commercial Paper Rate or any Eurodollar Advance, the Servicer shall deposit an amount equal to accrued interest on such Advance, which amount shall be paid to the applicable Managing Agent’s Account for the related Lenders. On each Settlement Date, the Servicer shall deposit an amount equal to accrued interest on each Advance that bears interest at the Alternate Base Rate to the applicable Managing Agent’s Account.

(C) To the extent not previously paid, on each Settlement Date, an amount equal to the fees, costs and expenses then due and payable pursuant to the related Fee Letter, on a pro rata basis, (i) to JPMorgan Chase, as a Managing Agent, to JPMorgan Chase’s Managing Agent’s Account, (ii) to Lloyds, as a Managing Agent, to Lloyds’ Managing Agent’s Account, (iii) to Calyon New York, as a Managing Agent, to Calyon New York’s Managing Agent’s Account and (iv) to the Administrative Agent, to the Administrative Agent’s Account.

(D) On each Settlement Date on which the Required Reserve Account Amount exceeds the amount then on deposit in the Reserve Account, the Servicer shall deposit an amount equal to such excess to the Reserve Account.

(E) On each Settlement Date, if the Group Banks in any Group have not consented to an extension of the Drawdown Termination Date, but the Group Banks in the other Groups have so consented and such non-extending Lenders have not assigned their respective Advances and Bank Commitments to one or more other Lenders in accordance with Section 2.1(b) and Section 13.9, the Servicer shall deposit an amount equal to the unpaid balance of all Principal Debt owing to the non-extending Lenders to the related Managing Agent’s Account.

(F) To the extent not previously paid, on each Settlement Date, the Servicer shall deposit any amounts, other than those listed in clauses (A), (B) and (C) above and other than principal on the Advances, that are then due and

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payable and of which the Servicer has received prior written notice, including without limitation additional costs under Section 2.16, any additional interest under Section 2.17, Consequential Losses under Section 2.18, indemnities under Section 10.1 and costs, expenses and taxes under Section 13.19, to the applicable Managing Agent’s Account.

(G) On each Settlement Date, the Servicer shall withdraw from the Collection Account for its own account an amount equal to accrued Servicing Fee then due and payable.

(iv) On the Drawdown Termination Date and thereafter, the Administrative Agent shall make payments from the Collection Account (to the extent of collected funds therein) at the following times and in the following order of priority:

(A) On each Settlement Date, if the Servicer is not one of the Originators or an Affiliate of one of the Originators, an amount equal to accrued Servicing Fee then due and payable shall be paid to the Servicer.

(B) To the extent not previously paid, on each Settlement Date, an amount equal to the costs, fees and expenses then due and payable to the Collateral Agent shall be paid to an account designated by the Collateral Agent.

(C) On the last day of each Interest Period for any Advance that bears interest at the Commercial Paper Rate or for any Eurodollar Advance, an amount equal to accrued interest on each such Advance shall be paid to the applicable Managing Agent’s Account. On each Settlement Date, an amount equal to accrued interest on Advances that bear interest at the Alternate Base Rate shall be paid to the applicable Managing Agent’s Account.

(D) On each Settlement Date, an amount equal to the unpaid principal balance of all Advances made by Lenders shall be paid to the applicable Managing Agent’s Account.

(E) To the extent not previously paid, on each Settlement Date, an amount equal to the fees, costs and expenses then due and payable pursuant to the related Fee Letter, on a pro rata basis, (i) to JPMorgan Chase, as a Managing Agent, to JPMorgan Chase’s Managing Agent’s Account, (ii) to Lloyds, as a Managing Agent, to Lloyds’ Managing Agent’s Account, (iii) to Calyon New York, as a Managing Agent, to Calyon New York’s Managing Agent’s Account and (iv) to the Administrative Agent, to the Administrative Agent’s Account.

(F) To the extent not previously paid, on each Settlement Date, any amounts of the type described in Section 2.7(c)(iii)(F) are then due and payable and any other unpaid Obligations shall be paid to the applicable Managing Agent’s Account.

(G) On the Settlement Date on which all Obligations are paid in full, if the Servicer is one of the Originators or an Affiliate of one of the Originators, an amount equal to accrued Servicing Fee then due and payable shall be paid to the Servicer.

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(v) Upon receipt of funds deposited into its Managing Agent’s Account, each Managing Agent shall distribute such funds to the Lenders in its Group or to itself for application to the Obligations in accordance with the order of priority set forth in Section 2.7(c)(iii) or (iv), as applicable.

(d) Interest Payments. Interest on each Advance that bears interest at the Commercial Paper Rate and interest on each Eurodollar Advance shall be due and payable on the last day of the Interest Period applicable to such Advance and on each day of any prepayment of an Advance to which such interest relates. Interest on each Advance that bears interest at a rate based on the Alternate Base Rate shall be due and payable in arrears on each Settlement Date, on the Drawdown Termination Date and on each day of any prepayment of an Advance to which such interest relates and, thereafter, on demand.

(e) Payments from Collection Account. To effect payments (including prepayments) hereunder, the Borrower may use collected funds (if any) then held on deposit in the Collection Account.

2.8. The Reserve Account.

(a) Establishment. An account (the “Reserve Account”) shall be established with the Reserve Account Bank. The Borrower, the Servicer, the Administrative Agent and the Reserve Account Bank have entered into the Reserve Account Control Agreement. The Reserve Account is and shall be under the control of the Administrative Agent, and the Borrower has and shall have no right to withdraw any amount from, the Reserve Account until the Obligations are indefeasibly paid in full.

(b) Taxation. The taxpayer identification number associated with the Reserve Account shall be that of the Borrower, and the Borrower will report for federal, state and local income tax purposes the income, if any, earned on funds in the Reserve Account.

(c) New Reserve Account. The Reserve Account Bank shall be an Eligible Institution. In the event the Reserve Account Bank ceases to be an Eligible Institution, the Borrower shall, within ten days after learning thereof, establish a new Reserve Account (and transfer any balance and investments then in the Reserve Account to such new Reserve Account) at another Eligible Institution, which new Reserve Account shall be subject to a replacement Reserve Account Control Agreement.

(d) Statements for Reserve Account. On a monthly basis, the Servicer shall cause the Reserve Account Bank to provide the Borrower, the Servicer and the Managing Agents with a written statement with respect to the preceding calendar month regarding the Reserve Account in a form customary for statements provided by the Reserve Account Bank for other accounts held by it, which statement shall include, at a minimum, the amount on deposit in the Reserve Account, and the dates and amounts of all deposits, withdrawals and investment earnings with respect to the Reserve Account.

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(e) Payments from Reserve Account.

(i) On the Business Day preceding the last day of each Interest Period and each Settlement Date, the Servicer will determine whether any Shortfall Amount will arise with respect to such Interest Period or Settlement Date and will give the Administrative Agent notice of the amount thereof by noon New York City time. By 1:00 p.m. New York City time on the Business Day prior to the last day of each Interest Period and each Settlement Date on which the amount of the Shortfall Amount is greater than zero, the Servicer shall notify the Reserve Account Bank requesting payment thereof. To the extent funds are available in the Reserve Account, the Servicer shall cause the Reserve Account Bank to pay the amount requested to the applicable Managing Agent’s Account, as specified by the Administrative Agent, by 1:00 p.m. New York City time on the last day of such Interest Period or on such Settlement Date.

(ii) On each Settlement Date prior to the Drawdown Termination Date on which the funds on deposit in the Reserve Account exceed the Required Reserve Account Amount (after giving effect to any payments pursuant to Section 2.8(e)(i)), the Servicer may withdraw and pay to the Borrower any such excess from the Reserve Account.

(iii) Except as set forth in Subclauses (i) and (ii) above, the Servicer shall not withdraw amounts from the Reserve Account.

(f) Payments to Reserve Account. On the date hereof, the Borrower shall remit to the Reserve Account immediately available funds so that the amount on deposit in the Reserve Account equals the Required Reserve Account Amount. Additional payments shall be deposited to the Reserve Account from time to time pursuant to Section 2.7(c)(iii)(D).

(g) Pledge. To secure the payment and performance of the Obligations, the Borrower hereby pledges and assigns to the Administrative Agent for the benefit of the Lenders, and hereby grants to the Administrative Agent for the benefit of the Lenders, a security interest in, all of the Borrower’s right, title and interest in and to the Reserve Account, including, without limitation, all funds on deposit therein, all investments arising out of such funds, all interest and any other income arising therefrom, all claims thereunder or in connection therewith, and all cash, instruments, securities, rights and other property at any time and from time to time received, receivable or otherwise distributed in respect of such account, such funds or such investments, and all money at any time in the possession or under the control of, or in transit to such account, or any bailee, nominee, agent or custodian of the Reserve Account Bank, and all proceeds and products of any of the foregoing. Except as provided in the preceding sentence, the Borrower may not assign, transfer or otherwise convey its rights under this Agreement to receive any amounts from the Reserve Account.

(h) Termination of Reserve Account. On the date following the Drawdown Termination Date on which all Obligations have been paid in full, all funds then on deposit in the Reserve Account shall be paid to the Borrower, and the Reserve Account shall be closed.

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2.9. Interest Allocations.

Each Managing Agent shall, from time to time and in its sole discretion, determine whether interest in respect of the Advances then outstanding and owing to the Lenders in the related Group, or any portion thereof, shall be calculated by reference to the Commercial Paper Rate (such portion of the Principal Debt being herein called a “CP Allocation”), the Eurodollar Rate or the Alternate Base Rate (such portion of the Principal Debt as shall be calculated based on the Alternate Base Rate or the Eurodollar Rate collectively, being herein called an “ABR Allocation”; provided, however, that each Advance made by a Bank hereunder shall be allocated to the ABR Allocation. Each Managing Agent shall provide the Borrower with reasonably prompt notice of the allocations made by it pursuant to this Section 2.9. In making its allocation decision pursuant to the foregoing sentence, each Managing Agent shall use reasonable efforts, taking into account market conditions, to accommodate the Borrower’s preferences; provided, however, that the Managing Agents shall have the ultimate authority to make all such decisions. Following designation by each Managing Agent of any Advance, or any portion thereof, as being a CP Allocation, the Borrower may, at all times that such designation remains in effect, consult with such Managing Agent as to the number and length of Interest Periods relating to such CP Allocation. In selecting such Interest Periods, each Managing Agent shall use reasonable efforts, taking into account market conditions, to accommodate the Borrower’s preferences; provided, however, that each Managing Agent shall have the ultimate authority to make all such selections.

2.10. Interest Rates.

Except where specifically otherwise provided, each CP Allocation shall bear interest for the related Interest Period at a rate per annum equal to the Commercial Paper Rate applicable to such Interest Period, and each ABR Allocation shall bear interest at either the Eurodollar Rate plus the Bank Spread, or the Alternate Base Rate; provided, however, that in no event shall the rate of interest with respect to any Advance or portion thereof exceed the Maximum Rate. Each change in the Alternate Base Rate and Maximum Rate, subject to the terms of this Agreement, will become effective, without notice to the Borrower or any other Person, upon the effective date of such change.

2.11. Quotation of Rates.

It is hereby acknowledged that an officer or other individual appropriately designated by an officer previously identified to a Managing Agent in a certificate of incumbency or other appropriately designated officer of the Borrower may call such Managing Agent from time to time in order to receive an indication of the rates then in effect, but such indicated rates shall neither be binding upon such Managing Agent nor the Lenders nor affect the rate of interest which thereafter is actually in effect.

2.12. Default Rate.

So long as any Event of Default exists, all Obligations shall bear interest at the Default Rate until paid, regardless of whether such payment is made before or after entry of a judgment.

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2.13. Interest Recapture.

If the designated rate applicable to any Borrowing exceeds the Maximum Rate, the rate of interest on such Borrowing shall be limited to the Maximum Rate, but any subsequent reductions in such designated rate shall not reduce the rate of interest thereon below the Maximum Rate until the total amount of interest accrued thereon equals the amount of interest that would have accrued thereon if such designated rate had at all times been in effect. If at maturity (stated or by acceleration), or at final payment of the Notes, the total amount of interest paid or accrued is less than the amount of interest that would have accrued if such designated rates had at all times been in effect, then, at such time and to the extent permitted by applicable Governmental Requirements, the Borrower shall pay an amount equal to the difference between (a) the lesser of the amount of interest that would have accrued if such designated rates had at all times been in effect and the amount of interest that would have accrued if the Maximum Rate had at all times been in effect, and (b) the amount of interest actually paid or accrued on the Notes.

2.14. Interest Calculations.

All computations of interest and any other fees hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day) elapsed; provided, however, that any calculations of interest based on the rate set forth in clause (i)(a) and (ii)(a) of the definition of Alternate Base Rate shall be made on the basis of a year of 365/366 days for the actual number of days (including the first day but excluding the last day) elapsed. All such determinations and calculations by the Administrative Agent and the Managing Agents shall be conclusive and binding absent manifest error.

2.15. Interest Period.

(a) “Interest Period” means with respect to any Advance included in the CP Allocation, each period (i) commencing on, and including, the date that such Advance was initially designated by the related Managing Agent as comprising a part of the CP Allocation hereunder, or the last day of the immediately preceding Interest Period for such Advance (whichever is latest); and (ii) ending on, but excluding, the date that falls such number of days (not to exceed 30 days) thereafter as such Managing Agent shall select; provided, however, that no more than ten Interest Periods (five per Issuer) shall be in effect at any one time with respect to Advances included in the CP Allocation.

(b) “Interest Period” means with respect to any Advance included in the ABR Allocation, a period of one month (provided that if such Interest Period begins on a date for which there is no corresponding date in the month in which such Interest Period is scheduled to end, the last day of such Interest Period shall be the last Business Day of the month in which such Interest Period is scheduled to end), which Advance shall be a Eurodollar Advance, unless:

(i) on or prior to the first day of such Interest Period the Lender with respect to such Advance shall have notified the Administrative Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for such Lender to fund such Advance at the Eurodollar Rate (and such Lender shall not have subsequently notified the Administrative Agent and Managing Agents that such circumstances no longer exist), or

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(ii) the Borrower shall have requested a Base Rate Advance or an Interest Period shorter than one month, or

(iii) the Administrative Agent and Managing Agents do not receive notice, by 12:00 noon (New York City time) on the third Business Day preceding the first day of such Interest Period, that the related Advance will not be funded by issuance of Commercial Paper Notes, or

(iv) the principal amount of such Advance is less than $500,000, or

(v) an Event of Default shall have occurred and be continuing, or

(vi) the Eurodollar Rate determined pursuant hereto does not accurately reflect the cost of funds to the Issuer or the Banks (as conclusively determined by the applicable Managing Agent) during such Interest Period, or

(vii) adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for the relevant Interest Period,

in which case (if any of the foregoing events occurs) such Advance shall be a Base Rate Advance.

(c) Notwithstanding any provision in this Agreement to the contrary, (x) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day (provided, however, if interest in respect of such Interest Period is computed by reference to the Eurodollar Rate, and such Interest Period would otherwise end on a day that is not a Business Day, and there is no subsequent Business Day in the same calendar month as such day, such Interest Period shall end on the immediately preceding Business Day); (y) any Interest Period that commences before the Drawdown Termination Date and would otherwise end after the Drawdown Termination Date shall end on the Drawdown Termination Date; and (z) the duration of each Interest Period that commences on or after the Drawdown Termination Date shall be of such duration as shall be selected by the applicable Managing Agents and communicated by notice to the Borrower.

2.16. Additional Costs.

(a) If any Regulatory Change occurring after the date hereof:

(i) shall subject an Affected Party to any tax, duty or other charge with respect to any Advance to or funded by it, or any obligations or right to make Advances hereunder or to provide funding therefor, or shall change the basis of taxation of payments to the Affected Party of any amounts in respect of a Lender’s principal or interest owed to or funded by it or any other amounts due under this Agreement in respect of any Advance funded by it or its obligations or rights, if any, to make Advances or to provide funding therefor (except for changes in the rate of tax on the overall net income

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of such Affected Party imposed by the United States of America, by the jurisdiction in which such Affected Party’s principal executive office is located and, if such Affected Party’s principal executive office is not in the United States of America, by the jurisdiction where such Affected Party’s principal office in the United States is located); or

(ii) shall impose, modify or deem applicable any reserve (other than reserve requirements referred to in Section 2.17), special deposit or similar requirement against assets of any Affected Party, deposits or obligations with or for the account of any Affected Party or with or for the account of any affiliate (or entity deemed by the Federal Reserve Board to be an affiliate) of any Affected Party, or credit extended by any Affected Party; or

(iii) shall change the amount of capital maintained or required or requested or directed to be maintained by any Affected Party; or

(iv) shall change the rates for, or the manner in which the Federal Deposit Insurance Corporation (or any successor thereto) assesses deposit insurance premiums or similar charges; or

(v) shall impose any other condition affecting any Advance funded by any Affected Party, or its obligations or rights, if any, to make Advances or to provide funding therefor;

and the result of any of the foregoing is or would be:

(x) to increase the cost to or impose a cost on (I) an Affected Party funding or making or maintaining any Advances or any liquidity loan to an Issuer or any commitment of such Affected Party with respect to any of the foregoing, or (II) the Administrative Agent for continuing its, or the Borrower’s, relationship with the Lenders,

(y) to reduce the amount of any sum received or receivable by an Affected Party under this Agreement or any Note, or under the Liquidity Agreement with respect thereto, or

(z) in the sole determination of such Affected Party, to reduce the rate of return on the capital of an Affected Party as a consequence of its obligations hereunder or arising in connection herewith to a level below that which such Affected Party could otherwise have achieved,

then within thirty days after demand by such Affected Party (which demand shall be accompanied by a statement setting forth the basis of such demand), the Borrower shall pay directly to such Affected Party such additional amount or amounts as will compensate such Affected Party for such additional or increased cost or such reduction.

(b) Each Affected Party will promptly notify the Borrower, the applicable Managing Agent and the Administrative Agent of any event of which it has knowledge that will entitle such Affected Party to compensation pursuant to this Section 2.16; provided, however, no failure to give or delay in giving such notification shall adversely affect the rights of any Affected Party to such compensation.

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(c) In determining any amount provided for or referred to in this Section 2.16, an Affected Party may use any averaging and attribution methods that it (in its sole discretion) shall deem applicable. Any Affected Party when making a claim under this Section 2.16 shall submit to the Borrower a statement as to such increased cost or reduced return (including calculation thereof), which Statement shall, in the absence of manifest error, be conclusive and binding upon the Borrower.

2.17. Additional Interest on Advances Bearing a Eurodollar Rate.

The Borrower shall pay to any Affected Party, so long as such Affected Party shall be required under regulations of the Federal Reserve Board to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency Liabilities, additional interest on the unpaid principal of each Advance or portion thereof made or funded (including fundings to an Issuer for the purpose of maintaining an Advance) by such Affected Party during each Interest Period in respect of which interest is computed by reference to the Eurodollar Rate, for such Interest Period, at a rate per annum equal at all times during such Interest Period to the remainder obtained by subtracting (i) the Eurodollar Rate for such Interest Period from (ii) the rate obtained by dividing such Eurodollar Rate referred to in clause (i) above by that percentage equal to 100% minus the Eurodollar Rate Reserve Percentage of such Affected Party for such Interest Period, payable on each date on which interest is payable on such Advance. Such additional interest shall be determined by such Affected Party and notice thereof given to the Borrower (with a copy to the Administrative Agent and the applicable Managing Agent) within 30 days after any interest payment is made with respect to which such additional interest is requested. A certificate as to such additional interest submitted to the Borrower, the Administrative Agent and the applicable Managing Agent by such Affected Party shall be conclusive and binding for all purposes, absent manifest error.

2.18. Consequential Loss.

The Borrower and the Servicer shall indemnify each Affected Party against, and shall pay to the Administrative Agent for such Affected Party within ten days after request therefor, any Consequential Loss of any Affected Party. When any Affected Party requests that the Borrower or the Servicer pay any Consequential Loss, it shall deliver to the Borrower, the Servicer, the Administrative Agent and the applicable Managing Agent a certificate setting forth the basis for imposing such Consequential Loss and the calculation of such amount thereof, which calculation shall be conclusive and binding absent manifest error.

2.19. Replacement Banks.

Upon the election of any Affected Party to request reimbursement by the Borrower for increased costs under Sections 2.16 or 2.17, the Borrower may, upon prior written notice to the Administrative Agent, the applicable Managing Agent and such Affected Party, seek a replacement Bank to whom such additional costs shall not apply (a “Replacement Bank”) and, upon the breach by a Bank (or, in the case of the Lloyds Group, Gresham) of its obligation

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hereunder to make an Advance, the Borrower may seek a Replacement Bank for such Bank. Any Replacement Bank shall be satisfactory to the applicable Managing Agent. Notwithstanding the foregoing, the Borrower may not seek a replacement for a Bank that is also a Managing Agent unless the related Issuer is also terminated as a party to this Agreement and all of its outstanding Advances are repaid in full. Each Affected Party agrees that, should it be identified for replacement pursuant to this Section 2.19, upon payment in full of all amounts due and owing to such Affected Party hereunder and under the other Transaction Documents, it will promptly execute and deliver all documents and instruments reasonably required by the Borrower to assign such Affected Party’s portion of the Advances to the applicable Replacement Bank. Any such replacement shall not relieve the Borrower of its obligation to reimburse the Affected Party for any such increased costs incurred through the date of such replacement.

ARTICLE III

COLLATERAL

3.1. Collateral. To secure the payment of the Obligations, the Borrower has executed and delivered to the Administrative Agent and the Collateral Agent, as applicable:

(a) the Security Agreement,

(b) the Collection Account Control Agreement,

(c) Reserve Account Control Agreement, and

(d) the UCC Financing Statements;

all as more fully provided for in the Collateral Agency Agreement. The Borrower further agrees to execute all documents and instruments, and perform all other acts deemed necessary by the Administrative Agent or any Managing Agent to create and perfect, and maintain the security interests and collateral assignments in favor of the Administrative Agent or the Collateral Agent for the benefit of the holders of the Obligations, as perfected first priority security interests. Any security interest or collateral assignments granted to the Administrative Agent or the Collateral Agent under any Transaction Document is for the benefit of the holders of the Obligations, whether or not reference is made to such holders.

3.2. Delivery of Collateral to Collateral Agent.

(a) Periodically, the Borrower may deliver Mortgage Loan Collateral to the Collateral Agent to hold as bailee for the Administrative Agent. Each delivery by the Borrower (i) shall be made in association with an Assignment (in the form attached as Exhibit D-4 to the Collateral Agency Agreement), or (ii) shall be in the form of an electronic transmission which shall include a schedule substantially in the form illustrated on Schedule I and Schedule II to Exhibit D-4 to the Collateral Agency Agreement and a specific code indicating that such electronic transmission is being delivered in connection with this Agreement. If the Borrower elects (ii) above, the Borrower shall be deemed to have made all of the representations, covenants and warranties set forth in the Assignment attached as Exhibit D-4 to the Collateral Agency Agreement contemporaneously with such electronic transmission.

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(b) Each Assignment delivered (or deemed to be delivered) to the Collateral Agent shall be accompanied by a completed Schedule I and Schedule II using the forms of such schedules as prescribed in the Collateral Agency Agreement and, with respect to each Mortgage Loan described in Schedule I to each Assignment, shall deliver or cause to be delivered the following items (collectively, the “Principal Mortgage Documents”):

(i) the original of each Mortgage Note, endorsed in blank (without recourse) and all intervening endorsements thereto;

(ii) in the case of each Mortgage Loan that is not a MERS Designated Mortgage Loan, an original executed assignment in blank for each Mortgage Note and the Mortgage securing such Mortgage Note, in recordable form executed by one of the Originators (and if the related Mortgage Loan is a MERS Designated Mortgage Loan, this document shall not be required to be delivered to the Collateral Agent); and

(iii) a certified copy of the executed Mortgage related to such Mortgage Note;

(c) The Servicer shall hold in trust for the Administrative Agent for the benefit of the holders of the Obligations, with respect to each Mortgage Loan included in the Collateral,

(i) the original filed Mortgage relating to such Mortgage Loan, provided, however, that, until an original Mortgage is received from the public official charged with its filing and recordation, a copy, certified by the closing agent to be a true and correct copy of the original sent to be filed and recorded, may be used by the Borrower to satisfy this requirement; however, the Borrower shall thereafter pursue, with reasonable diligence, receipt of the filed and recorded original Mortgage and, if received, shall deliver such original to the Servicer;

(ii) other than with respect to a HUD repossessed Property that is sold to a consumer, a mortgagee’s policy of title insurance (or binding unexpired commitment to issue such insurance if the policy has not yet been delivered to the Servicer) insuring the Borrower’s perfected, first-priority Lien created by the Mortgage securing such Mortgage Loan (subject to such title exceptions that conform to the related Take-Out Commitments) in a policy amount not less than the principal amount of such Mortgage Loan;

(iii) the original hazard insurance policy, appropriately endorsed to provide that all insurance proceeds will be paid to any of the Originators or any of the assigns of such Originator, referred to in Section 6.6(b) hereof which relate to such Mortgage Loan, or other evidence of insurance reasonably acceptable to the Administrative Agent;

(iv) the form of current appraisal of the Property described in the Mortgage, prepared by a state licensed appraiser, that complies with all applicable Governmental Requirements, including all Governmental Requirements that are applicable to the Lenders or any other Affected Party; provided, however, that no

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appraisal shall be required for Mortgage Loans (x) financing HUD repossessed Property that is sold to a consumer, financed with an FHA loan, fully insurable and in accordance with FHA guidelines, but for which an appraisal is not required, and (y) representing so called VA Rate Reduction or FHA Streamline refinances, insurable in accordance with VA and FHA guidelines, but for which an appraisal is not required ; and

(v) all other original documents (collectively, the “Other Mortgage Documents”).

Upon request of the Administrative Agent or any Managing Agent, the Borrower shall immediately deliver, or shall cause to be delivered, all such items to the Collateral Agent as bailee for the Administrative Agent or such other party as may be designated in such notice.

(d) Whenever a Mortgage Loan becomes subject to a Loan Specific Take-Out Commitment, Servicer shall reflect such Loan Specific Take-Out Commitment on the Hedge and Commitment Report next delivered by the Servicer, and the Borrower shall deliver to the Administrative Agent upon request by the Administrative Agent copies of the related master agreement or commitment with the related Approved Investor, with any confidential economic terms redacted (unless a copy of such agreement or commitment has been delivered previously).

(e) The Servicer shall provide the Collateral Agent and the Administrative Agent with full access to all Other Mortgage Documents held in trust for the Administrative Agent at all times.

(f) With respect to each Assignment that is received or deemed received by the Collateral Agent, the Collateral Agent shall review the schedules to such Assignment and make a written report to the Borrower and the Administrative Agent, all as more fully provided in the Collateral Agency Agreement.

3.3. Redemption of Mortgage Collateral.

(a) Generally. Subject to the limitations contained in this Section 3.3, in connection with a sale or other transfer contemplated by clause (a) or (b) or otherwise, and so long as no Default or Event of Default is continuing, the Borrower or the Servicer (on behalf of the Borrower) may request releases of the Administrative Agent’s security interest in all or any part of the Collateral (including releases from the Collection Account) at any time, and from time to time and such requests shall be automatically granted; provided that no such request shall be granted unless, in addition to the satisfaction of the other conditions contained in this Section 3.3,

(i) (immediately after giving effect to any requested release) the total Collateral Value of all Eligible Mortgage Collateral shall equal or exceed the Principal Debt, or

(ii) (A) the Borrower makes a principal payment on account of the Principal Debt in an amount, such that after giving effect to such payment or delivery, the total Collateral Value of all Eligible Mortgage Collateral will equal or exceed the Principal Debt, or (B) the Borrower delivers to the Collateral Agent as bailee for the Administrative Agent substitute Eligible Mortgage Collateral with a Collateral Value, such that after giving effect to such payment or delivery, the total Collateral Value of all Eligible Mortgage Collateral will equal or exceed the Principal Debt.

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Each request for a release of any portion of the Collateral shall be addressed to the Collateral Agent and shall be substantially in either the form illustrated in Exhibit D-5 to the Collateral Agency Agreement (or such other form as may be reasonably acceptable to or required by the Administrative Agent, from time to time), or the form of an electronic transmission which shall include a schedule substantially in the form illustrated on Schedule I to Exhibit D-5 to the Collateral Agency Agreement (or such other form as may be reasonably acceptable to or required by the Administrative Agent, from time to time) and a specific code indicating that such electronic transmission is being delivered in connection with this Agreement (a “Transfer Request”). Each request for a release of any portion of the Collateral from the Collection Account shall be addressed to the Administrative Agent and shall be substantially in the form illustrated in Exhibit D-11 to the Collateral Agency Agreement (or such other form as may be reasonably acceptable to or required by the Administrative Agent, from time to time) (a “Collection Account Release Notice”). Neither the Borrower nor the Servicer will request a release of any portion of the Collateral from the Collection Account in the amount of any payments (“Unidentified Payments”) that have been deposited into the Collection Account, to the extent that the Servicer has not identified the Mortgage Loan to which any such payment relates such that the Lenders’ security interest could be released. If the Borrower or the Servicer elects to deliver a Transfer Request by electronic transmission the Borrower or the Servicer shall be deemed to have made all of the representations, covenants and warranties set forth in the Transfer Request attached as Exhibit D-5 to the Collateral Agency Agreement contemporaneously with such electronic transmission.

(b) Redemption Pursuant to Sale. So long as no Default or Event of Default is continuing, the Borrower or the Servicer (on behalf of the Borrower) may from time to time submit a Shipping Request that would permit a sale of Mortgage Loan Collateral to, or the pooling of Mortgage Loan Collateral for, an Approved Investor, pursuant to a Take-Out Commitment. Upon the receipt by the Collateral Agent of a Shipping Request from the Borrower identifying Collateral to be delivered to an Approved Investor, and so long as no Default or Event of Default shall be in existence or would be caused thereby:

(i) The Collateral Agent shall deliver to the Approved Investor, or its loan servicing provider or custodian, under the Collateral Agent’s “Bailee and Security Agreement Letter” substantially in the form provided for in the Collateral Agency Agreement, as appropriate, the items of Mortgage Loan Collateral being sold that are held by the Collateral Agent as bailee for the Administrative Agent pursuant to Section 3.2 hereof, with the release of the security interest in favor of the Administrative Agent for the benefit of the holders of the Obligations in such items being conditioned upon timely payment to the Collection Account of the amount described in Section 3.3(b)(iii) or delivery of additional Eligible Mortgage Collateral;

(ii) The Servicer shall, as agent for the Administrative Agent, deliver to such Approved Investor, or such Approved Investor’s loan servicing provider or custodian, pursuant to procedures provided for in the Collateral Agency Agreement, the items held by the Servicer pursuant to Section 3.2(c) that are related to the Mortgage

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Loan Collateral to be transferred on the condition that such Approved Investor or its loan servicing provider or custodian shall hold or control such Other Mortgage Documents as bailee for the Administrative Agent (for the benefit of the holders of the Obligations) until the Approved Investor has either paid the full purchase price for such Mortgage Loan Collateral to the Collateral Agent, as required by the relevant Take-Out Commitment;

(iii) Within forty-five (45) days after the delivery by the Collateral Agent to such Approved Investor or its loan servicing provider or custodian of the items of Mortgage Loan Collateral described in Section 3.3(b)(i), the Borrower shall make a payment, or shall cause a payment to be made, to the Collection Account for distribution to the Administrative Agent for the account of the Lenders in an amount equal to at least the full purchase price for such Mortgage Loan Collateral; and

(iv) With respect to each Shipping Request that is received by the Collateral Agent by 10:00 a.m. (eastern time), or such later time as permitted by the Collateral Agent, on a Business Day, the Collateral Agent shall use due diligence and efforts to review such Shipping Request and prepare the Mortgage Loan files identified in each Shipping Request, for shipment prior to the close of business on such day; provided, however, that for each shipment of 100 or more Mortgage Loans, the Collateral Agent shall receive the Shipping Request by 10:00 a.m. (eastern time) or such later time as permitted by the Collateral Agent, on the Business Day prior to the shipment date.

(c) Transfers. So long as no Default or Event of Default is continuing, the Borrower shall, at any time, be permitted to transfer Mortgage Loans to either Originator by means of its daily electronic transmissions to the Collateral Agent, together with delivery of a Transfer Request delivered to the Collateral Agent, identifying each Mortgage Loan being transferred. The Collateral Agent’s sole responsibility with respect to any such transfers shall be to correctly reflect such transfers on its computer system and books and records and to indicate, on its Collateral Agent’s Daily Report on the next Business Day, that such transfers have been effected. However, neither the Borrower nor the Servicer on its behalf shall request transfers if (A) total Principal Debt will exceed the total Collateral Value of Eligible Mortgage Collateral immediately after giving effect to a requested transfer, or (B) the Collateral Agent shall have received written notice from the Administrative Agent that a Default or Event of Default has occurred.

(d) Continuation of Lien. Unless released in writing by the Administrative Agent as herein provided, the security interest in favor of the Administrative Agent for the benefit of the holders of the Obligations, in all Mortgage Loan Collateral transmitted pursuant to Section 3.3(b) shall continue in effect until such time as payment in full of the amount described in Section 3.3(b)(iii) shall have been received.

(e) Application of Proceeds; No Duty. Neither the Administrative Agent nor the Lenders shall be under any duty at any time to credit Borrower for any amount due from any Approved Investor in respect of any purchase of any Mortgage Collateral contemplated under Section 3.3(b) above, until such amount has actually been received in immediately available funds and deposited to the Collection Account. Neither the Collateral Agent, nor the Lenders,

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nor the Administrative Agent shall be under any duty at any time to collect any amounts or otherwise enforce any obligations due from any Approved Investor in respect of any such purchase.

(f) Mandatory Redemption of Mortgage Collateral. Notwithstanding any provision herein to the contrary, if at any time a Collateral Deficiency exists, the Borrower shall, as promptly as possible and in any event within one Business Day, make a payment to the Collection Account (or make payment directly to the Administrative Agent) or pledge, assign and deliver additional or substitute Eligible Mortgage Collateral to the Administrative Agent for the benefit of the holders of the Obligations, so that, immediately after giving effect to such payment or pledge and assignment, total Collateral Value of Eligible Mortgage Collateral shall be equal or greater than the Principal Debt.

(g) Representation in Connection with Releases, Sales and Transfers. The Borrower represents and warrants that each request for any release or transfer pursuant to Section 3.3(a) or Section 3.3(b) shall automatically constitute a representation and warranty to the effect that immediately before and after giving effect to such release or Transfer Request, the Collateral Value of Eligible Mortgage Collateral shall equal or exceed the Principal Debt.

(h) Limitation on Releases. Notwithstanding any provision to the contrary, the Servicer shall not request a release of any Collateral unless payment of the purchase price by the Approved Investor or any of the Originators shall have been made in immediately available funds to the Collection Account; provided, however, that the foregoing shall not apply if there is no Default or Event of Default, and, immediately before and after giving effect to such release (and any related substitutions), the total Collateral Value of Eligible Mortgage Collateral shall equal or exceed the Principal Debt.

3.4. Correction of Mortgage Notes. The Servicer may from time to time request, in writing, that the Collateral Agent deliver a Mortgage Note that constitutes Mortgage Loan Collateral so that such Mortgage Note may be replaced by a corrected Mortgage Note. Upon receipt by the Collateral Agent of such a request from the Servicer, and so long as no Default or Event of Default shall be in existence, the Collateral Agent shall deliver to the Servicer, under the Collateral Agent’s “Trust Receipt and Security Agreement Letter,” in the form provided for in the Collateral Agency Agreement, or such other form as may be approved by the Administrative Agent, the Mortgage Note to be corrected, such delivery to be conditioned upon the receipt within fourteen (14) calendar days by the Collateral Agent of a corrected Mortgage Note; provided, that

(i) at no time shall Mortgage Notes having an aggregate Collateral Value in excess of 3.5% of the Maximum Facility Amount (the Collateral Value assigned to each such Mortgage Notes shall be determined utilizing as the principal amount of such Mortgage Note the lesser of the uncorrected face value of such Mortgage Note and the correct face value of such Mortgage Note known to the Borrower or the Servicer; provided, however, that if correct face value of such Mortgage Note is not communicated or known to the Collateral Agent, the Collateral Agent may use the uncorrected face value of such Mortgage Note in determining the Collateral Value) be so delivered for replacement with corrected Mortgage Notes under the Collateral Agency Agreement;

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(ii) until such time as a corrected Mortgage Note shall have been delivered to the Collateral Agent, the Collateral Value attributed to each Mortgage Note delivered to the Servicer to be corrected in accordance with this Section 3.4 shall be the lesser of the uncorrected face value of such Mortgage Note and the corrected face value of such Mortgage Note known to the Borrower and communicated by the Borrower to the Collateral Agent; provided, however, that if correct face value of such Mortgage Note is not communicated or known to the Collateral Agent, the Collateral Agent may use the uncorrected face value of such Mortgage Note in determining the Collateral Value; and

(iii) notwithstanding the preceding clause (ii), unless the corrected Mortgage Note is endorsed in blank (without recourse) and re-delivered to the Collateral Agent within 14 calendar days of the delivery by the Collateral Agent of the Mortgage Note to be corrected, the Collateral Value attributed to both the Mortgage Note to be delivered and the corrected Mortgage Note shall be zero beginning on the 15^th calendar day; provided, however, that the Collateral Value attributable to the corrected Mortgage Note will be reinstated promptly upon the subsequent delivery thereof to the Collateral Agent.

3.5. Collateral Reporting. Pursuant to the Collateral Agency Agreement in no event later than 10:00 a.m. (eastern time) on each Business Day, the Collateral Agent shall furnish to the Borrower, the Servicer and each Managing Agent by facsimile (a hard copy of which shall not subsequently be mailed, sent or delivered to any Managing Agent, unless so requested by such Managing Agent) a duly completed Collateral Agent Daily Report in the form of Exhibit D-8 to the Collateral Agency Agreement.

3.6. Hedge and Commitment Reports. No later than 3:00 p.m. (eastern time), on the first Business Day of each week, and, if any changes would be reflected since the last Hedge and Commitment Report, on each other Business Day, the Servicer shall furnish the Borrower, the Collateral Agent and the Managing Agents a Hedge and Commitment Report, in the form of Exhibit D-13.

3.7. Investor Concentration Reporting. No later than 3:00 p.m. (eastern time) on the first Business Day of each week, the Servicer shall provide a written report, in the form of Exhibit L, to the Managing Agents demonstrating that the concentrations specified in Section 6.23 were not exceeded during the prior calendar week and confirming the ratings set forth on Schedule II.

3.8. Servicer Monthly Reporting. No later than 3:00 p.m. (eastern time) on the 4th Business Day of each month, the Servicer shall furnish the Borrower and the Managing Agents (by facsimile or electronic transmission (a hard copy of which shall not subsequently be mailed, sent or delivered to the Managing Agent, unless so requested by a Managing Agent) a report executed by a Financial Officer of the Servicer, in the form of Exhibit F hereto (“Servicer Monthly Report”) which shall provide as of the last day of the previous month (or of the date of such request) (i) a computation of the Default Ratio and Sixty-Day Default Ratio, (ii) an aging of Mortgage Loans owned by the Borrower that are financed by the Lenders and constitute Collateral hereunder, and (iii) the other information provided for therein.

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3.9. Servicer Weekly Report. No later than 3:00 p.m. (eastern time) the Servicer shall furnish to the Managing Agents and the Collateral Agent a report substantially in the form of Exhibit Q hereto, regarding Alt-A Loan compliance and Jumbo Loan compliance, including without duplication with the weekly reports set forth in Sections 3.6 and 3.7.

3.10. [Reserved].

ARTICLE IV

CONDITIONS PRECEDENT

4.1. Initial Borrowing. The making of any Advances hereunder shall not occur until the later of September 25, 2006, the “Initial Funding Date”, or satisfaction of the conditions precedent specified in Section 4.2 hereof and delivery to the Administrative Agent of the following (each of the following documents being duly executed and delivered and in form and substance satisfactory to the Managing Agents and the Administrative Agent, and, with the exception of the Notes and the UCC statement(s), each in a sufficient number of originals that each Managing Agent may have an executed original of each document):

(a) an executed counterpart of this Agreement;

(b) the Notes;

(c) the Collateral Agency Agreement, the Security Agreement, the Collection Account Control Agreement, the Reserve Account Control Agreement and such other Security Instruments as may be requested by the Administrative Agent;

(d) the Servicer Performance Guaranty, substantially in the form of Exhibit G-1 hereto and the Originator Performance Guaranty, substantially in the form of Exhibit G-2 hereto;

(e) the Repurchase Agreement;

(f) the Subordination Agreement;

(g) a certificate of the Secretary or Assistant Secretary of each of the Borrower, each Originator and the Performance Guarantor certifying as to (i) resolutions of each Borrower’s, each Originator’s and the Performance Guarantor’s board of directors or managers, as applicable, authorizing the execution, delivery, and performance by each of them of the Transaction Documents to which they are a party and identifying the officers or the members, as applicable, of the Borrower, the Originators and the Performance Guarantor who are authorized to sign such Transaction Documents, (ii) specimen signatures of the officers or the members, as applicable, so authorized, (iii) the certificate of incorporation or organization, and (iv) bylaws or the limited liability company agreement, as applicable;

(h) a favorable written opinion from counsel to the Borrower, the Originators and the Performance Guarantor on entity matters in a form acceptable to the Managing Agents;

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(i) a favorable written opinion from counsel to the Borrower and the Originators on security interest matters in a form acceptable to the Managing Agents;

(j) a favorable written opinion from counsel to the Originators as to true sale and non-consolidation matters in a form acceptable to the Managing Agents;

(k) a certificate from each of (i) the Secretary of State of the State of California, (ii) the Secretary of State of the State of Delaware and/or (iii) the Secretary of the State of Florida, and (iv) an officer or member, as applicable, of the Borrower, the Performance Guarantor and each of the Originators with respect to every state in which the Borrower, the Performance Guarantor or such Originator is organized or conducts business, as to the good standing of the Borrower, the Performance Guarantor and/or each of the Originators, as applicable, in each state or states for which each certificate is made;

(l) each Fee Letter;

(m) evidence of the payment of fees due at closing, as provided in each Fee Letter;

(n) a letter agreement between the Borrower and the Collateral Agent establishing fees for collateral agency, custodial and administrative services, and a mutually agreeable schedule for payment of such fees shall have been executed by the Borrower and the Collateral Agent and shall have been approved by the Administrative Agent;

(o) acknowledgment copies of proper Financing Statements (Form UCC1), filed on or prior to the date of the initial Advance, naming (i) each Originator as the Seller, the Borrower as the secured party/purchaser and the Administrative Agent as the assignee, and (ii) the Borrower as the debtor and the Administrative Agent on behalf of the holders of the Obligations as the secured party, or other, similar instruments or documents, as may be necessary or, in the opinion of the Administrative Agent, desirable under the UCC or any comparable law of all appropriate jurisdictions to perfect the ownership and security interests in the Collateral contemplated by the Repurchase Agreement and this Agreement;

(p) a search report provided in writing to the Administrative Agent by Bilzin Sumberg Baena Price & Axelrod, LLP, listing all effective financing statements that name the Borrower or any of the Originators as debtor and that are filed in the jurisdictions in which filings were made pursuant to subsection (o) above and in such other jurisdictions as the Administrative Agent shall request, together with copies of such financing statements (none of which shall cover any Mortgage Loans or interests therein or proceeds thereof);

(q) evidence of the initial deposit to the Reserve Account in the amount of 0.5% of the Maximum Facility Amount;

(r) such other documents as the Administrative Agent may reasonably request at any time at or prior to the Borrowing Date of the initial Borrowing hereunder;

(s) such other documents as any Managing Agent may request at any time at or prior to the Borrowing Date of the initial Borrowing hereunder; and

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(t) the Performance Guarantor Quarterly Certificate, substantially in the form of Exhibit H-3.

4.2. All Borrowings. Each Advance (including, without limitation, the initial Advance) pursuant to this Agreement is subject to the following further conditions precedent:

(a) (i) prior to 3:00 p.m. (eastern time) on two Business Days before the designated Borrowing Date, the Administrative Agent, each Managing Agent and the Collateral Agent shall have received a Borrowing Request (together with any related Assignment) duly executed and delivered by the Borrower; and (ii) the Administrative Agent and each Managing Agent shall have received on the proposed date of funding, a Collateral Agent Daily Report, pursuant to Section 3.8 of the Collateral Agency Agreement, verifying that after giving effect to the requested Advance, the Collateral Value of all Eligible Mortgage Collateral shall exceed the Principal Debt;

(b) all Collateral in which the Borrower has granted a security interest to the Administrative Agent for the benefit of the holders of the Obligations, with the exception of Special Mortgage Loans pursuant to Section 2.3(c), shall have been physically delivered to the possession of the Collateral Agent, to the extent that such possession is necessary or appropriate for the purpose of creating a first priority perfected Lien of the Administrative Agent for the benefit of the holders of the Obligations in such Collateral;

(c) the representations and warranties of the Borrower, the Originators and (so long as the Servicer and one of the Originators is the same entity) the Servicer contained in this Agreement, any Assignment or Borrowing Request, or any Security Instrument or other Transaction Document (other than those representations and warranties that, by their express terms, are limited to the effective date of the document or agreement in which they are initially made) shall be true and correct in all respects on and as of the date of such Advance;

(d) no Default or Event of Default or Servicer Default shall have occurred and be continuing, or would result from such Advance, and no change or event that constitutes a Material Adverse Effect shall have occurred and be continuing as of the date of such Advance;

(e) the Collection Account shall be established and in existence and free from any Lien other than pursuant to the Collection Account Control Agreement;

(f) delivery of a sufficient number of originals such that the Administrative Agent may have an executed original thereof, of such other documents, including such other documents as may be necessary or desirable to perfect or maintain the priority of any Lien granted or intended to be granted hereunder, as any Managing Agent may request; and

(g) the Drawdown Termination Date shall not have occurred; and

(h) the most recently due Performance Guarantor Quarterly Certificate, substantially in the form of Exhibit H-3, shall have been delivered previously to the Managing Agents.

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Each Borrowing Request shall be automatically deemed to constitute a representation and warranty by the Borrower on the Borrowing Date set forth therein to the effect that all of the conditions of this Section 4.2 are satisfied as of such Borrowing Date; provided that it is understood and agreed that only the Managing Agents can determine whether conditions are “satisfactory” to the Managing Agents.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

5.1. Representations of the Borrower and the Servicer. The Borrower and the Servicer each represents and warrants, as to itself, as follows:

(a) Organization and Good Standing. It (i) is a limited liability company duly organized and existing in good standing under the laws of the jurisdiction of its organization, (ii) is duly qualified to do business and in good standing in all jurisdictions in which its failure to be so qualified could have a Material Adverse Effect, (iii) has the requisite entity power and authority to own its properties and assets and to transact the business in which it is engaged and is or will be qualified in those states wherein it proposes to transact business in the future and (iv) is in compliance with all Requirements of Law. Universal American Mortgage Company, LLC is organized in Florida and in no other jurisdiction, and Universal American Mortgage Company of California is incorporated in California and in no other jurisdiction. The Borrower is organized in Delaware and in no other jurisdiction.

(b) Authorization and Power. It has the requisite entity power and authority to execute, deliver and perform this Agreement and the other Transaction Documents to which it is a party; it is duly authorized to and has taken all requisite entity action necessary to authorize it to, execute, deliver and perform this Agreement and the other Transaction Documents to which it is a party and is and will continue to be duly authorized to perform this Agreement and such other Transaction Documents.

(c) No Conflicts or Consents. Neither the execution and delivery by it of this Agreement or the other Transaction Documents to which it is a party, nor the consummation of any of the transactions herein or therein contemplated, nor compliance with the terms and provisions hereof or with the terms and provisions thereof, will (i) contravene or conflict with any Requirement of Law to which it is subject, or any indenture, mortgage, deed of trust, or other agreement or instrument to which it is a party or by which it may be bound, or to which its Property may be subject, or (ii) result in the creation or imposition of any Lien, other than the Liens of the Security Instruments, on the Property of the Borrower.

(d) Enforceable Obligations. This Agreement and the other Transaction Documents to which it is a party have been duly and validly executed by it and are its legal, valid and binding obligations, enforceable in accordance with their respective terms, except as limited by Debtor Laws.

(e) Full Disclosure. There is no fact known to it that it has not disclosed to the Managing Agents that could have a Material Adverse Effect. Neither its financial statements

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nor any Borrowing Request, officer’s certificate or statement delivered by it to the Managing Agents in connection with this Agreement, contains or will contain any untrue or inaccurate statement of material fact or omits or will omit to state a material fact necessary to make such information not misleading.

(f) No Default. It is not in default under any loan agreement, mortgage, security agreement or other agreement or obligation to which it is a party or by which any of its Property is bound, if such default would also be a Default or an Event of Default (or, with notice or passage of time would become a Default or Event of Default) under either of subparagraphs (e) or (i) of Section 8.1 of this Agreement.

(g) Litigation.

(i) Except as set forth on Schedule III, there are no actions, suits or proceedings, including arbitrations and administrative actions, at law or in equity, either by or before any Governmental Authority, now pending or, to its knowledge, threatened by or against it or any of its Subsidiaries, and pertaining to any Governmental Requirement affecting its Property or rights or any of its Subsidiaries.

(ii) Neither it nor any of its Subsidiaries is in default with respect to any Governmental Requirements.

(iii) The Servicer is not liable on any judgment, order or decree (or any series of judgments, orders, or decrees) that could reasonably be expected to have a Material Adverse Effect and that has not been paid, stayed or dismissed within 30 days and the Borrower is not liable on any judgment, order or decree (or any series of judgments, orders, or decrees).

(h) Taxes. All tax returns required to be filed by it in any jurisdiction have been filed, except where extensions of time to make those filings have been granted by the appropriate taxing authorities and the extensions have not expired, and all taxes, assessments, fees and other governmental charges upon it or upon any of its properties, income or franchises have been paid prior to the time that such taxes could give rise to a Lien thereon, unless protested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been established on its books. There is no proposed tax assessment against it that would have a Material Adverse Effect.

(i) Indebtedness. If the Servicer is one of the Originators, the Servicer is in compliance with the maximum leverage test set forth in Section 7.10.

(j) Permits, Patents, Trademarks, Etc.

(i) It has all permits and licenses necessary for the operation of its business.

(ii) It owns or possesses (or is licensed or otherwise has the necessary right to use) all patents, trademarks, service marks, trade names and copyrights, technology, know-how and processes, and all rights with respect to the foregoing, which

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are necessary for the operation of its business, without any conflict with the rights of others. The consummation of the transactions contemplated hereby will not alter or impair any of such rights of it.

(k) Status Under Certain Federal Statutes. It is not (i) a “holding company”, or a “subsidiary company” of a “holding company” or an “affiliate” of a “holding company,” or of a “subsidiary company” of a “holding company,” as such terms are defined in the Public Utility Holding Company Act of 1935, as amended, (ii) a “public utility,” as such term is defined in the Federal Power Act, as amended, (iii) an “investment company,” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended, or (iv) a “rail carrier,” or a “person controlled by or affiliated with a rail carrier,” within the meaning of Title 49, U.S.C., and it is not a “carrier” to which 49 U.S.C. § 11301(b)(1) is applicable.

(l) Securities Acts. It has not issued any unregistered securities in violation of the registration requirements of the Securities Act of 1933, as amended, or of any other Requirement of Law, and is not violating any rule, regulation, or requirement under the Securities Act of 1933, as amended, or the Securities and Exchange Act of 1934, as amended. The Borrower is not required to qualify an indenture under the Trust Indenture Act of 1939, as amended, in connection with its execution and delivery of the Notes.

(m) No Approvals Required. Other than consents and approvals previously obtained and actions previously taken, neither the execution and delivery of this Agreement and the other Transaction Documents to which it is a party, nor the consummation of any of the transactions contemplated hereby or thereby requires the consent or approval of, the giving of notice to, or the registration, recording or filing by it of any document with, or the taking of any other action in respect of, any Governmental Authority that has jurisdiction over it or any of its Property.

(n) Environmental Matters. There have been no past, and there are no pending or threatened, claims, complaints, notices, or governmental inquiries against it regarding any alleged violation of, or potential liability under, any environmental laws that could be expected to have a Material Adverse Effect. It and its properties are in compliance in all respects with all environmental laws and related licenses and permits. No conditions exist at, on or under any Property now or previously owned or leased by it that could give rise to liability under any environmental law that could be expected to have a Material Adverse Effect.

(o) Eligibility. The Servicer and each Originator are approved and qualified and in good standing as a lender or seller/servicer, as follows:

(i) The Servicer and each Originator is a Fannie Mae approved seller/servicer (in good standing) of Mortgage Loans, eligible to originate, purchase, hold, sell and, with respect to the Servicer, service Mortgage Loans to be sold to Fannie Mae.

(ii) The Servicer and each Originator is a Freddie Mac approved seller/servicer (in good standing) of Mortgage Loans, eligible to originate, purchase, hold, sell and, with respect to the Servicer, service Mortgage Loans to be sold to Freddie Mac.

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(iii) Each of the Servicer and each Originator are each an approved FHA servicer, VA servicer and Ginnie Mae issuer (in good standing) of mortgage loans, eligible to originate, purchase, hold, sell and service mortgage loans to be pooled into Ginnie Mae MBS Pools and to issue Ginnie Mae MBS.

5.2. Additional Representations of the Borrower. The Borrower further represents and warrants as follows:

(a) Activities. The Borrower was formed on May 21, 2003, and the Borrower did not engage in any business activities prior to the date of this Agreement. The Borrower will limit its activities to those specified in the Charter, and the Borrower has no Subsidiaries.

(b) Solvency. Both prior to and after giving effect to each Borrowing, (i) the fair value of the property of the Borrower is greater than the total amount of liabilities, including contingent liabilities, of the Borrower, (ii) the present fair salable value of the assets of the Borrower is not less than the amount that will be required to pay all probable liabilities of the Borrower on its debts as they become absolute and matured, (iii) the Borrower does not intend to, and does not believe that it will, incur debts or liabilities beyond the Borrower’s abilities to pay such debts and liabilities as they mature and (iv) the Borrower is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which the Borrower’s property would constitute unreasonably small capital.

(c) Purchase of Mortgage Loans. With respect to each Mortgage Loan, the Borrower purchased such Mortgage Loan from one of the Originators for cash (in accordance with the provisions of the Repurchase Agreement), substitution of other Mortgage Loans, the Deferred Purchase Price (as such term is defined in the Repurchase Agreement), or a combination thereof in an amount that constitutes fair consideration and reasonably equivalent value. Each such sale referred to in the preceding sentence shall not have been made for or on account of an antecedent debt owed by one of the Originators to the Borrower and no such sale is or may be voidable or subject to avoidance under any section of the Federal Bankruptcy Code.

(d) Priority of Debts and Liens. The Borrower has incurred no Indebtedness except as expressly incurred hereunder and under the other Transaction Documents. Upon delivery of an Assignment to the Collateral Agent, the Administrative Agent will have a valid, enforceable, perfected and first-priority Lien, for the benefit of the holders of the Obligations, in all Mortgage Loan Collateral described in or delivered with such Assignment. Upon delivery of funds for deposit in the Collection Account to the Collateral Agent, the Administrative Agent will have a valid, enforceable, perfected and first-priority Lien for the benefit of the holders of the Obligations, on the Collection Account and related Collateral.

(e) No Liens. The Borrower has (or, as to all Mortgage Loan Collateral delivered to the Collateral Agent after the date of this Agreement, will have) good and indefeasible title to all Collateral, and the Mortgage Loan Collateral and all proceeds thereof are (or, as to all Mortgage Loan Collateral delivered to the Collateral Agent after the date of this

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Agreement, will be) free and clear of all Liens and other adverse claims of any nature, other than (i) the right of the related Originator to repurchase such Mortgage Loan Collateral pursuant to the terms of the Repurchase Agreement and/or (ii) Liens in the Mortgage Loan Collateral or proceeds in favor of the Administrative Agent for the benefit of the holders of the Obligations.

(f) Financial Condition. The balance sheet of the Borrower as of May 31, 2006, a copy of which has been furnished to the Managing Agents, fairly presents the financial condition of the Borrower as at such date, in accordance with GAAP, and since such date, there has been no material adverse change in the business, operations, property or financial or other condition of the Borrower.

(g) Principal Office, Etc. The principal office, chief executive office and principal place of business of (i) Universal American Mortgage Company, LLC is at 311 Park Place Boulevard, Suite 500, Clearwater, Florida 33759, (ii) Universal American Mortgage Company of California is at 391 N. Main Street, Suite 200, Corona, California 92880 and (iii) the Borrower is at 311 Park Place Boulevard, Suite 500, Clearwater, Florida 33759.

(h) Ownership. Universal American Mortgage Company, LLC is the owner of one hundred percent (100%) of the membership interests in the Borrower.

(i) UCC Financing Statements. Except as set forth on Schedule III, no effective financing statement or other instrument similar in effect covering any Mortgage Loan, any interest therein, or the related Collateral with respect thereto is on file in any recording office except such as may be filed (x) in favor of the Originators or the Borrower in accordance with the Mortgage Loans, (y) in favor of the Borrower in connection with the Repurchase Agreement, or (z) in favor of the Administrative Agent or the holders of the Obligations in accordance with this Agreement or in connection with a Lien arising solely as the result of any action taken by the Lenders (or any assignee thereof) or by the Administrative Agent.

(j) Trade Names. The Borrower is not known by and does not use any trade name or doing-business-as name.

(k) Origination of Mortgage Loans.

(i) Each Mortgage Loan was originated in compliance with local, state and federal law applicable thereto at the time of origination, including, without limitation, required disclosures of points, charges and fees.

(ii) Each Mortgage Loan was originated using credit policies in effect at the time of such origination, which were designated to provide guidelines in underwriting the creditworthiness of the Obligors and to determine the Obligors’ ability to repay the debt. In accordance with such policies, each of the Originators considered, among other things, the credit history of the Obligor and other credit indicators such as income verification and/or debt-to-income ratios of the Obligor. No Mortgage Loan was originated based solely on an estimation of the value of the mortgaged property without any consideration of the potential ability of the Obligor to repay the amount owed under the Mortgage Loan.

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(iii) No Mortgage Loan violates any of the provisions of the Home Ownership and Equity Protection Act of 1994 (15 U.S.C. § 1602(aa)) or Regulation Z (12 C.F.R. 226.32).

(iv) No Obligor was required to purchase any credit life, disability, accident or health insurance product as a condition of obtaining the Mortgage Loan. No Obligor obtained a prepaid single-premium credit life, disability, accident or health policy in connection with the origination of the Mortgage Loan.

5.3. Additional Representations and Warranties of the Servicer. The Servicer represents and warrants as follows:

(a) Financial Condition.

(i) The Servicer has delivered to the Administrative Agent (x) copies of the balance sheets of the Servicer (and its Subsidiaries, on a consolidated basis), as of May 31, 2006, and the related statements of income, stockholder’s equity and cash flows for the year ended on such date, audited by independent certified accountants of recognized national standing and (y) copies of the balance sheets of the Servicer (and its Subsidiaries, on a consolidated basis), as of May 31, 2006, and the related statements of income for the nine months ended on such date, audited by independent certified accountants of recognized national standing (“Interim Statements”); and all such financial statements fairly present the financial condition of the Servicer as of their respective dates, subject, in the case of the Interim Statements, to normal year end adjustments and the results of operations of the Servicer for the periods ended on such dates and have been prepared in accordance with GAAP.

(ii) As of the date thereof, there are no obligations, liabilities or Indebtedness (including contingent and indirect liabilities and obligations or unusual forward or long-term commitments) of the Servicer that are required to be reflected in the foregoing financial statements in accordance with GAAP and that are not reflected therein.

(iii) No change that constitutes a Material Adverse Effect has occurred in the financial condition or business of the Servicer or either of their subsidiaries, since May 31, 2006.

(b) Employee Benefit Plans. (i) No Employee Plan of the Servicer or any ERISA Affiliate has incurred an “accumulated funding deficiency” (as defined in Section 302 of ERISA or Section 412 of the Code), (ii) neither the Servicer nor any ERISA Affiliate has incurred liability under ERISA to the PBGC, (iii) neither the Servicer nor any ERISA Affiliate has partially or fully withdrawn from participation in a Multiemployer Plan, (iv) no Employee Plan of the Servicer or any ERISA Affiliate has been the subject of involuntary termination proceedings, (v) neither the Servicer nor any ERISA Affiliate has engaged in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code), and (vi) no “reportable event” (as defined in Section 4043 of ERISA) has occurred in connection with any Employee Plan of the Servicer or any ERISA Affiliate other than events for which the notice requirement is waived under applicable PBGC regulations.

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(c) Ownership. On the date of this Agreement, the Performance Guarantor has beneficial ownership of 100% of the issued and outstanding shares of each class of the stock of or 100% of the membership interests in the Servicer and each Originator, as applicable.

5.4. Survival of Representations. All representations and warranties by the Borrower and the Servicer herein shall survive delivery of the Notes and the making of the Advances, and any investigation at any time made by or on behalf of the Administrative Agent or the Lenders shall not diminish the right of the Administrative Agent, the Managing Agents or the Lenders to rely thereon.

ARTICLE VI

AFFIRMATIVE COVENANTS

The Borrower and the Servicer shall each at all times comply with the covenants applicable to it contained in this Article VI, from the date hereof until the later of the Drawdown Termination Date and the date all of the Obligations are paid in full.

6.1. Financial Statements and Reports. The Servicer, for so long as the Servicer is one of the Originators, and thereafter the Borrower, shall furnish to the Managing Agents the following, all in form and detail satisfactory to each Managing Agent:

(a) promptly after becoming available, and in any event within 120 days after the close of each fiscal year of each of the Servicer, audited balance sheets of the Servicer (and its Subsidiaries, including the Borrower) on a consolidated and consolidating basis as of the end of such fiscal year, and the related statements of income, stockholder’s equity and cash flows of the Servicer for such year accompanied by (i) the related report of independent certified public accountants acceptable to the Managing Agents, which report shall be to the effect that such statements have been prepared in accordance with GAAP applied on a basis consistent with prior periods except for such changes in such principles with which the independent public accountants shall have concurred and (ii) if issued, the auditor’s letter or report to management customarily given in connection with such audit;

(b) promptly after becoming available, and in any event within 60 days after the end of each fiscal quarter, excluding the fourth fiscal quarter, of each fiscal year of the Servicer, a balance sheet and statements of income of the Servicer (and its Subsidiaries including the Borrower), on a consolidated and consolidating basis, for such fiscal quarter and the period from the first day of the then current fiscal year of the Servicer through the end of such fiscal quarter, certified by a Financial Officer of the Servicer, to have been prepared in accordance with GAAP applied on a basis consistent with prior periods, subject to normal year-end adjustments;

(c) promptly upon receipt thereof, a copy of each other report submitted to each of the Servicer, the Originators and the Performance Guarantor by independent accountants in connection with any annual, interim or special audit of the books of such Person;

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(d) promptly and in any event within twenty (20) days after the request of the Administrative Agent at any time and from time to time, a certificate, executed by the Financial Officer of the Servicer and the Originators, setting forth all of such Person’s warehouse borrowings and a description of the collateral related thereto;

(e) promptly and in any event within 60 days after the end of each of the first three (3) quarters in each fiscal year of the Borrower, and within 120 days after the close of the Borrower’s fiscal year, completed officer’s certificates in the form of Exhibit H-1 and H-2 hereto, executed by the Financial Officer of the Servicer and the Borrower, respectively;

(f) promptly and in any event within 60 days after the end of each quarter (90 days in the case of the fourth quarter), a management report regarding the Originators’ Mortgage Loan production for the prior quarter and year-to-date, in form and sufficient detail reasonably acceptable to the Administrative Agent;

(g) promptly after the filing or receiving thereof, copies of all reports and notices with respect to any “reportable event” defined in Article IV of ERISA that the Borrower, the any of the Originators or the Servicer files under ERISA with the Internal Revenue Service, the PBGC or the U.S. Department of Labor receives from the PBGC;

(h) immediately after becoming aware of the expiration, forfeiture, termination, or cancellation of, or default under, any Take-Out Commitment relating to any Collateral, telephone notice thereof confirmed in writing within one Business Day, together with a statement as to what action the Borrower proposes to take with respect thereto;

(i) [Reserved];

(j) [Reserved];

(k) promptly after the Borrower obtains knowledge thereof, notice of any “Event of Default” or “Facility Termination Date” under the Repurchase Agreement;

(l) promptly after receipt thereof, copies of all notices received by the Borrower from any of the Originators under the Repurchase Agreement;

(m) promptly after the Servicer obtains knowledge thereof, notice of any Servicer Default or of any condition or event that, with the giving of notice or lapse of time or both and unless cured or waived, would constitute a Servicer Default;

(n) such other information concerning the business, properties or financial condition of the Borrower or any of the Originators as the Administrative Agent or any Managing Agent may request; and

(o) upon request by the Administrative Agent, or if there is an Event of Default, copies of all Take-Out Commitments (if the Take-Out Commitment is made on a confirmation or supplement to a master agreement and the master agreement has been previously delivered to the Administrative Agent, only the confirmation or supplement is required to be delivered pursuant to this clause).

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6.2. Taxes and Other Liens. The Borrower shall pay and discharge promptly all taxes, assessments and governmental charges or levies imposed upon it or upon its income or upon any of its Property as well as all claims of any kind (including claims for labor, materials, supplies and rent) that, if unpaid, might become a Lien upon any or all of its Property; provided, however, the Borrower shall not be required to pay any such tax, assessment, charge, levy or claim if the amount, applicability or validity thereof shall currently be contested in good faith by appropriate proceedings diligently conducted by it or on its behalf and if it shall have set up reserves therefor adequate under GAAP.

6.3. Maintenance. The Borrower shall (i) maintain its entity existence, rights and franchises and (ii) observe and comply with all Governmental Requirements. The Servicer shall maintain its entity existence. The Borrower shall maintain its Properties (and any Properties leased by or consigned to it or held under title retention or conditional sales contracts) in good and workable condition at all times and make all repairs, replacements, additions, betterments and improvements to its Properties as are needful and proper so that the business carried on in connection therewith may be conducted properly and efficiently at all times.

6.4. Further Assurances. The Borrower and the Servicer shall, each within three (3) Business Days (or, in the case of Mortgage Notes, such longer period as provided under Section 3.4 of this Agreement) after the request of the Administrative Agent, cure any defects in the execution and delivery of the Notes, this Agreement or any other Transaction Document. The Borrower and the Servicer shall, each at its expense, promptly execute and deliver to the Administrative Agent, upon the Administrative Agent’s request, all such other and further documents, agreements and instruments in compliance with or accomplishment of the covenants and agreements of the Borrower and the Servicer, respectively, in this Agreement and in the other Transaction Documents or to further evidence and more fully describe the collateral intended as security for the Notes, or to correct any omissions in this Agreement or the other Transaction Documents, or more fully to state the security for the obligations set out herein or in any of the other Transaction Documents, or to perfect, protect or preserve any Liens created (or intended to be created) pursuant to any of the other Transaction Documents, or to make any recordings, to file any notices, or obtain any consents.

6.5. Compliance with Laws. The Servicer shall comply with all applicable laws, rules, regulations and orders in connection with servicing the Mortgage Assets.

6.6. Insurance.

(a) The Borrower and the Servicer shall each maintain with financially sound and reputable insurers, insurance with respect to its Properties and business against such liabilities, casualties, risks and contingencies and in such types and amounts as is customary in the case of Persons engaged in the same or similar businesses and similarly situated, including, without limitation, a fidelity bond or bonds in form and with coverage and with a company satisfactory to the Administrative Agent and with respect to such individuals or groups of individuals as the Administrative Agent may designate. Upon request of the Administrative Agent or a Managing Agent, the Borrower and the Servicer shall each furnish or cause to be furnished to the Administrative Agent and any requesting Managing Agent from time to time a summary of the insurance coverage of the Borrower and the Servicer, respectively, in form and

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substance satisfactory to the Administrative Agent or requesting Managing Agent and if requested shall furnish the Administrative Agent or requesting Managing Agent with copies of the applicable policies.

(b) With respect to Mortgages comprising the Collateral (i) the Servicer, for as long as the Servicer is one of the Originators, and thereafter the Borrower, shall cause the improvements on the land covered by each Mortgage to be kept continuously insured at all times by responsible insurance companies against fire and extended coverage hazards under policies, binders, letters, or certificates of insurance, with a standard mortgagee clause in favor of the original mortgagee and its successors and assigns or, in the case of a MERS Designated Mortgage Loan, the beneficial owner of such mortgage loan, and (ii) the Servicer, for so long as the Servicer is one of the Originators, and thereafter the Borrower, shall cause each such policy to be in an amount equal to the lesser of the maximum insurable value of the improvements or the original principal amount of the Mortgage, without reduction by reason of any co-insurance, reduced rate contribution, or similar clause of the policies or binders.

6.7. Accounts and Records. The Borrower and, so long as the Servicer and one of the Originators are the same entity, the Servicer shall each keep books of record and account in which full, true and correct entries will be made of all dealings or transactions in relation to its business and activities, in accordance with GAAP. The Borrower and the Servicer shall each maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate all records pertaining to the performance of the Borrower’s obligations under the Take-Out Commitments and other agreements made with reference to any Mortgage Loans in the event of the destruction of the originals of such records) and keep and maintain all documents, books, records, computer tapes and other information necessary or advisable for the performance by the Borrower of its Obligations. The Borrower shall not enter the “loan servicing” business.

6.8. Right of Inspection; Audit. The Borrower, the Originators and, so long as the Servicer and one of the Originators are the same entity, the Servicer shall each

(a) permit any officer, employee or agent of the Administrative Agent or any Managing Agent (including an independent certified public accountant) to visit and inspect any of its Properties, examine its books, records, accounts, documents (including without limitation computer tapes and disks), telecopies and extracts from the foregoing, and discuss its affairs, finances and accounts with its officers, accountants, and auditors, all at such times and as often as the Administrative Agent may desire, but no more than once each calendar year unless a Default or an Event of Default has occurred or is continuing, and

(b) in conjunction with its annual audit by its independent certified public accountant, at its sole cost and expense, will ensure such independent certified public accountant, as part of its audit, will test the applicable systems pertaining to the origination, purchase and sale, and collection of Mortgage Loans, in accordance with the applicable testing guidelines published by HUD and the Servicer shall deliver to the Administrative Agent a copy of such audit report prepared by such independent certified public accountant; provided, however, that to the extent that HUD ceases to publish any such testing guidelines, the Administrative Agent and the Managing Agents shall agree upon the testing guidelines to be used based upon then existing industry guidelines.

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The Borrower agrees to pay the reasonable costs of reviews and inspections performed pursuant to this Section 6.8.

6.9. Notice of Certain Events. The Borrower and, so long as the Servicer and one of the Originators are the same entity (other than with respect to clause (g) hereof), the Servicer shall each promptly notify the Managing Agents upon (a) the receipt of any notice from, or the taking of any other action by, the holder of any of its promissory notes, debentures or other evidences of Indebtedness with respect to a claimed default, together with a detailed statement by a responsible officer of the Borrower or the Servicer, as the case may be, specifying the notice given or other action taken by such holder and the nature of the claimed default and what action the Borrower or the Servicer is taking or proposes to take with respect thereto, but only if such alleged default or event of default (if it were true) would also be a Default or Event of Default under this Agreement; (b) the commencement of, or any determination in, any legal, judicial or regulatory proceedings that, if adversely determined, could also be a Default or Event of Default under this Agreement; (c) any dispute between the Borrower or the Servicer, as the case may be, and any Governmental Authority or any other Person that, if adversely determined, could reasonably be expected to have a Material Adverse Effect; (d) any change in the business, operations prospects or financial conditions of the Servicer, including, without limitation, the Servicer’s insolvency, that could reasonably be expected to have a Material Adverse Effect, or any adverse change in the business, operations prospects or financial condition of the Borrower, including, without limitation, the Borrower’s insolvency; (e) any event or condition known to it that, if adversely determined, could reasonably be expected to have a Material Adverse Effect; (f) the receipt of any notice from, or the taking of any other action by any Approved Investor indicating an intent not to honor, or claiming a default under a Take-Out Commitment, together with a detailed statement by a responsible officer of the Borrower specifying the notice given or other action taken by such Approved Investor and the nature of the claimed default and what action the Borrower is taking or proposes to take with respect thereto; (g) the receipt of any notice from, and or the taking of any action by any Governmental Authority indicating an intent to cancel the Borrower’s or the Servicer’s right to be either a seller or servicer of such Governmental Authority’s insured or guaranteed Mortgage Loans; and (h) the receipt of any notice of any final judgment or order for payment of money applicable to the Servicer that could reasonably be expected to have a Material Adverse Effect, or the receipt of any notice of any final judgment or order for payment of money applicable to the Borrower.

6.10. Performance of Certain Obligations. The Borrower and, so long as the Servicer and one of the Originators are the same entity, the Servicer shall each perform and observe each of the provisions of each Mortgage Loan and Take-Out Commitment on its part to be performed or observed and will cause all things to be done that are necessary to have each Mortgage Loan covered by a Take-Out Commitment comply with the requirements of such Take-Out Commitment.

6.11. Use of Proceeds; Margin Stock. The proceeds of the Advances shall be used by the Borrower solely for the acquisition of Mortgage Loans under the Repurchase Agreement. None of such proceeds shall be used for the purpose of purchasing or carrying any “margin

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stock” as defined in Regulation U, or for the purpose of reducing or retiring any Indebtedness that was originally incurred to purchase or carry margin stock or for any other purpose that might constitute this transaction a “purpose credit” within the meaning of such Regulation U. Neither the Borrower nor any Person acting on behalf of the Borrower shall take any action in violation of Regulations U or X or shall violate Section 7 of the Securities Exchange Act of 1934, as amended, or any rule or regulation thereunder, in each case as now in effect or as the same may hereafter be in effect.

6.12. Notice of Default. The Borrower shall furnish to the Managing Agents promptly, but in any event within one (1) Business Day, of becoming aware of the existence of any Default or Event of Default, a written notice specifying the nature and period of existence thereof and the action that the Borrower is taking or proposes to take with respect thereto.

6.13. Compliance with Transaction Documents. The Borrower and, so long as the Servicer and one of the Originators are the same entity, the Servicer shall each promptly comply with any and all covenants and provisions of this Agreement applicable to it, the Notes, in the case of the Borrower, and the other Transaction Documents.

6.14. Compliance with Material Agreements. The Borrower and, so long as the Servicer and one of the Originators are the same entity, the Servicer shall each comply in all respects with all agreements, indentures, Mortgages or documents (including, with respect to the Borrower, the Charter) binding on it or affecting its Property or business in all cases where the failure to so comply could reasonably be expected to result in a Material Adverse Effect.

6.15. Operations and Properties. The Borrower and, so long as the Servicer and one of the Originators are the same entity, the Servicer shall each act prudently and in accordance with customary industry standards in managing and operating its Property and shall continue to underwrite, hedge and sell Mortgage Loans in the same diligent manner it has applied in the past and take no greater credit or market risks than are currently being borne by it.

6.16. Performance Guarantor Credit Rating. If at any time any of the senior debt of the Performance Guarantor, which is publicly held, shall fail to bear a rating of at least BB+ by S&P, Ba1 by Moody’s and BB+ by Fitch, the Borrower shall give the Administrative Agent written notice of such change in rating, within one Business Day of the date on which such change is announced by any of these rating agencies.

6.17. Take-Out Commitments. The Borrower shall cause the Originators to obtain, and maintain in full force and effect, Take-Out Commitments (either in the form of a Loan Specific Take-Out Commitment or a Hedge) reflecting total Approved Investor obligations, as of each date of determination, with an aggregate purchase price at least equal to the total of the original principal balances of the Borrower’s entire portfolio of Mortgage Loans, except with respect to Uncovered Loans permitted hereunder. The Borrower shall ensure that each of such Take-Out Commitments (i) shall reflect only those terms and conditions as are permitted hereunder or are acceptable to the Administrative Agent and the Managing Agents and (ii) in the case of Subprime Loans, shall be issued by an Approved Investor specifically designated on Schedule II hereto as an Approved Investor for Subprime Loans.

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6.18. Collateral Proceeds. The Borrower and the Servicer shall instruct all Approved Investors to cause all payments in respect of Take-Out Commitments on Mortgage Loans to be deposited directly in the Collection Account.

6.19. Environmental Compliance. The Borrower and, so long as the Servicer and one of the Originators are the same entity, the Servicer shall each use and operate all of its facilities and properties in compliance with all environmental laws, keep all necessary permits, approvals, certificates, licenses and other authorizations relating to environmental matters in effect and remain in compliance therewith, and handle all hazardous materials in compliance with all applicable environmental laws.

6.20. Closing Instructions. The Borrower agrees to indemnify and hold the Lenders, and the Administrative Agent and the Managing Agents harmless from and against any loss, including attorneys’ fees and costs, attributable to the failure of a title insurance company, agent, Managing Agent or approved attorney to comply with the disbursement or instruction letter or letters of the Borrower, the Managing Agents or of the Administrative Agent relating to any Mortgage Loan.

6.21. Special Affirmative Covenants Concerning Collateral.

(a) The Borrower shall at all times warrant and defend the right, title and interest of the Lenders, the Collateral Agent and the Administrative Agent in and to the Collateral against the claims and demands of all Persons whomsoever.

(b) The Borrower and the Servicer shall each service or cause to be serviced all Mortgage Loans in the best interests of and for the benefit of the Lenders, in accordance with the terms of this Agreement, the terms of the Principal Mortgage Documents, the standard requirements of the issuers of Take-Out Commitments covering the Mortgage Loans and, to the extent consistent with such terms, in accordance with Accepted Servicing Standards, including without limitation taking all actions necessary to enforce the obligations of the Obligors under such Eligible Mortgage Loans. The Borrower and the Servicer shall each hold all escrow funds collected in respect of Eligible Mortgage Loans in trust, without commingling the same with any other funds, and apply the same for the purposes for which such funds were collected.

(c) The Servicer shall, no less than on an annual basis, review financial statements, compliance with financial parameters, Fannie Mae/Freddie Mac approvals (if applicable), and state licenses of all Persons from whom the Originators acquire Mortgage Loans.

6.22. Entity Separateness.

(a) The Borrower covenants to take the following actions, and the Servicer covenants to cause the Borrower to take the following actions: The Borrower shall at all times maintain at least one Independent Manager (as such term is defined in the Charter).

(b) The Borrower shall not direct or participate in the management of any of the operations of the Other Companies.

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(c) The Borrower shall allocate fairly and reasonably any overhead for shared office space. The Borrower shall have stationery and other business forms separate from that of the Other Companies.

(d) The Borrower shall at all times be adequately capitalized in light of its contemplated business.

(e) The Borrower shall at all times provide for its own operating expenses and liabilities from its own funds.

(f) The Borrower shall maintain its assets and transactions separately from those of the Other Companies and reflect such assets and transactions in financial statements separate and distinct from those of the Other Companies and evidence such assets and transactions by appropriate entries in books and records separate and distinct from those of the Other Companies. The Borrower shall hold itself out to the public under the Borrower’s own name as a legal entity separate and distinct from the Other Companies. The Borrower shall not hold itself out as having agreed to pay, or as being liable, primarily or secondarily, for, any obligations of the Other Companies.

(g) The Borrower shall not maintain any joint account with any Other Company or become liable as a guarantor or otherwise with respect to any Indebtedness or contractual obligation of any Other Company.

(h) The Borrower shall not grant a Lien on any of its assets to secure any obligation of any Other Company.

(i) The Borrower shall not make loans, advances or otherwise extend credit to any of the Other Companies.

(j) The Borrower shall conduct its business in its own name and strictly comply with all organizational formalities to maintain its separate existence.

(k) The Borrower shall have bills of sale (or similar instruments of assignment) and, if appropriate, UCC1 financing statements, with respect to all assets purchased from any of the Other Companies.

(l) The Borrower shall not engage in any transaction with any of the Other Companies, except as permitted by this Agreement or the Charter and as contemplated by the Repurchase Agreement.

6.23. Approved Investor Concentration Limits. The Borrower covenants that, at any time:

(a) the portion of the total Collateral Value that may be attributable to any single Approved Investor listed on Schedule II pursuant to one or more Take-Out Commitments shall not exceed the concentration limit for such Approved Investor as set forth on Schedule II (as the same may be updated from time to time), and

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(b) the portion of Mortgage Loans covered by a single Approved Investor with

(i) a rating of its short-term debt of lower than A-3 (or, if a short-term rating is not available, a rating of long-term debt of BBB- or lower) by S&P, a rating of its short-term debt of lower than P-3 (or, if a short-term rating is not available, a rating of the long-term debt of below Baa3) by Moody’s or a rating of its short-term debt of lower than F3 (or, if a short-term rating is not available, a rating of long-term debt of below BBB-) by Fitch (it being understood that if the ratings assigned by S&P, Moody’s and Fitch are split, the lowest rating will control, and it being understood that if only one Rating Agency has assigned a rating, that rating will control) shall not exceed twenty-five percent (25%) of the Maximum Facility Amount, or

(ii) no short-term or long-term rating by S&P, Moody’s or Fitch shall not exceed ten percent (10%) of the Maximum Facility Amount.

6.24. MERS Designated Mortgage Loans.

(a) Within five (5) Business Days from the date on which any then existing MERS Designated Mortgage Loan is assigned to the Administrative Agent under this Agreement, the Servicer shall cause the MERS Agent, as agent for the Administrative Agent, to be identified on the MERS electronic registration system as the “warehouse lender” with respect to any such MERS Designated Mortgage Loan; provided, however, that, subject to subparagraph (b) below, the Servicer’s failure to satisfy the foregoing shall not be an Event of Default hereunder.

(b) If the MERS Agent, as agent for the Administrative Agent, is not identified on the MERS electronic registration system as the “warehouse lender” with respect to any then existing MERS Designated Mortgage Loan within 5 Business Days of the date on which such MERS Designated Mortgage Loan was assigned to the Administrative Agent pursuant to this Agreement, at the commencement of the next Business Day, and in no event later than 9:00 a.m. (eastern time), the Servicer shall furnish to the Collateral Agent a report, either by facsimile or electronic transmission, that the Collateral Value for any such MERS Designated Mortgage Loan shall be zero.

6.25. Electronic Tracking Agreement. In the event that the Electronic Tracking Agreement is terminated, the Servicer shall deliver to the Administrative Agent assignments of all the MERS Designated Mortgage Loans.

ARTICLE VII

NEGATIVE COVENANTS

The Borrower and the Servicer shall each at all times comply with the covenants applicable to it contained in this Article VII, from the date hereof until the later of the Drawdown Termination Date and the date all of the Obligations are paid in full:

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7.1. Limitations on Mergers and Acquisitions.

(a) The Servicer (so long as the Servicer and one of the Originators are the same entity) shall not (i) merge or consolidate with or into any corporation or other entity unless the Servicer is the surviving entity of any such merger or consolidation or (ii) liquidate or dissolve.

(b) The Borrower will not merge with or into or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions), all or substantially all of its assets (whether now owned or hereafter acquired) to, or acquire all or substantially all of the assets or capital stock or other ownership interest of, or enter into any joint venture or partnership agreement with, any Person, other than as contemplated by this Agreement and the Repurchase Agreement.

7.2. Fiscal Year. Neither the Borrower nor, so long as the Servicer and one of the Originators are the same entity, the Servicer shall change its fiscal year other than to conform with changes that may be made to the Performance Guarantor’s fiscal year and then only after notice to the Managing Agents and after whatever amendments are made to this Agreement as may be required by the Managing Agents, in order that the reporting criteria for the financial covenants contained in Articles VI and VII remain substantially unchanged.

7.3. Business. The Borrower will not engage in any business other than as set forth in Article 8 of the Charter.

7.4. Use of Proceeds. The Borrower shall not permit the proceeds of the Advances to be used for any purpose other than those permitted by Section 6.11 hereof. The Borrower shall not, directly or indirectly, use any of the proceeds of the Advances for the purpose, whether immediate, incidental or ultimate, of buying any “margin stock” or of maintaining, reducing or retiring any Indebtedness originally incurred to purchase a stock that is currently any “margin stock,” or for any other purpose that might constitute this transaction a “purpose credit,” in each case within the meaning of Regulation U, or otherwise take or permit to be taken any action that would involve a violation of such Regulation U or of Regulation T or Regulation Z (12 C.F.R. 224, as amended) or any other regulation promulgated by the Federal Reserve Board.

7.5. Actions with Respect to Collateral. Neither the Borrower nor the Servicer shall:

(a) Compromise, extend, release, or adjust payments on any Mortgage Collateral, accept a conveyance of mortgaged Property in full or partial satisfaction of any Mortgage debt or release any Mortgage securing or underlying any Mortgage Collateral, except as permitted by the related Approved Investor or as contemplated in the servicing guidelines distributed thereby;

(b) Agree to the amendment or termination of any Take-Out Commitment in which the Administrative Agent has a security interest or to substitution of a Take-Out Commitment for a Take-Out Commitment in which the Administrative Agent has a security interest hereunder, if such amendment, termination or substitution may be expected (as determined by the Collateral Agent or the Administrative Agent in either of their sole discretion) to have a Material Adverse Effect or to result in a Default or Event of Default;

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(c) Transfer, sell, assign or deliver any Mortgage Loan Collateral pledged to the Administrative Agent to any Person other than the Administrative Agent, except pursuant to a Take-Out Commitment or pursuant to either Section 3.3 or Section 3.4;

(d) Grant, create, incur, permit or suffer to exist any Lien upon any Mortgage Loan Collateral except for (i) Liens granted to the Administrative Agent to secure the Notes and Obligations and (ii) any rights created by the Repurchase Agreement; or

(e) With respect to any Mortgage Loans constituting Collateral, permit the payment instructions relating to a Take-Out Commitment to provide for payment to any Person except directly to the Collection Account.

7.6. Liens. The Borrower will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to exist any Lien upon or with respect to, any Mortgage Asset, or upon or with respect to any account to which any Collections of any Mortgage Asset are sent, or assign any right to receive income in respect thereof except as contemplated hereby.

7.7. Employee Benefit Plans. Neither the Borrower nor, so long as the Servicer and one of the Originators are the same entity, the Servicer may permit any of the events or circumstances described in Section 5.3(b) to exist or occur.

7.8. Change of Principal Office. The Borrower shall not move its principal office, executive office or principal place of business from the address set forth in Section 5.2(g) without 30-days’ prior written notice to the Administrative Agent and the Managing Agents. The Borrower shall not change its place of organization or add a new jurisdiction of organization without 30 days’ prior written notice to the Administrative Agent.

7.9. No Commercial, A&D, Etc. Loans. The Borrower shall not make or acquire any direct outright ownership interest, participation interest or other creditor’s interest in any commercial real estate loan, acquisition and/or development loan, unimproved real estate loan, personal property loan, oil and gas loan, commercial loan, wrap-around real estate loan, unsecured loan, acquisition, development or construction loan.

7.10. Maximum Leverage. The Leverage Ratio, as defined in and when and as determined pursuant to the UAMC Revolver, of Universal American Mortgage Company, LLC shall not exceed 10 to 1.

7.11. Indebtedness. The Borrower will not incur any Indebtedness, other than any Indebtedness incurred pursuant to this Agreement or the Repurchase Agreement or permitted to be incurred pursuant to the Charter.

7.12. Deposits to Collection Account. Neither the Borrower nor the Servicer shall deposit or otherwise credit, or cause or permit to be so deposited or credited, to the Collection Account, cash or cash proceeds other than Collateral Proceeds.

7.13. Transaction Documents. The Borrower will not amend, waive, terminate or modify any provision of any Transaction Document to which it is a party (provided that the Borrower may extend the “Facility Termination Date” or waive the occurrence of any “Event of

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Default” under the Repurchase Agreement) without, in each case, the prior written consent of the Managing Agents. The Borrower will perform all of its obligations under each Transaction Document to which it is a party and will enforce each Transaction Document to which it is a party in accordance with its terms in all respects.

7.14. Distributions, Etc. The Borrower will not declare or make any distribution payment or other distribution of assets, properties, cash, rights, obligations or securities on account of any equity ownership interests of the Borrower, or return any capital to its members as such, or purchase, retire, defease, redeem or otherwise acquire for value or make any payment in respect of any equity ownership interests of the Borrower or any warrants, rights or options to acquire any such interests, now or hereafter outstanding; provided, however, that the Borrower may declare and pay cash distributions on its equity ownership interests to its members so long as (a) no Event of Default shall then exist or would occur as a result thereof, (b) such distributions are in compliance with all applicable law including the limited liability company law of the state of Borrower’s organization, and (c) such distributions have been approved by all necessary and appropriate action of the Borrower.

7.15. Charter. The Borrower will not amend or delete (a) Articles 7 through 10 or (b) the definition of “Independent Manager” set forth in the Charter. The Borrower will perform all of its obligations under the Charter.

7.16. Default Ratio. The Borrower shall not permit the Default Ratio to exceed two percent (2%) as at the end of any Collection Period.

7.17. Excess Spread. The Borrower shall not permit the Excess Spread to be less than twenty-five (25) basis points as at the end of any Collection Period.

7.18. Minimum Tangible Net Worth. Universal American Mortgage Company, LLC shall not permit its Tangible Net Worth (as defined in and when and as determined pursuant to the UAMC Revolver) to be less than the amount set forth in Section 8.7 of the UAMC Revolver.

7.19. Limitation on Debt. Universal American Mortgage Company, LLC shall not incur Debt (as defined in and when and as determined pursuant to the UAMC Revolver) in violation of Section 8.13 of the UAMC Revolver.

ARTICLE VIII

EVENTS OF DEFAULT

8.1. Nature of Event. An “Event of Default” shall exist if any one or more of the following occurs:

(a) the Borrower fails (i) to make any payment of principal of or interest on any of the Notes when due, or (ii) to make any payment within two (2) Business Days after the date when due, of any fee, expense or other amount due hereunder, under the Notes or under any other Transaction Document or, so long as the Servicer is one of the Originators, the Servicer fails to make any payment or deposit to be made by it under this Agreement when due; or

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(b) the Borrower, any one of the Originators or, so long as the Servicer and one of the Originators are the same entity, the Servicer fails (i) to keep or perform any covenant or agreement contained in this Agreement (other than as referred to in Section 8.1(a)) and such failure continues unremedied beyond the expiration of any applicable grace or notice period that may be expressly provided for in such covenant or agreement or, if no grace or notice period is provided for ten days after written notice thereof, provided, however, that no grace or notice period shall be permitted for any breach of Section 6.24(b), Section 7.16, Section 7.17, Section 7.18 and/or Section 7.19; or

(c) the Borrower, any one of the Originators, the Servicer (so long as the Servicer and one of the Originators are the same entity) or the Performance Guarantor defaults in the due observance or performance of any of the covenants or agreements contained in any Transaction Document other than this Agreement, and (unless such default otherwise constitutes a Default or an Event of Default pursuant to other provisions of this Section 8.1) such default continues unremedied beyond the expiration of any applicable grace or notice period that may be expressly provided for in such Transaction Document (or, if no grace or notice is provided, for ten days after written notice thereof); or

(d) any statement, warranty or representation by or on behalf of the Borrower, any one of the Originators, the Servicer (so long as the Servicer and one of the Originators are the same entity) or the Performance Guarantor contained in this Agreement, the Notes or any other Transaction Document or any Borrowing Request, officer’s certificate or other writing furnished in connection with this Agreement, proves to have been incorrect or misleading in any respect as of the date made or deemed made; or

(e)(i) in the case of the Borrower, the Borrower fails to make when due or within any applicable grace period any payment on any other Indebtedness with an unpaid principal balance or, in the case of the Originators, the Servicer and the Performance Guarantor, any one of the Originators, the Servicer (so long as the Servicer and one of the Originators are the same entity) or the Performance Guarantor fails to make when due or within any applicable grace period any payment on any other Indebtedness with an unpaid principal balance of over $5,000,000.00 with respect to each Originator, the Servicer and the Performance Guarantor; or (ii) any event or condition occurs under any provision contained in any such obligation or any agreement securing or relating to such obligation (or any other breach or default under such obligation or agreement occurs) if the effect thereof is to cause or permit with the giving of notice or lapse of time or both the holder or trustee of such obligation to cause such obligation to become due prior to its stated maturity; or (iii) any such obligation becomes due (other than by regularly scheduled payments) prior to its stated maturity; or (iv) in the case of the Borrower, any of the foregoing occurs with respect to any one or more items of Indebtedness with an unpaid principal balance, or, in the case of each of the Originators, the Servicer (so long as the Servicer and one of the Originator are the same entity) or the Performance Guarantor, any of the foregoing occurs with respect to any one or more items of Indebtedness with unpaid principal balances exceeding, in the aggregate, $5,000,000.00 with respect to each Originator, the Servicer and the Performance Guarantor; or

(f) the Borrower, any of the Originators, the Servicer (so long as the Servicer and one of the Originators are the same entity) or the Performance Guarantor generally shall not pay its debts as they become due or shall admit in writing its inability to pay its debts, or shall make a general assignment for the benefit of creditors; or

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(g) the Borrower, any of the Originators, the Servicer (so long as the Servicer and one of the Originators are the same entity) or the Performance Guarantor shall (i) apply for or consent to the appointment of a receiver, trustee, custodian, intervenor or liquidator of it or of all or a substantial part of its assets, (ii) file a voluntary petition in bankruptcy, (iii) file a petition or answer seeking reorganization or an arrangement with creditors or to take advantage of any Debtor Laws, (iv) file an answer admitting the allegations of, or consent to, or default in answering, a petition filed against it in any bankruptcy, reorganization or insolvency proceeding, or (v) take action for the purpose of effecting any of the foregoing; or

(h) an involuntary petition or complaint shall be filed against the Borrower, any of the Originators, the Servicer (so long as the Servicer and one of the Originators are the same entity) or the Performance Guarantor seeking bankruptcy or reorganization of the Borrower, any of the Originators, the Servicer or the Performance Guarantor or the appointment of a receiver, custodian, trustee, intervenor or liquidator of the Borrower, any of the Originators, the Servicer or the Performance Guarantor, or all or substantially all of the assets of either the Borrower, any of the Originators, the Servicer or the Performance Guarantor, and such petition or complaint shall not have been dismissed within 60 days of the filing thereof; or an order, order for relief, judgment or, decree shall be entered by any court of competent jurisdiction or other competent authority approving a petition or complaint seeking reorganization of the Borrower, any of the Originators, the Servicer (so long as the Servicer and one of the Originators are the same entity) or the Performance Guarantor or appointing a receiver, custodian, trustee, intervenor or liquidator of the Borrower, any of the Originators, the Servicer or the Performance Guarantor, or of all or substantially all of assets of the Borrower, any of the Originators, the Servicer or the Performance Guarantor; or

(i) in the case of the Borrower, the Borrower shall fail within 30 days to pay, bond or otherwise discharge any final judgment or order for payment of money, or, in the case of the Originators, the Servicer and the Performance Guarantor, any of the Originators, the Servicer (so long as the Servicer and one of the Originators are the same entity) or the Performance Guarantor shall fail within 30 days to pay, bond or otherwise discharge any final judgment or order for payment of money in excess of $5,000,000.00; or any of the Originators, the Servicer (so long as the Servicer and one of the Originators are the same entity) or the Performance Guarantor shall fail within 30 days to pay, bond or otherwise discharge final judgments or orders for payment of money which exceed in the aggregate $5,000,000.00; or in the case of the Borrower, the Borrower shall fail within 30 days to timely appeal or pay, bond or otherwise discharge any judgments or order for payment which the Borrower may appeal, or in the case of the Originators, the Servicer and the Performance Guarantor, any of the Originators, the Servicer (so long as the Servicer and one of the Originators are the same entity) or the Performance Guarantor shall fail within 30 days to timely appeal or pay, bond or otherwise discharge any judgments or orders for payment of money which exceed, in the aggregate, $5,000,000.00 and which any of the Originators, the Servicer or the Performance Guarantor may appeal; or

(j) any Person shall levy on, seize or attach all or any material portion of the assets of the Borrower, any of the Originators, the Servicer (so long as the Servicer and one of

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the Originators are the same entity) or the Performance Guarantor and within thirty (30) days thereafter the Borrower, the related Originators, the Servicer or the Performance Guarantor shall not have dissolved such levy or attachment, as the case may be, and, if applicable, regained possession of such seized assets; or

(k) if an event or condition specified in Section 5.3(b) shall occur or exist; or

(l) any of the Originators or the Servicer (so long as the Servicer and one of the Originators are the same entity) becomes ineligible to originate, sell or service Mortgage Loans to Fannie Mae, Freddie Mac or Ginnie Mae, or Fannie Mae, Freddie Mac or Ginnie Mae shall impose any sanctions upon or terminate or revoke any rights of the Servicer (so long as the Servicer is one of the Originators) or any of the Originators; or

(m) if (x) any Governmental Authority cancels an Originator’s right to be either a seller or servicer of such Governmental Authority’s insured or guaranteed Mortgage Loans or mortgage-backed securities, (y) any Approved Investor cancels for cause any servicing or underwriting agreement between any of the Originators and such Approved Investor or (z) any of the Originators receive notice from a Governmental Authority that such Governmental Authority intends to revoke an Originator’s right to be a seller or servicer of such Governmental Authority’s insured or guaranteed Mortgage Loans or mortgaged-backed securities and such notice is not withdrawn within ten days of the receipt thereof; or

(n) failure of the Borrower or any of the Originators to correct an imbalance in any escrow account established with the Borrower or the related Originators as either an originator, purchaser or servicer of Mortgage Loans, which imbalance may have a Material Adverse Effect, within two (2) Business Days after demand by any beneficiary of such account or by the Administrative Agent; or

(o) failure of any of the Originators or the Servicer to meet, at all times, the minimum net worth requirements of Fannie Mae, Freddie Mac or Ginnie Mae as an originator, seller or servicer, as applicable; or

(p) any provision of this Agreement, the Notes or any other Transaction Document shall for any reason cease to be in full force and effect, or be declared null and void or unenforceable in whole or in part; or the validity or enforceability of any such document shall be challenged or denied; or

(q) a “change in control,” with respect to the ownership of the Performance Guarantor shall have occurred (and as used in this subparagraph, the term “change in control” shall mean an acquisition by any Person, partnership or group, as defined under the Securities Exchange Act of 1934, as amended, of a direct or indirect beneficial ownership of 10% or more of the then-outstanding voting stock of the Performance Guarantor); or the Performance Guarantor shall cease at any time to own, directly or indirectly, at least 90% of each class of the outstanding capital stock of or at least 90% of all of the membership interests in, as applicable, each Originator; or

(r) the total Collateral Value of all Eligible Mortgage Collateral shall be less than the Principal Debt, at any time, and the Borrower shall fail either to provide additional Eligible Mortgage Collateral with a sufficient Collateral Value, or to pay Principal Debt, in an amount sufficient to correct the deficiency within the time period set forth in Section 2.5(b); or

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(s) if, as a result of the Borrower’s failure to obtain and deliver to the Collateral Agent, Principal Mortgage Documents as required by Section 2.3(c), the Administrative Agent shall determine that the continuation of such condition may have a Material Adverse Effect on the Borrower or the Lenders; or

(t) there shall have occurred any event that adversely affects the enforceability or collectability of any significant portion of the Mortgage Loans or the Take-Out Commitments (provided that to the extent such event gives rise to an obligation by any of the Originators to repurchase such Mortgage Loans pursuant to the Repurchase Agreement and such Originator does so repurchase in accordance with the provisions of the Repurchase Agreement, no Event of Default shall occur under this Section 8.1(t)) or there shall have occurred any other event that adversely affects the ability of the Borrower, the Servicer or the Collateral Agent to collect a significant portion of Mortgage Loans or Take-Out Commitments or the ability of the Borrower or, so long as the Servicer and one of the Originators are the same entity, the Servicer to perform hereunder or a Material Adverse Effect has occurred in the financial condition or business of the Borrower since inception or, so long as the Servicer and one of the Originators are the same entity, the Servicer since February 28, 2003; or

(u)(i) any litigation (including, without limitation, derivative actions), arbitration proceedings or governmental proceedings not disclosed in writing by the Borrower to the Lenders, the Administrative Agent and the Managing Agents prior to the date of execution and delivery of this Agreement is pending against the Borrower or any Affiliate thereof, or (ii) any development not so disclosed has occurred in any litigation (including, without limitation, derivative actions), arbitration proceedings or governmental proceedings so disclosed, which, in the case of either clause (i) and/or (ii), in the opinion of the Administrative Agent, could reasonably be expected to have a Material Adverse Effect or impair the ability of the Borrower, any of the Originators, the Servicer or the Performance Guarantor to perform its obligations under this Agreement or any other Transaction Document; or

(v) the Internal Revenue Service shall file notice of a lien pursuant to Section 6323 of the Code with regard to any of the assets of the Borrower, any of the Originators or the Servicer (so long as the Servicer and any one of the Originators are the same entity) and such lien shall not have been released within thirty days, or the PBGC shall, or shall indicate its intention to, file notice of a lien pursuant to Section 4068 of ERISA with regard to any of the assets of the Borrower, any of the Originators, or the Servicer (so long as the Servicer and any one of the Originators are the same entity) or the Performance Guarantor and as to each of the Originators; or

(w) [Reserved]; or

(x) a successor Collateral Agent shall not have been appointed and accepted such appointment within 180 days after the retiring Collateral Agent shall have given notice of resignation pursuant to Section 4.4 of the Collateral Agreement; or

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(y) a “Default” or an “Event of Default” shall occur under the Repurchase Agreement, or the Repurchase Agreement shall cease to be in full force and effect; or

(z) all of the outstanding equity ownership interests of the Borrower shall cease to be owned, directly or indirectly, by the Performance Guarantor; or

(aa) the Borrower shall cease or otherwise fail to have a good and valid title to (or, to the extent that Article 9 of the UCC is applicable to the Borrower’s acquisition thereof, a valid perfected security interest in) a significant portion of the Collateral (other than Collateral released in accordance with Section 3.3 or the Security Instruments shall for any reason (other than pursuant to the terms hereof) fail or cease to create a valid and perfected first priority security interest in the Mortgage Loans and the other Collateral for the benefit of the holders of the Obligations, which in the opinion of the Administrative Agent could reasonably be expected to have a Material Adverse Effect; or

(bb) [Reserved]; or

(cc) the Adjusted Consolidated Tangible Net Worth, as defined in and when and as defined pursuant to the Lennar Revolver, of the Performance Guarantor shall be less than the amount set forth in Section 7.01 of the Lennar Revolver; or

(dd) the amount on deposit in the Reserve Account shall not be less than the Required Reserve Account Amount; or

(ee) the Performance Guarantor ceases to have the Required Ratings; or

(ff) Take-Out Commitments attributable to an Approved Investor exceed the concentration permitted by Section 6.23, as provided in Schedule II.

8.2. Default Remedies.

(a) Upon the occurrence and continuation of an Event of Default under Sections 8.1(f), (g), (h), (j) or (v) of this Agreement, the entire unpaid balance of the Obligations shall automatically become due and payable, the Drawdown Termination Date shall immediately occur and the Maximum Facility Amount shall immediately terminate, all without any notice or action of any kind whatsoever.

(b) Upon the occurrence and continuation of an Event of Default under any other provision of Section 8.1 of this Agreement, the Administrative Agent, on behalf of the Managing Agents, may declare the Drawdown Termination Date to have occurred, terminate the Bank Commitments and reduce the Maximum Facility Amount to zero, and the Administrative Agent, on behalf of the Managing Agents, may do any one or more of the following: (i) declare the entire unpaid balance of the Obligations immediately due and payable, whereupon it shall be due and payable; (ii) declare the Drawdown Termination Date to have occurred, terminate the Bank Commitments and reduce the Maximum Facility Amount to zero; (iii) reduce any claim to judgment pursuant to applicable law; (iv) exercise the rights of offset or banker’s Lien against the interest of the Borrower in and to every account and other Property of the Borrower that are in the possession of the Lenders, the Managing Agents, the Collateral Agent or the

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Administrative Agent to the extent of the full amount of the Obligations (the Borrower being deemed directly obligated to the Lenders and the Administrative Agent in the full amount of the Obligations for such purposes); (v) subject to applicable law foreclose or direct the Collateral Agent to foreclose any or all Liens or otherwise realize upon any and all of the rights the Administrative Agent, the Managing Agents or the Lenders may have in and to the Collateral, or any part thereof; and (vi) exercise any and all other legal or equitable rights afforded by the Transaction Documents, applicable Governmental Requirements, or otherwise, including, but not limited to, the right to bring suit or other proceedings before any Governmental Authority either for specific performance of any covenant or condition contained in any of the Transaction Documents or in aid of the exercise of any right granted to the Lenders, the Managing Agents or the Administrative Agent in any of the Transaction Documents.

(c) Upon the occurrence and continuation of a Default hereunder or under any Transaction Document, the Administrative Agent, on behalf of the Managing Agents, may, in addition to any and all other legal or equitable rights afforded by the Transaction Documents, deliver an Activation Notice under the Collection Account Control Agreement and/or the Reserve Account Control Agreement.

(d) Notwithstanding anything to the contrary herein, the Obligations of the Borrower under this Agreement shall be recourse solely to the Mortgage Assets, and the Borrower shall have no obligation in respect of any deficiencies.

8.3. Paydowns. Immediately upon the occurrence of an Event of Default, and without any requirement for notice or demand (including, without limitation, any notice or demand otherwise required under Section 8.1), the Borrower shall (a) make a payment to the Administrative Agent equal to the Collateral Deficiency and (b) deliver to the Collateral Agent additional Take-Out Commitments in an amount equal to unrepaid Advances that have been made against any Uncovered Mortgage Loans. Take-Out Commitments for Conforming Loans that are delivered pursuant to clause (b), above, in addition to conforming with all other criteria of this Agreement, shall also substantially conform to the interest rates and “terms to maturity” for all Uncovered Mortgage Loans. This is a special, and not an exclusive, right or remedy, and any demand for performance under this Section 8.3 shall not waive or affect the Lenders’ or the Administrative Agent’s rights to enforce any security interest in the Collateral, collect a deficiency or to pursue damages or any other remedy, as herein provided or as permitted at law or in equity, until all Obligations have been fully paid and performed.

8.4. Waivers of Notice, Etc. Except as otherwise provided in this Agreement, the Borrower and each surety, endorser, guarantor and other party ever liable for payment of any sum or sums of money that may become due and payable, or the performance or any undertaking that may be owed, to the Lenders, the Managing Agents or the Administrative Agent pursuant to this Agreement, the Notes, or the other Transaction Documents, including the Obligations, jointly and severally waive demand for payment, presentment, protest, notice of protest and nonpayment or other notice of default, notice of acceleration and notice of intention to accelerate, and agree that its or their liability under this Agreement, the Notes or other Transaction Documents shall not be affected by any renewal or extension of the time or place of payment or performance hereof, or any indulgences by the Lenders, the Managing Agents or the Administrative Agent, or by any release or change in any security for the payment of the

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Obligations, and hereby consent to any and all renewals, extensions, indulgences, releases or changes, regardless of the number of such renewals, extensions, indulgences, releases or changes.

ARTICLE IX

THE ADMINISTRATIVE AGENT

9.1. Authorization. Each Lender has appointed the Administrative Agent as its agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement of this Agreement), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Banks, and such instructions shall be binding upon all Lenders; provided, however, that the Administrative Agent shall not be required to take any action that exposes the Administrative Agent to personal liability or that is contrary to this Agreement or applicable law.

9.2. Reliance by Agent. Notwithstanding anything to the contrary in this Agreement or any other Transaction Document, neither the Administrative Agent nor any of its directors, officers, agents, representatives, employees, attorneys-in-fact or Affiliates shall be liable for any action taken or omitted to be taken by it or them (in their capacity as or on behalf of the Administrative Agent) under or in connection with this Agreement or the other Transaction Documents, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Administrative Agent: (a) may treat the payee of the Notes as the holder thereof; (b) may consult with legal counsel (including counsel for the Borrower), independent certified public accountants and other experts selected by it or the Borrower and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (c) makes no warranty or representation to any Lender or the Managing Agents and shall not be responsible to any Lender or the Managing Agents for any statements, warranties or representations made in or in connection with this Agreement or the other Transaction Documents; (d) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of the Borrower or to inspect the Property (including the books and records) of the Borrower; (e) shall not be responsible to any Lender or the Managing Agents for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto or the enforceability or perfection or priority of any Collateral; and (f) shall incur no liability under or in respect of this Agreement or any other Transaction Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telegram, cable or telex) believed by the Administrative Agent to be genuine and signed or sent by the proper Person or party.

9.3. Agent and Affiliates. With respect to any Advance made by Calyon New York, Calyon New York shall have the same rights and powers under this Agreement as would any

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Lender and may exercise the same as though it were not the Administrative Agent. Calyon New York and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Borrower, the Managing Agents, any of the Borrower’s Affiliates and any Person who may do business with or own securities of the Borrower, the Managing Agents or any such Affiliate, all as if Calyon New York were not the Administrative Agent and without any duty to account therefor to the Lenders. If Calyon New York is removed as Administrative Agent, such removal will not affect Calyon New York’s rights and interests as a Lender.

9.4. Lender Decision. Each Lender (including each Lender that becomes a party hereto by assignment) acknowledges that it has, independently and without reliance on the Administrative Agent, any of its Affiliates or any other Lender and based on such documents and information as it has deemed appropriate, made its own evaluation and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance on the Administrative Agent, any of its Affiliates or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own decisions in taking or not taking action under this Agreement.

9.5. Rights of the Administrative Agent. Each right and remedy expressly provided by this Agreement as being available to the Administrative Agent shall be exercised by the Administrative Agent only at the direction of the Majority Banks or all the Banks where unanimity is required.

9.6. Indemnification of Administrative Agent. Each Bank agrees to indemnify the Administrative Agent (to the extent not reimbursed by or on behalf of the Borrower), ratably according to the respective principal amounts held by it (or if no Advances are then outstanding, each Bank shall indemnify the Administrative Agent ratably according to the amount of its Bank Commitment), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or the other Transaction Documents or any action taken or omitted by the Administrative Agent under this Agreement or the other Transaction Documents, provided that no Bank shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent’s gross negligence or willful misconduct.

9.7. UCC Filings. The Lenders and the Borrower expressly recognize and agree that the Administrative Agent may be listed as the assignee or secured party of record on the various UCC filings required to be made hereunder in order to perfect the security interest in the Collateral granted by the Borrower for the benefit of the holders of the Obligations and that such listing shall be for administrative convenience only in creating a record-holder or nominee to take certain actions hereunder on behalf of the holders of the Obligations.

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ARTICLE X

INDEMNIFICATION

10.1. Indemnities by the Borrower. Without limiting any other rights that any such Person may have hereunder or under applicable law, the Borrower hereby agrees to indemnify each of the Lenders, the Related CP Issuer, each Managing Agent, the MERS agent, the Administrative Agent, any Affected Party, their respective successors, transferees, participants and assigns and all affiliates, officers, directors, shareholders, controlling persons, employees and agents of any of the foregoing (each an “Indemnified Party”), forthwith on demand, from and against any and all damages, losses, claims, liabilities and related costs and expenses, including attorneys’ fees and disbursements (all of the foregoing being collectively referred to as “Indemnified Amounts”) awarded against or incurred by any of them arising out of or relating to this Agreement or any Transaction Document or the exercise or performance of any of its or their powers or duties, in respect of any Mortgage Loan or Take-Out Commitment, or related in any way to its or their possession of, or dealings with, the Collateral, excluding, however, Indemnified Amounts to the extent resulting from gross negligence or willful misconduct on the part of such Indemnified Party.

ARTICLE XI

ADMINISTRATION AND COLLECTION OF MORTGAGE LOANS

11.1. Designation of Servicer. The servicing, administration and collection of the Mortgage Assets shall be conducted by the Servicer so designated hereunder from time to time. Until the Administrative Agent gives notice to the Borrower and the Originators of the designation of a new Servicer, Universal American Mortgage Company, LLC, is hereby designated as, and hereby agrees to perform the duties and obligations of, the Servicer pursuant to the terms hereof. The Administrative Agent may at any time following the occurrence of a Servicer Default designate as Servicer any Person (including itself) to succeed the Originators or any successor Servicer, if such Person shall consent and agree to the terms hereof. The Servicer may, with the prior consent of the Administrative Agent, subcontract with any other Person for the servicing, administration or collection of the Mortgage Assets. Any such subcontract shall not affect the Servicer’s liability for performance of its duties and obligations pursuant to the terms hereof.

11.2. Duties of Servicer.

(a) The Servicer shall take or cause to be taken all such actions as may be necessary or advisable to collect each Mortgage Asset from time to time, all in accordance with applicable laws, rules and regulations, with care and diligence, and in accordance with the servicing guide issued by the Governmental Authority applicable to such Mortgage Asset or, in the case of Non-Conforming Loans, the servicing criteria specified by the Approved Investor that has issued a Take-Out Commitment with respect thereto. The Borrower and the Administrative Agent hereby appoint the Servicer, from time to time designated pursuant to Section 11.1, as agent for themselves and for the Lenders to enforce their respective rights and interests in the Mortgage Assets and the Collections thereof. In performing its duties as Servicer,

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the Servicer shall exercise the same care and apply the same policies as it would exercise and apply if it owned such Mortgage Loans and shall act in the best interests of the Borrower and the Lenders.

(b) The Servicer shall administer the Collections in accordance with the procedures described in Section 2.7 and shall service the Collateral in accordance with Section 6.21 and Section 7.5.

(c) The Servicer shall hold in trust for the Borrower and the Lenders, in accordance with their respective interests, all books and records (including, without limitation, computer tapes or disks) that relate to the Mortgage Assets.

(d) The Servicer shall, as soon as practicable following receipt, turn over to the Borrower or the Originators, as appropriate, any cash collections or other cash proceeds received with respect to Property not constituting Mortgage Assets.

(e) The Servicer shall, from time to time at the request of the Administrative Agent, furnish to the Administrative Agent (promptly after any such request) a calculation of the amounts set aside for the Lenders pursuant to Section 2.7(c).

(f) The Servicer shall perform the duties and obligations of the Servicer set forth in the Collateral Agency Agreement and the other Security Instruments.

11.3. Certain Rights of the Administrative Agent. At any time following the designation of a Servicer other than the Originators pursuant to Section 11.1 or following an Event of Default:

(a) The Administrative Agent may direct the Obligors that all payments thereunder be made directly to the Administrative Agent or its designee.

(b) At the Administrative Agent’s request and at the Borrower’s expense, the Borrower shall notify each Obligor of the Lien on the Mortgage Assets and direct that payments be made directly to the Administrative Agent or its designee.

(c) At the Administrative Agent’s request and at the Borrower’s expense, the Borrower and the Servicer shall (i) assemble all of the documents, instruments and other records (including, without limitation, computer tapes and disks) that evidence or relate to the Mortgage Assets and Collections and Collateral, or that are otherwise necessary or desirable to collect the Mortgage Assets, and shall make the same available to the Administrative Agent at a place selected by the Administrative Agent or its designee, and (ii) segregate all cash, checks and other instruments received by it from time to time constituting Collections in a manner acceptable to the Administrative Agent and, promptly upon receipt, remit all such cash, checks and instruments, duly endorsed or with duly executed instruments of transfer, to the Administrative Agent or its designee.

(d) The Borrower authorizes the Administrative Agent to take any and all steps in the Borrower’s name and on behalf of the Borrower that are necessary or desirable, in the determination of the Administrative Agent, to collect amounts due under the Mortgage Assets, including, without limitation, endorsing the Borrower’s name on checks and other instruments representing Collections and enforcing the Mortgage Assets and the other Collateral.

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11.4. Rights and Remedies.

(a) If the Servicer fails to perform any of its obligations under this Agreement, the Administrative Agent may (but shall not be required to) itself perform, or cause performance of, such obligation; and the Administrative Agent’s costs and expenses incurred in connection therewith shall be payable by the Servicer.

(b) The Borrower and the Originators shall perform their respective obligations under the Mortgage Loans to the same extent as if such Mortgage Loans had not been sold by the Originators and the exercise by the Administrative Agent on behalf of the Lenders of their rights under this Agreement shall not release the Servicer or the Borrower from any of their duties or obligations with respect to any Mortgage Loans. Neither the Administrative Agent, nor the Lenders shall have any obligation or liability with respect to any Mortgage Loans, nor shall any of them be obligated to perform the obligations of the Borrower thereunder.

(c) In the event of any conflict between the provisions of this Article XI of this Agreement and Article VI of the Repurchase Agreement, the provisions of this Agreement shall control.

11.5. Indemnities by the Servicer. Without limiting any other rights that the Administrative Agent, the MERS Agent, any Lender or Managing Agent or any of their respective Affiliates (each, a “Special Indemnified Party”) may have hereunder or under applicable law, and in consideration of its appointment as Servicer, the Servicer hereby agrees to indemnify each Special Indemnified Party from and against any and all claims, losses and liabilities (including attorneys’ fees) (all of the foregoing being collectively referred to as “Special Indemnified Amounts”) arising out of or resulting from any of the following (excluding, however, (x) Special Indemnified Amounts to the extent resulting from gross negligence or willful misconduct on the part of such Special Indemnified Party, (y) recourse for Mortgage Assets that are not collected, not paid or uncollectible on account of the insolvency, bankruptcy or financial inability to pay of the applicable Obligor or (z) any income taxes or any other tax or fee measured by income incurred by such Special Indemnified Party arising out of or as a result of this Agreement or the Borrowings hereunder):

(a) any representation or warranty or statement made or deemed made by the Servicer under or in connection with this Agreement that shall have been incorrect in any respect when made;

(b) the failure by the Servicer to comply in any material respect with any applicable law, rule or regulation with respect to any Mortgage Asset or the failure of any Mortgage Loan to conform to any such applicable law, rule or regulation;

(c) the failure to have filed, or any delay in filing, financing statements, Mortgages or assignments of Mortgages under the applicable laws of any applicable jurisdiction with respect to any Mortgage Assets and the other Collateral and Collections in respect thereof, whether at the time of any purchase under the Repurchase Agreement or at any subsequent time;

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(d) any failure of the Servicer to perform its duties or obligations in accordance with the provisions of this Agreement;

(e) the commingling of Collections at any time by the Servicer with other funds;

(f) any action or omission by the Servicer reducing or impairing the rights of the Administrative Agent or the Lenders with respect to any Mortgage Asset or the value of any Mortgage Asset;

(g) any Servicer Fees or other costs and expenses payable to any replacement Servicer, to the extent in excess of the Servicer Fees payable to the Servicer hereunder; or

(h) any claim brought by any Person other than a Special Indemnified Party arising from any activity by the Servicer or its Affiliates in servicing, administering or collecting any Mortgage Asset.

ARTICLE XII

THE MANAGING AGENTS

12.1. Authorization. Each Lender hereby appoints and authorizes the related Managing Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to such Managing Agent by the terms hereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement of this Agreement), each Managing Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of its Majority Group Banks, and such instructions shall be binding upon all Lenders in its Group; provided, however, that such Managing Agent shall not be required to take any action which exposes such Managing Agent to personal liability or which is contrary to this Agreement or applicable law.

12.2. Reliance by Agent. Notwithstanding anything to the contrary in this Agreement or any other Transaction Document, none of the Managing Agents nor any of their respective directors, officers, agents, representatives, employees, attorneys-in-fact or Affiliates shall be liable for any action taken or omitted to be taken by it or them (in their capacity as or on behalf of such Managing Agent) under or in connection with this Agreement or the other Transaction Documents, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, each Managing Agent: (a) may treat the payee of the Notes as the holder thereof; (b) may consult with legal counsel (including counsel for the Borrower), independent certified public accountants and other experts selected by it or any such party and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (c) makes no warranty or representation to any Lender or to the other Managing Agents and shall not be responsible to any Lender or to the other Managing Agents for any statements, warranties or representations made in or in connection with this Agreement or the other Transaction Documents; (d) shall not have

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any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of the Borrower or to inspect the property (including the books and records) of the Borrower; (e) shall not be responsible to any Lender or to the other Managing Agents for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto or the enforceability or perfection or priority of any Collateral; and (f) shall incur no liability under or in respect of this Agreement or any other Transaction Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telegram, cable or telex) believed by such Managing Agent to be genuine and signed or sent by the proper Person or party.

12.3. Agent and Affiliates. With respect to any Advance made by a Managing Agent in its capacity as a Lender, such Managing Agent shall have the same rights and powers under this Agreement as would any Lender and may exercise the same as though it were not a Managing Agent. The Managing Agents and their respective Affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Borrower, any of the Borrower’s respective Affiliates and any Person who may do business with the Borrower or any such Affiliates or own the Borrower’s securities or those of any such Affiliate, all as if no such Managing Agent were a Managing Agent and without any duty to account therefor to the Lenders. If any Managing Agent is removed as a Managing Agent, such removal will not affect the rights and interests of such Managing Agent as a Lender.

12.4. Notices. Each Managing Agent shall give each Lender in its Group prompt notice of each written notice received by it from the Borrower pursuant to the terms of this Agreement.

12.5. Lender Decision. Each Lender (including each Lender that becomes a party hereto by assignment) acknowledges that it has, independently and without reliance on any Managing Agent, any Managing Agent’s Affiliates or any other Lender and based on such documents and information as it has deemed appropriate, made its own evaluation and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance on any Managing Agent, any Managing Agent’s Affiliates or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own decisions in taking or not taking action under this Agreement.

ARTICLE XIII

THE MERS AGENT

13.1. Authorization. Each Lender has appointed the MERS Agent as its agent to take such action as agent on its behalf and to exercise such powers under the Electronic Tracking Agreement as are delegated to the MERS Agent by the terms thereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by the Electronic Tracking Agreement (including, without limitation, enforcement of the Electronic Tracking Agreement), the MERS Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Banks, and such instructions shall be binding upon all Lenders; provided, however, that the MERS Agent shall not be required to take any action that exposes the MERS Agent to personal liability or that is contrary to the Electronic Tracking Agreement or applicable law.

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13.2. Reliance by Agent. Notwithstanding anything to the contrary in the Electronic Tracking Agreement, neither the MERS Agent nor any of its directors, officers, agents, representatives, employees, attorneys-in-fact or Affiliates shall be liable for any action taken or omitted to be taken by it or them (in their capacity as or on behalf of the MERS Agent) under or in connection with the Electronic Tracking Agreement, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the MERS Agent: (a) may consult with legal counsel (including counsel for the Borrower), independent certified public accountants and other experts selected by it or the Borrower and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (b) makes no warranty or representation to any Lender or the Managing Agent and shall not be responsible to any Lender or the Managing Agent for any statements, warranties or representations made in or in connection with the Electronic Tracking Agreement; (c) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of the Electronic Tracking Agreement on the part of the parties thereto or to inspect the Property (including the books and records) of the Borrower; (d) shall not be responsible to any Lender or the Managing Agent for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of the Electronic Tracking Agreement or any other instrument or document furnished pursuant thereto; and (e) shall incur no liability under or in respect of the Electronic Tracking Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by telegram, cable or telex) believed by the MERS Agent to be genuine and signed or sent by the proper Person or party.

13.3. Agent and Affiliates. With respect to any Advance made by JPMorgan Chase in its capacity as a Lender, JPMorgan Chase shall have the same rights and powers under this Agreement as would any Lender and may exercise the same as though it were not the MERS Agent. JPMorgan Chase and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Borrower, the Managing Agents, any of the Borrower’s Affiliates and any Person who may do business with or own securities of the Borrower, the Managing Agents or any such Affiliate, all as if JPMorgan Chase were not the MERS Agent and without any duty to account therefor to the Lenders. If JPMorgan Chase is removed as MERS Agent, such removal will not affect JPMorgan Chase’s rights and interests as a Lender.

13.4. Rights of the MERS Agent. Each right and remedy expressly provided by the Electronic Tracking Agreement as being available to the MERS Agent shall be exercised by the MERS Agent only at the direction of the Majority Banks, or all the Banks where unanimity is required.

13.5. Indemnification of MERS Agent. Each Bank agrees to indemnify the MERS Agent (to the extent not reimbursed by or on behalf of the Borrower), ratably according to the respective principal amounts held by it (or if no Advances are then outstanding, each Bank shall indemnify the MERS Agent ratably according to the amount of its Bank Commitment), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits,

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costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the MERS Agent in any way relating to or arising out of the Electronic Tracking Agreement or any action taken or omitted by the MERS Agent under the Electronic Tracking Agreement, provided that no Bank shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the MERS Agent’s gross negligence or willful misconduct.

ARTICLE XIV

MISCELLANEOUS

14.1. Notices. Any notice or request required or permitted to be given under or in connection with this Agreement, the Notes or the other Transaction Documents (except as may otherwise be expressly required therein) shall be in writing and shall be mailed by first class or express mail, postage prepaid, or sent by telex, telegram, telecopy or other similar form of rapid transmission, confirmed by mailing (by first class or express mail, postage prepaid) written confirmation at substantially the same time as such rapid transmission, or personally delivered to an officer of the receiving party. With the exception of certain administrative and collateral reports that may be directed to specific departments of the Administrative Agent, all such communications shall be mailed, sent or delivered to the parties hereto at their respective addresses as follows:

The Borrower:	UAMC CAPITAL, LLC
	700 N.W. 107th Avenue
	Miami, Florida 33172
	Facsimile: (305) 229-6657
	Attention: Janice Munoz, Vice President & Treasurer
	With a copy to:
	LENNAR CORPORATION
	700 N.W. 107th Avenue
	Miami, Florida 33172
	Facsimile: (305) 229-6650
	Attention: Mark Sustana, General Counsel
Issuers:	ATLANTIC ASSET SECURITIZATION LLC
	c/o Lord Securities Corporation
	45 Broadway, 19th Floor
	New York, New York 10006
	Attention: Dwight Jenkins, Vice President
	With a copy to the Administrative Agent (except in the case
	of notice from the Administrative Agent).
	LA FAYETTE ASSET SECURITIZATION LLC
	c/o Calyon New York Branch
	1301 Avenue of the Americas

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	New York, New York 10019
	Facsimile: (212) 459-3258
	Attention: Conduit Securitization
	With a copy to the Administrative Agent (except in the case of notice from the Administrative Agent).
	GRESHAM RECEIVABLES (NO. 6) LIMITED
	26 New Street
	St. Helier
	Jersey JE2 3RA
	Fax number: + 44 (0) 1534 814815
	Attention: Miranda Landsdowne
	JUPITER SECURITIZATION COMPANY LLC
	c/o JPMorgan Chase Bank, N.A.
	Asset-Backed Finance Division
	1 JPMorgan Chase Plaza
	Chicago, Illinois 60670
	Facsimile: (312) 732-1844
Banks:	CALYON NEW YORK BRANCH
	Calyon Building
	1301 Avenue of the Americas
	New York, New York 10019
	Facsimile: (212) 459-3258
	Attention: Conduit Securitization
	LLOYDS TSB BANK PLC
	10 Gresham Street
	London, England
	EC2V 7AE
	Facsimile: 011 44 207 158 3247
	Attention: Directors - Securitisation
	With copy to:
	LLOYDS TSB BANK PLC
	1251 Avenue of the Americas
	39th Floor
	New York, New York 10017
	Telephone No.: (212) 930-5000
	Facsimile: (212) 930-5098
	Attention: Michelle White
	JPMORGAN CHASE BANK, N.A.
	c/o JPMorgan Chase Bank, N.A.

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	Asset-Backed Finance Division
	1 JPMorgan Chase Plaza
	Chicago, Illinois 60670
	Telephone No.: (312) 732-2722
	Facsimile: (312) 732-1844
Administrative	CALYON NEW YORK BRANCH,
Agent:	Calyon Building
	1301 Avenue of the Americas
	New York, New York 10019
	Telephone No.: (212) 261-7810
	Telex No.: 62410
	(Answerback: CRED A 62410 UW)
	Facsimile: (212) 459-3258
	Attention: Conduit Securitization
Managing Agents:	CALYON NEW YORK BRANCH,
	Calyon Building
	1301 Avenue of the Americas
	New York, New York 10019
	Telephone No.: (212) 261-7810
	Telex No.: 62410
	(Answerback: CRED A 62410 UW)
	Facsimile: (212) 459-3258
	Attention: Conduit Securitization
	LLOYDS TSB BANK PLC
	10 Gresham Street
	London, England
	EC2V 7AE
	Facsimile: 011 44 207 158 3247
	Attention: Directors - Securitization
	With copy to:
	LLOYDS TSB BANK PLC
	1251 Avenue of the Americas
	39th Floor
	New York, New York 10017
	Telephone No.: (212) 930-5000
	Facsimile: (212) 930-5098
	Attention: Michelle White
	JPMORGAN CHASE BANK, N.A.
	c/o JPMorgan Chase Bank, N.A.
	Asset-Backed Finance Division

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	1 JPMorgan Chase Plaza
	Chicago, Illinois 60670
	Facsimile: (312) 732-1844
	Telephone No. (312) 732-2722
Originators:	UNIVERSAL AMERICAN MORTGAGE COMPANY, LLC
	700 N.W. 107th Avenue
	Miami, Florida 33172
	Facsimile: (305) 229-6657
	Attention: Janice Munoz, Vice President & Treasurer
	With a copy to:
	LENNAR CORPORATION
	700 N.W. 107th Avenue
	Miami, Florida 33172
	Facsimile: (305) 229-6650
	Attention: Mark Sustana, General Counsel
	UNIVERSAL AMERICAN MORTGAGE COMPANY OF CALIFORNIA
	700 N.W. 107th Avenue
	Miami, Florida 33172
	Facsimile: (305) 229-6657
	Attention: Janice Munoz, Vice President & Treasurer
	With a copy to:
	LENNAR CORPORATION
	700 N.W. 107th Avenue
	Miami, Florida 33172
	Facsimile: (305) 229-6650
	Attention: Mark Sustana, General Counsel
Servicer:	UNIVERSAL AMERICAN MORTGAGE COMPANY, LLC
	700 N.W. 107th Avenue
	Miami, Florida 33172
	Facsimile: (305) 229-6657
	Attention: Janice Munoz, Vice President & Treasurer
	With a copy to:
	LENNAR CORPORATION
	700 N.W. 107th Avenue
	Miami, Florida 33172
	Facsimile: (305) 229-6650
	Attention: Mark Sustana, General Counsel

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or at such other addresses or to such officer’s, individual’s or department’s attention as any party may have furnished the other parties in writing. Any communication so addressed and mailed shall be deemed to be given when so mailed, except that notices and requests given pursuant to Sections 2.3 and 3.3(e). Borrowing Requests and communications related thereto shall not be effective until actually received by the Collateral Agent, the Administrative Agent, the Issuers or the Borrower, as the case may be; and any notice so sent by rapid transmission shall be deemed to be given when receipt of such transmission is acknowledged, and any communication so delivered in person shall be deemed to be given when receipted for by, or actually received by, an authorized officer of the Borrower, the Collateral Agent, or the Administrative Agent.

14.2. Amendments, Etc. No amendment or waiver of any provision of this Agreement or consent to any departure by the Borrower therefrom shall be effective unless in a writing signed by the Majority Banks, the Administrative Agent (as agent for the Issuers) and the Administrative Agent (and, in the case of any amendment, also signed by the Borrower), and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Notwithstanding the foregoing, unless an amendment, waiver or consent shall be made in writing and signed by each of the Banks, the Managing Agents, and the Administrative Agent, and each of the Rating Agencies shall confirm that any amendment will not result in a downgrade or withdrawal of the ratings assigned to any Commercial Paper Notes, no amendment, waiver or consent shall do any of the following:

(a) amend the definitions of Eligible Mortgage Loan, Collateral Value, Advance Rate or Majority Banks or

(b) amend, modify or waive any provision of this Agreement in any way that would:

(i) reduce the amount of principal or interest that is payable on account of any Advance or delay any scheduled date for payment thereof or

(ii) impair any rights expressly granted to an assignee or participant under this Agreement or

(iii) reduce the fees payable by the Borrower to the Managing Agents, to the Administrative Agent, or to the Lenders or

(iv) delay the dates on which such fees are payable or

(c) amend or waive the Event of Default set forth in Sections 8.1(f), (g) or (h) relating to the bankruptcy of the Performance Guarantor, the Originators or the Borrower or

(d) amend or waive the Event of Default set forth in Sections 8.1(i), (j) or (v) or

(e) amend the definition of Advance Rates or

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(f) amend clause (a) of the definition of Drawdown Termination Date or

(g) amend Section 14.9(e) or

(h) release all or substantially all of the Collateral other than as contemplated by the Transaction Documents or

(i) amend this Section 14.2;

and provided, further, that no amendment, waiver or consent shall, unless in writing and signed by the Servicer in addition to the other parties required above to take such action, affect the rights or duties of the Servicer under this Agreement. No failure on the part of the Lenders, the Managing Agents, or the Administrative Agent to exercise, and no delay in exercising, any right thereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.

14.3. Invalidity. In the event that any one or more of the provisions contained in the Notes, this Agreement or any other Transaction Document shall, for any reason, be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of such document.

14.4. Restrictions on Informal Amendments. No course of dealing or waiver on the part of the Administrative Agent, the Managing Agents, the Collateral Agent, any Lender or any Affected Party, or any of their officers, employees, consultants or agents, or any failure or delay by any such Person with respect to exercising any right, power or privilege under the Notes, this Agreement or any other Transaction Document shall operate as an amendment to the express written terms of the Notes, this Agreement or any other Transaction Document or shall act as a waiver of any right, power or privilege of any such Person.

14.5. Cumulative Rights. The rights, powers, privileges and remedies of each of the Lenders, the Collateral Agent, the Managing Agents, and the Administrative Agent under the Notes, this Agreement, and any other Transaction Document shall be cumulative, and the exercise or partial exercise of any such right, power, privilege or remedy shall not preclude the exercise of any other right or remedy.

14.6. Construction; Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF, OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW WHICH SHALL APPLY HERETO).

14.7. Interest. Any provisions herein, in the Notes, or in any other Transaction Document, or any other document executed or delivered in connection herewith, or in any other agreement or commitment, whether written or oral, expressed or implied, to the contrary notwithstanding, the Lenders shall in no event be entitled to receive or collect, nor shall or may amounts received hereunder be credited, so that the Lenders shall be paid, as interest, a sum greater than the maximum amount permitted by applicable law to be charged to the Person primarily obligated to pay such Note at the time in question. If any construction of this

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Agreement, any Note or any other Transaction Document, or any and all other papers, agreements or commitments indicate a different right given to a Lender to ask for, demand or receive any larger sum as interest, such is a mistake in calculation or wording that this clause shall override and control, it being the intention of the parties that this Agreement, each Note, and all other Transaction Documents or other documents executed or delivered in connection herewith shall in all things comply with applicable law and proper adjustments shall automatically be made accordingly. In the event that any of the Lenders shall ever receive, collect or apply as interest, any sum in excess of the maximum nonusurious rate permitted by applicable law (the “Maximum Rate”), if any, such excess amount shall be applied to the reduction of the unpaid principal balance of the Note held by such Lender, and if such Note is paid in full, any remaining excess shall be paid to the Borrower. In determining whether or not the interest paid or payable, under any specific contingency, exceeds the Maximum Rate, if any, the Borrower and each of the Lenders shall, to the maximum extent permitted under applicable law: (a) characterize any nonprincipal payment as an expense or fee rather than as interest, (b) exclude voluntary prepayments and the effects thereof, and (c) “spread” the total amount of interest throughout the entire term of the respective Note; provided that if any Note is paid and performed in full prior to the end of the full contemplated term hereof, and if the interest received for the actual period of existence thereof exceeds the Maximum Rate, if any, the respective Lender shall refund to the Borrower the amount of such excess, or credit the amount of such excess against the aggregate unpaid principal balance of all Advances made by such Lender hereunder at the time in question.

14.8. Right of Offset. The Borrower hereby grants to each of the Lenders and the Administrative Agent and to any assignee or participant a right of offset, to secure the repayment of the Obligations, upon any and all monies, securities or other Property of the Borrower, and the proceeds therefrom now or hereafter held or received by or in transit to such Person, from or for the account of the Borrower, whether for safekeeping, custody, pledge, transmission, collection or otherwise, and also upon any and all deposits (general or special, time or demand, provisional or final) and credits of the Borrower, and any and all claims of the Borrower against such Person at any time existing, in accordance with the following sentence. Upon the occurrence of any Event of Default, such Person is hereby authorized at any time and from time to time, without notice to the Borrower, to offset, appropriate, and apply any and all items hereinabove referred to against the Obligations. Notwithstanding anything in this Section 13.8 or elsewhere in this Agreement to the contrary, the Administrative Agent and the Lenders and any assignee or participant shall not have any right to offset, appropriate or apply any accounts of the Borrower that consist of escrowed funds (except and to the extent of any beneficial interest of the Borrower in such escrowed funds) that have been so identified by the Borrower in writing at the time of deposit thereof.

14.9. Successors and Assigns.

(a) This Agreement and the Lenders’ rights and obligations herein (including ownership of each Advance) shall be assignable by the Lenders and their successors and assigns to any Eligible Assignee. Each assignor of an Advance or any interest therein shall notify the Administrative Agent and the Borrower of any such assignment.

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(b) Each Bank may assign to any Eligible Assignee or to any other Bank all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Bank Commitment and any Advances or interests therein owned by it), provided however, that:

(i) each such assignment shall be of a constant, and not a varying, percentage of all rights and obligations under this Agreement,

(ii) the amount being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance Agreement with respect to such assignment) shall in no event be less than the lesser of (x) $20,000,000 and (y) all of the assigning Bank’s Bank Commitment,

(iii) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance Agreement, together with a processing and recordation fee of $2,500, and

(iv) concurrently with such assignment, such assignor Bank shall assign to such assignee Bank an equal percentage of its rights and obligations under the related Liquidity Agreement.

Upon such execution, delivery, acceptance and recording, from and after the effective date specified in such Assignment and Acceptance Agreement, (x) the assignee thereunder shall be a party to this Agreement and, to the extent that rights and obligations hereunder or under this Agreement have been assigned to it pursuant to such Assignment and Acceptance Agreement, have the rights and obligations of a Bank hereunder and thereunder and (y) the assigning Bank shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance Agreement, relinquish such rights and be released from such obligations under this Agreement (and, in the case of an Assignment and Acceptance Agreement covering all or the remaining portion of an assigning Bank’s rights and obligations under this Agreement, such Bank shall cease to be a party thereto).

(c) The Administrative Agent shall maintain at its address referred to in Section 13.1 a copy of each Assignment and Acceptance Agreement delivered to and accepted by it and a register for the recordation of the names and addresses of the Banks and the Bank Commitment of, and aggregate outstanding principal of Advances or interests therein owned by, each Bank from time to time (the “Register”). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Servicer, the Managing Agents, the Administrative Agent and the Banks may treat each person whose name is recorded in the Register as a Bank under this Agreement for all purposes of this Agreement. The Register shall be available for inspection by the Borrower, the Servicer, the Managing Agents, the Administrative Agent or any Bank at any time and from time to time upon prior notice.

(d) Each Bank may sell participations, to one or more banks or other entities that are Eligible Assignees, in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Bank Commitment and the Advances or interests therein owned by it); provided, however, that:

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(i) such Bank’s obligations under this Agreement (including, without limitation, its Bank Commitment to the Borrower thereunder) shall remain unchanged,

(ii) such Bank shall remain solely responsible to the other parties to this Agreement for the performance of such obligations, and

(iii) concurrently with such participation, the selling Bank shall sell to such bank or other entity a participation in an equal percentage of its rights and obligations under the related Liquidity Agreement.

The Administrative Agent, the other Banks, the Managing Agents, the Servicer and the Borrower shall have the right to continue to deal solely and directly with such Bank in connection with such Bank’s rights and obligations under this Agreement.

(e) The Borrower may not assign its rights or obligations hereunder or any interest herein without the prior written consent of the Administrative Agent, each Managing Agent, and each Lender.

(f) The parties hereto acknowledge that each of the Issuers hereby grants to the related Managing Agent, as a Program Agent as defined in Section 6.9 of the Collateral Agency Agreement, for the benefit of holders of its Commercial Paper Notes, its liquidity banks, and certain other related creditors, a security interest in its right, title and interest in and to the Advances, the Transaction Documents and the Collateral. Each reference herein or in any of the other Transaction Documents to the Liens in the Collateral granted to the Issuers under the Transaction Documents shall be deemed to include a reference to such security interest of the related Program Agent.

14.10. Survival of Termination. The provisions of Article X and Sections 2.12, 11.4, 13.5, 14.14, 14.15 and 14.20 shall survive any termination of this Agreement.

14.11. Exhibits. The exhibits attached to this Agreement are incorporated herein and shall be considered a part of this Agreement for the purposes stated herein, except that in the event of any conflict between any of the provisions of such exhibits and the provisions of this Agreement, the provisions of this Agreement shall prevail.

14.12. Titles of Articles, Sections and Subsections. All titles or headings to articles, sections, subsections or other divisions of this Agreement or the exhibits hereto are only for the convenience of the parties and shall not be construed to have any effect or meaning with respect to the other content of such articles, sections, subsections or other divisions, such other content being controlling as to the agreement between the parties hereto.

14.13. Counterparts. This Agreement may be executed in two or more counterparts, and it shall not be necessary that the signatures of each of the parties hereto be contained on any one counterpart hereof; each counterpart shall be deemed an original, but all counterparts together shall constitute one and the same instrument.

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14.14. No Proceedings. The Borrower, the Servicer, the Administrative Agent and each Bank hereby agrees that it will not institute against the Issuers, or join any other Person in instituting against the Issuers, any bankruptcy, reorganization, arrangement, insolvency, or liquidation proceeding, or other proceeding under any federal or state bankruptcy or similar law so long as any Commercial Paper Notes issued by any of the Issuers or in the case of Gresham, the Related CP Issuer shall be outstanding or there shall not have elapsed one year plus one day since the last day on which any such Commercial Paper Notes shall have been outstanding. The foregoing shall not limit the rights of the Borrower, the Servicer, any Managing Agent, the Administrative Agent or any Bank to file any claim in or otherwise take any action with respect to any insolvency proceeding that was instituted by any other Person.

14.15. Confidentiality. The Borrower and the Servicer each hereby agrees that it will maintain and cause its respective employees to maintain the confidentiality of this Agreement, and the other Transaction Documents (and all drafts thereof), and each Lender, each Managing Agent, and the Administrative Agent agrees that it will maintain and cause its respective employees to maintain the confidentiality of the Collateral and all other non-public information with respect to the Borrower and the Servicer, and their respective businesses obtained by such party in connection with the structuring, negotiating and execution of the transactions contemplated herein, in each case except (a) as may be required or appropriate in communications with its respective independent certified public accountants, legal advisors, or with independent financial rating agencies, (b) as may be required or appropriate in any report, statement or testimony submitted to any municipal, state or Federal regulatory body having or claiming to have jurisdiction over it, (c) as may be required or appropriate in response to any summons or subpoena or in connection with any litigation, (d) as may be required by or in order to comply with any law, order, regulation or ruling, (e) as may be required or appropriate in connection with disclosures to any and all persons, without limitation of any kind, of information relating in the tax treatment and tax structure of the transaction and all materials of any kind (including opinions and other tax analyses) that are provided to the Borrower or any of the Originators relating to such tax treatment and tax structure, (f) in the case of any Bank, any Issuer, each Managing Agent, or the Administrative Agent, to any Liquidity Bank or provider of credit support to any of the Issuers or in the case of Gresham, the Related CP Issuer, any Managing Agent, any dealer or placement Administrative Agent for any of the Issuers’ or in the case of Gresham, the Related CP Issuer commercial paper, and any actual or potential assignee of, or participant in, any of the rights or obligations of such Lender, or (g) in the case of any Issuer, any Managing Agent or the Administrative Agent, to any Person whom any dealer or placement Administrative Agent for any of the Issuers or in the case of Gresham, the related CP Issuer, shall have identified as an actual or potential investor in Commercial Paper Notes; provided that any proposed recipient under clause (f) or (g) shall, as a condition to the receipt of any such information, agree to maintain the confidentiality thereof.

14.16. No Recourse Against Directors, Officers, Etc. The Obligations are solely the entity obligations of the Borrower. No recourse for the Obligations shall be had hereunder against any director, officer, employee (in its capacity as such, and not as Servicer), trustee, Administrative Agent or any Person owning, directly or indirectly, any legal or beneficial interest in the Borrower (in its capacity as such owner, and not as Servicer, Performance Guarantor or otherwise as a party to any Transaction Document). This Section 13.16 shall not, however, (a) constitute a waiver, release or impairment of the Obligations, or (b) affect the

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validity or enforceability of the Performance Guaranty or any other Transaction Document to which the Originators, the Servicer, the Performance Guarantor or any of their Affiliates may be a party.

14.17. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, THE NOTES, ANY OTHER TRANSACTION DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING OR OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OTHER TRANSACTION DOCUMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

14.18. Consent to Jurisdiction; Waiver of Immunities. EACH PARTY HERETO HEREBY ACKNOWLEDGES AND AGREES THAT:

(a) IT IRREVOCABLY (i) SUBMITS TO THE JURISDICTION, FIRST, OF ANY UNITED STATES FEDERAL COURT, AND, SECOND, IF FEDERAL JURISDICTION IS NOT AVAILABLE, OF ANY NEW YORK STATE COURT, IN EITHER CASE SITTING IN NEW YORK CITY, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, (ii) AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED ONLY IN SUCH NEW YORK STATE OR FEDERAL COURT AND NOT IN ANY OTHER COURT, AND (iii) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO MAINTENANCE OF SUCH ACTION OR PROCEEDING.

(b) TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID TO EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, IT HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER OR IN CONNECTION WITH THIS AGREEMENT.

14.19. Costs, Expenses and Taxes. In addition to its obligations under Articles II and X, the Borrower agrees to pay on demand:

(a)(i) all costs and expenses incurred by the Administrative Agent, the Managing Agents and the Lenders, in connection with the negotiation, preparation, execution and delivery or the administration (including periodic auditing) of this Agreement, the Notes, the other Transaction Documents, and, to the extent related to this Agreement, the Program Documents (including any amendments or modifications of or supplements to the Program Documents entered into in connection herewith), and any amendments, consents or waivers executed in connection therewith, including, without limitation, (A) the fees and expenses of

103

counsel to any of such Persons incurred in connection with any of the foregoing or in advising such Persons as to their respective rights and remedies under any of the Transaction Documents or (to the extent related to this Agreement) the Program Documents, and (B) all out-of-pocket expenses (including fees and expenses of independent accountants) incurred in connection with any review of the books and records of the Borrower or the Servicer either prior to the execution and delivery hereof or pursuant to Section 6.8, provided that any such review pursuant to Section 6.8(a) shall be limited to once each calendar year unless a Default or an Event of Default has occurred or is continuing, and (ii) all costs and expenses incurred by the Administrative Agent, the Managing Agents and the Lenders, in connection with the enforcement of, or any actual or claimed breach of, this Agreement, the Notes, the other Transaction Documents and, to the extent related to this Agreement, the Program Documents (including any amendments or modifications of or supplements to the Program Documents entered into in connection herewith), including, without limitation, the fees and expenses of counsel to any of such Persons incurred in connection therewith including without limitation, with respect to each Issuer or in the case of Gresham, the Related CP Issuer, the cost of rating the Commercial Paper Notes by the Rating Agencies and the reasonable fees and out-of-pocket expenses of counsel to each Issuer; and

(b) all stamp and other taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement, the Notes, the other Transaction Documents or (to the extent related to this Agreement) the Program Documents, and agrees to indemnify each Indemnified Party against any liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees.

14.20. Entire Agreement. THE NOTES, THIS AGREEMENT, AND THE OTHER TRANSACTION DOCUMENTS EXECUTED AND DELIVERED AS OF EVEN DATE HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND THERETO ANY MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES. TO THE EXTENT THAT ANY PROVISIONS OF THE TRANSACTION DOCUMENTS ARE INCONSISTENT WITH THE TERMS OF THIS AGREEMENT, THIS AGREEMENT SHALL CONTROL.

14.21. Excess Funds. An Issuer shall not be obligated to pay any amount pursuant to this Agreement unless such Issuer has excess cash flow from operations or has received funds with respect to such obligation which may be used to make such payment and which funds or excess cash flow are not required to repay when due its Commercial Paper Note or other short term funding backing its Commercial Paper Notes, or in the case of Gresham, those of its Related CP Issuer. Any amount which such Issuer does not pay pursuant to the operation of the preceding sentence shall not constitute a claim, as defined in Section 101(5) of the United States Bankruptcy Code, against such Issuer for any such insufficiency unless and until such Issuer does have excess cash flow or excess funds.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

BORROWER:	UAMC CAPITAL, LLC
	By:	/s/ Robert S. Greaton
	Name:	Robert S. Greaton
	Title:	Vice President
SERVICER:	UNIVERSAL AMERICAN MORTGAGE COMPANY, LLC
	By:	/s/ Robert S. Greaton
	Name:	Robert S. Greaton
	Title:	Vice President
ISSUER:	ATLANTIC ASSET SECURITIZATION LLC
	By:	Calyon New York Branch,
		as Attorney-in-Fact
	By:	/s/ Anthony Brown
	Name:	Anthony Brown
	Title:	Vice President
	By:	/s/ Kostantina Kourmpetis
	Name:	Kostantina Kourmpetis
	Title:	Managing Director
	LA FAYETTE ASSET SECURITIZATION LLC
	By:	Calyon New York Branch,
		as Attorney-in-Fact
	By:	/s/ Anthony Brown
	Name:	Anthony Brown
	Title:	Vice President
	By:	/s/ Kostantina Kourmpetis
	Name:	Kostantina Kourmpetis
	Title:	Managing Director

	GRESHAM RECEIVABLES (NO. 6) LIMITED
	By:	/s/ S.M. Hollywood
	Name:	S.M. Hollywood
	Title:	Director
	JUPITER SECURITIZATION COMPANY LLC
	By:	/s/ John K. Svolos
	Name:	John K. Svolos
	Title:	Vice President
BANK, ADMINISTRATIVE AGENT AND MANAGING AGENT:	CALYON NEW YORK BRANCH
	By:	/s/ Anthony Brown
	Name:	Anthony Brown
	Title:	Vice President
	By:	/s/ Kostantina Kourmpetis
	Name:	Kostantina Kourmpetis
	Title:	Managing Director
BANK AND MANAGING AGENT:	JPMORGAN CHASE BANK, N.A.
	By:	/s/ John K. Svolos
	Name:	John K. Svolos
	Title:	Vice President
	LLOYDS TSB BANK PLC
	By:	/s/ James Hart
	Name:	James Hart
	Title:	Assistant Director

EX-10.18

Exhibit 10.18

THIRD AMENDED AND RESTATED WAREHOUSING

CREDIT AND SECURITY AGREEMENT

BETWEEN

UNIVERSAL AMERICAN MORTGAGE COMPANY, LLC,

a Florida limited liability company

EAGLE HOME MORTGAGE, INC.,

a Washington corporation,

EAGLE HOME MORTGAGE OF CALIFORNIA, INC.,

a California corporation,

UNIVERSAL AMERICAN MORTGAGE COMPANY OF CALIFORNIA,

a California corporation,

UAMC ASSET CORP. II,

a Nevada corporation,

UNIVERSAL AMERICAN MORTGAGE COMPANY OF PENNSYLVANIA, INC.,

a Florida corporation

EAGLE HOME MORTGAGE, LLC,

a Delaware limited liability company

The Lenders Party Hereto

AND

RESIDENTIAL FUNDING CORPORATION,

a Delaware corporation, as Credit Agent

Dated as of April 30, 2006

TABLE OF CONTENTS

1.	THE CREDIT		1-1
	1.1.	The Warehousing Commitment	1-1
	1.2.	Expiration of Warehousing Commitment	1-1
	1.3.	Swingline Facility	1-1
	1.4.	Notes	1-2
	1.5.	Non-Receipt of funds by Credit Agent.	1-2
	1.6.	Replacement Notes.	1-3
	1.7.	Joint and Several Liability	1-3
	1.8.	Limitation on Warehousing Advances	1-3
2.	PROCEDURES FOR OBTAINING ADVANCES		2-1
	2.1.	Warehousing Advances and Swingline Advances	2-1
3.	INTEREST, PRINCIPAL AND FEES		3-1
	3.1.	Interest	3-1
	3.2.	Interest Limitation	3-2
	3.3.	Principal Payments	3-2
	3.4.	Buydowns	3-5
	3.5.	Warehousing Commitment Fees	3-6
	3.6.	Agent’s Fee	3-6
	3.7.	Loan Package Fees, Wire Fees, Warehousing Fees	3-6
	3.8.	Miscellaneous Fees and Charges	3-7
	3.9.	Method of Making Payments	3-7
	3.10.	Illegality	3-7
	3.11.	Increased Costs; Capital Requirements	3-8
	3.12.	Withholding Taxes	3-8
4.	COLLATERAL		4-1
	4.1.	Grant of Security Interest	4-1
	4.2.	Maintenance of Collateral Records	4-2
	4.3.	Release of Security Interest in Pledged Assets	4-3
	4.4.	Collection and Servicing Rights	4-4
	4.5.	Return of Collateral at End of Warehousing Commitment	4-4
	4.6.	Delivery of Collateral Documents	4-5
	4.7.	Borrowers Remain Liable	4-5
	4.8.	Further Assurance	4-5
5.	CONDITIONS PRECEDENT		5-1
	5.1.	Initial Advance	5-1
	5.2.	Each Advance	5-4
	5.3.	Force Majeure	5-5
6.	GENERAL REPRESENTATIONS AND WARRANTIES		6-1
	6.1.	Place of Business	6-1
	6.2.	Organization; Good Standing; Subsidiaries	6-1
	6.3.	Authorization and Enforceability	6-2
	6.4.	Authorization and Enforceability of Lennar Undertaking	6-2
	6.5.	Approvals	6-2
	6.6.	Financial Condition	6-3
	6.7.	Litigation	6-3
	6.8.	Compliance with Laws	6-3
	6.9.	Regulation U	6-3

	6.10.	Investment Company Act	6-3
	6.11.	Payment of Taxes	6-4
	6.12.	Agreements	6-4
	6.13.	Title to Properties	6-4
	6.14.	ERISA	6-4
	6.15.	No Retiree Benefits	6-5
	6.16.	Assumed Names	6-5
	6.17.	Servicing	6-5
7.	AFFIRMATIVE COVENANTS		7-1
	7.1.	Payment of Obligations	7-1
	7.2.	Financial Statements	7-1
	7.3.	Other Borrower Reports	7-1
	7.4.	Maintenance of Existence; Conduct of Business	7-2
	7.5.	Compliance with Applicable Laws	7-2
	7.6.	Inspection of Properties and Books; Operational Reviews	7-3
	7.7.	Notice	7-3
	7.8.	Payment of Debt, Taxes and Other Obligations	7-4
	7.9.	Insurance	7-4
	7.10.	Closing Instructions	7-4
	7.11.	Subordination of Certain Indebtedness	7-4
	7.12.	Other Loan Obligations	7-4
	7.13.	ERISA	7-5
	7.14.	Use of Proceeds of Advances	7-5
8.	NEGATIVE COVENANTS		8-1
	8.1.	Contingent Liabilities	8-1
	8.2.	Restrictions on Fundamental Changes	8-1
	8.3.	Deferral of Subordinated Debt	8-1
	8.4.	Loss of Eligibility, Licenses or Approvals	8-2
	8.5.	Accounting Changes	8-2
	8.6.	Leverage Ratio	8-2
	8.7.	Minimum Tangible Net Worth	8-2
	8.8.	Minimum Modified Tangible Net Worth	8-2
	8.9.	Distributions to Members	8-2
	8.10.	Transactions with Affiliates	8-2
	8.11.	Recourse Servicing Contracts	8-3
	8.12.	Limitation on Liens.	8-3
	8.13.	Limitation on Debt.	8-3
9.	SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING COLLATERAL		9-1
	9.1.	Special Representations and Warranties Concerning Eligibility as Seller/Servicer of Mortgage Loans	9-1
	9.2.	Special Representations and Warranties Concerning Warehousing Collateral	9-2
	9.3.	Special Affirmative Covenants Concerning Warehousing Collateral	9-4
	9.4.	Special Negative Covenants Concerning Warehousing Collateral	9-5
	9.5.	Special Affirmative Covenants Concerning Construction/Perm Mortgage Loans and Third-Party Builder Construction Mortgage Loans	9-6
	9.6.	Special Representations Concerning Construction/Perm Mortgage Loans and Third Party Builder Construction Mortgage Loans	9-6
	9.7.	Special Representations and Warranties Concerning Receivables	9-7
	9.8.	Special Representations Concerning Pledged Shares	9-7
	9.9.	Special Representations and Warranties Concerning Foreclosure Claim Receivables and Foreclosure Mortgage Loans	9-8

	9.10.	Voting Rights; Dividends; Etc.	9-8
10.	DEFAULTS; REMEDIES		10-1
	10.1.	Events of Default	10-1
	10.2.	Remedies	10-3
	10.3.	Application of Proceeds	10-6
	10.4.	Credit Agent Appointed Attorney-in-Fact	10-6
	10.5.	Right of Set-Off	10-7
	10.6.	Sharing of Payments	10-7
11.	AGENT		11-1
	11.1.	Appointment	11-1
	11.2.	Duties of Agent	11-1
	11.3.	Standard of Care	11-1
	11.4.	Delegation of Duties	11-2
	11.5.	Exculpatory Provisions	11-2
	11.6.	Reliance by Agent	11-2
	11.7.	Non-Reliance on Agent or Other Lenders	11-3
	11.8.	Agent in Individual Capacity	11-3
	11.9.	Successor Agent	11-3
	11.10.	Inspection	11-4
12.	MISCELLANEOUS		12-1
	12.1.	Notices	12-1
	12.2.	Reimbursement Of Expenses; Indemnity	12-1
	12.3.	Indemnification by Lenders	12-2
	12.4.	Financial Information	12-2
	12.5.	Terms Binding Upon Successors; Survival of Representations	12-3
	12.6.	Lenders in Individual Capacity	12-3
	12.7.	Assignment and Participation	12-3
	12.8.	Quarterly Accordion Period Commitment Increases	12-4
	12.9.	Amendments	12-4
	12.10.	Governing Law	12-5
	12.11.	Relationship of the Parties	12-5
	12.12.	Severability	12-5
	12.13.	Consent to Credit References	12-5
	12.14.	Counterparts	12-5
	12.15.	Headings/Captions	12-5
	12.16.	Entire Agreement	12-6
	12.17.	Consent to Jurisdiction	12-6
	12.18.	Waiver of Jury Trial	12-6
	12.19.	Waiver of Punitive, Consequential, Special or Indirect Damages	12-6
	12.20.	Confidentiality	12-7
13.	DEFINITIONS		13-1
	13.1.	Defined Terms	13-1
	13.2.	Other Definitional Provisions; Terms of Construction	13-13

EXHIBITS

Exhibit A-SF	Request for Advance
Exhibit A-Construction	Request for Advance (Construction/Rehab)
Exhibit A-Other Investments	Request for Advance Against Other Investments
Exhibit A-SF/UNI	Request for Advance – Unimproved Land Loans
Exhibit B-SF	Procedures and Documentation for Warehousing Single Family Mortgage Loans
Exhibit B-Construction	Procedures and Documentation for Warehousing Construction/Perm Mortgage Loans and Third-Party Builder Construction Mortgage Loans
Exhibit B-Foreclosure Claim Receivable	Procedures and Documentation for Warehousing Foreclosure Claim Receivable
Exhibit B-Investment Mortgage Loans	Procedures and Documentation for Warehousing Investment Mortgage Loans
Exhibit C	Schedule of Servicing Portfolio
Exhibit D	Subsidiaries
Exhibit E	Compliance Certificate
Exhibit F	Schedule of Lines of Credit
Exhibit G	Assumed Names
Exhibit H	Eligible Loans and Other Assets
Exhibit I	Collateral Operations Fee Schedule
Exhibit J	Commitments Schedule
Exhibit K	Advance Certificate
Exhibit L	Existing Liens
Exhibit M	Existing Debt
Exhibit N	Terms of Guaranteed Obligations
Exhibit O	Commitment Summary/Takeout Report

THIRD AMENDED AND RESTATED WAREHOUSING CREDIT

AND SECURITY AGREEMENT

THIRD AMENDED AND RESTATED WAREHOUSING CREDIT AND SECURITY AGREEMENT, dated as of April 30, 2006 between UNIVERSAL AMERICAN MORTGAGE COMPANY, LLC, a Florida limited liability company (“UAMCLLC”), EAGLE HOME MORTGAGE, INC., a Washington corporation (“EHMI”), EAGLE HOME MORTGAGE OF CALIFORNIA, INC., a California corporation (“EHMCA”), UNIVERSAL AMERICAN MORTGAGE COMPANY OF CALIFORNIA, a California corporation (“UAMCC”), UAMC ASSET CORP. II, a Nevada corporation (“UAMC Asset”), UNIVERSAL AMERICAN MORTGAGE COMPANY OF PENNSYLVANIA, INC., a Florida corporation (“UAMCP”), and EAGLE HOME MORTGAGE, LLC, a Delaware limited liability company (“EHMLLC”) (UAMCLLC, EHMI, EHMCA, UAMCC, UAMC Asset, UAMCP, and EHMLLC, collectively, “Borrowers”) RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (“RFC”), JPMORGAN CHASE BANK, N.A., a national banking association (“JPMorgan Chase”), U.S. BANK NATIONAL ASSOCIATION, a national banking association (“U.S. Bank”), SUNTRUST BANK, a state bank organized under the laws of Georgia (“Suntrust”), NATIONAL CITY BANK OF KENTUCKY, a national banking association (“NCBK”), COMERICA BANK (“Comerica”), CALYON NEW YORK BRANCH (“Calyon”) and WASHINGTON MUTUAL BANK, FA (“WaMu”) (RFC, Bank One, U.S. Bank, Suntrust, NCBK, Comerica, Calyon, WaMu, and any additional lender as may from time to time become a party hereto and their respective successors and permitted assigns being referred to individually as a “Lender” and collectively as the “Lenders”), and RFC as credit agent for the Lenders (in such capacity, the “Credit Agent”).

A. Borrowers have requested certain financing from Lenders.

B. Borrowers have asked Lenders and Credit Agent to amend and restate the Existing Agreement (as defined below) and to set forth the terms and conditions upon which Lenders will continue to provide financing to Borrowers.

C. Credit Agent and Lenders have agreed to amend and restate the Existing Agreement to continue to provide that financing to Borrowers subject to the terms and conditions of this Agreement.

D. Subject to Borrowers’ satisfaction of the conditions set forth in Article 5, the “Closing Date” for the transactions contemplated by this Agreement is the date set forth as the Closing Date on the signature page of Credit Agent to this Agreement.

NOW, THEREFORE, the parties to this Agreement agree as follows:

Preamble

1. THE CREDIT

1.1. The Warehousing Commitment

On the terms and subject to the conditions and limitations of this Agreement, including Exhibit H, Lenders agree, severally and not jointly, to make Warehousing Advances to Borrowers from the Closing Date to the Business Day immediately preceding the Warehousing Maturity Date, pro rata in accordance with their respective Percentage Shares, during which period Borrowers may borrow, repay and reborrow in accordance with the provisions of this Agreement. Lenders and RFC have no obligation to make Warehousing Advances and Swingline Advances in an aggregate amount outstanding at any time in excess of the lesser of (a) the Warehousing Credit Limit, or (b) the Aggregate Warehousing Collateral Value. While a Default or Event of Default exists, Lenders may refuse to make any additional Warehousing Advances to Borrowers. Effective as of the Closing Date, all outstanding “Warehousing Advances” and “Swingline Advances” made under the Existing Agreement are deemed to be Warehousing Advances and Swingline Advances, as applicable, made under this Agreement and the Interest Rates and fees set forth in the Existing Agreement, or any separate letter agreement entered into under the Existing Agreement, will no longer apply. In addition, as of the Closing Date, all outstanding RFC/WaMu Advances and RFC Direct Advances made under the Existing Agreement are deemed to be Warehousing Advances made under this Agreement, and the Interest Rates and fees set forth in the Existing Agreement, or under any separate letter agreement entered into under the Existing Agreement, will no longer apply. The Lenders will, at the request of the Credit Agent, make or accept such payments as may be necessary to reallocate their commitments so that each has advanced its pro rata share of all Warehousing Advances in accordance with the other terms of this Agreement. All Warehousing Advances under this Agreement constitute a single indebtedness, and all of the Collateral is security for the Warehousing Note and Swingline Note and for the performance of all of the Obligations.

1.2. Expiration of Warehousing Commitment

The Warehousing Commitment expires on the earlier of (“Warehousing Maturity Date”): (a) April 21, 2008, on which date each Lender’s Warehousing Commitment will expire of its own term and the related Warehousing Advances will become due and payable without the necessity of Notice or action by Lenders or Credit Agent; and (b) the date the Warehousing Commitment is terminated and the Warehousing Advances become due and payable under Section 10.2.

1.3. Swingline Facility

On the terms and subject to the conditions set forth herein, RFC may, from time to time to, but not including the Business Day immediately preceding the Warehousing Maturity Date, make Advances (“Swingline Advances”) requested by Borrowers against Eligible Assets, in an aggregate amount not to exceed the Swingline Facility Amount, without requesting Warehousing Advances from the other Lenders. RFC agrees to provide Borrowers 1 day’s Notice at such time as Borrowers have borrowed the maximum amount available under the Swingline Facility Amount. RFC has no obligation to make Swinglines Advances if the aggregate amount of Swingline Advances and Warehousing Advances outstanding would exceed the lesser of (a) the Warehousing Credit Limit or (b) the Aggregate Warehousing Collateral Value. Lenders hereby agree to purchase from RFC an undivided participation interest in all outstanding Swingline Advances at any time in an amount equal to each Lender’s Percentage Share of such Swingline Advances. RFC may at any time in its sole and absolute discretion (and shall no less frequently than weekly and upon the acceleration of the Obligations following an Event of Default) request

Page 1-1

the Lenders to make Warehousing Advances in principal amounts equal to their Percentage Shares of outstanding Swingline Advances, and each Lender absolutely and unconditionally agrees to fund such Warehousing Advances, regardless of any Default or Event of Default or other condition which would otherwise excuse such Lender from funding Warehousing Advances, provided that no Lender is required to make Warehousing Advances to repay Swingline Advances or purchase participations in Swingline Advances that would cause such Lender’s aggregate Warehousing Advances (including participations in Swingline Advances) then outstanding to exceed the amount of such Lender’s Warehousing Commitment Amount. Each Lender’s Warehousing Advances made pursuant to the preceding sentence shall be delivered directly to RFC in immediately available funds at the office of Credit Agent by 4:00 p.m. on the day of the request therefor by RFC if such request is made on or before 1:00 p.m., or by 9:00 a.m. on the 1st Business Day following such request if such request is made after 1:00 p.m., and shall be promptly applied against the outstanding Swingline Advances. At the time of any request for Warehousing Advances from Lenders pursuant to this Section 1.7, Credit Agent will deliver to each Lender a certificate in the form of Exhibit K attached hereto (the “Advance Certificate”), certified by Credit Agent. For purposes of the limitations set forth in Exhibit H hereto, Swingline Advances shall be deemed to be Warehousing Advances.

1.4. Notes

Warehousing Advances made by each Lender against Eligible Assets other than Agreements for Deed and Foreclosure Claim Receivables are evidenced by Borrowers’ promissory notes, payable to each Lender, in the form prescribed by Credit Agent (each, a “Warehousing Note”). Warehousing Advances made by each Lender against Agreements for Deed or Foreclosure Claim Receivables are evidenced by Borrowers’ promissory notes, payable to each Lender, in the form prescribed by the Credit Agent (each, a “Sublimit Note”). Swingline Advances made by RFC are evidenced by Borrowers’ promissory note, payable to RFC, in the form prescribed by Credit Agent (the “Swingline Note”). The terms “Warehousing Notes,” “Sublimit Notes” and “Swingline Note,” as used in this Agreement, include all amendments, restatements, renewals or replacements of the original “Warehousing Notes,” “Sublimit Notes” and “Swingline Note,” and all substitutions for any of them. All terms and provisions of the “Warehousing Notes,” “Sublimit Notes” and “Swingline Note” are incorporated into this Agreement.

1.5. Non-Receipt of funds by Credit Agent.

If Credit Agent receives notice from a Lender that such Lender does not intend to make its Percentage Share of any Warehousing Advances, neither Credit Agent nor any other Lender shall have any obligation to fund such Lender’s Percentage Share. Notwithstanding the foregoing, unless a Lender notifies Credit Agent by 3:00 p.m. on the date of a proposed Warehousing Advance that it does not intend to make its Percentage Share of such Warehousing Advance available to Credit Agent at such time and on such date, Credit Agent may assume that such Lender will make such amount available to Credit Agent to be advanced to Borrowers, and in reliance on such assumption, Credit Agent may, at its option, make a corresponding amount available to the Borrowers.

1.5 (a) If Credit Agent makes such corresponding amount available to the Borrowers and such amount is not made available to Credit Agent by such Lender by close of business on the date of the Warehousing Advance, such Lender shall pay such amount to Credit Agent upon demand plus interest to the date of payment at a rate per annum equal to the Federal Funds Rate.

1.5 (b) If a Lender fails to pay as provided herein, the Borrowers shall pay such amount to Credit Agent upon demand plus interest (at the rate applicable to the Borrowers for such Warehousing Advance) to the date of repayment.

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1.5 (c) Nothing in this Section 1.7 shall relieve any Lender from its obligation to fund its Percentage Share of any Warehousing Advance, or prejudice any rights the Borrowers may have against any Lender as a result of such Lender’s failure to make its Percentage Share of any Warehousing Advance.

1.6. Replacement Notes.

Upon receipt by Credit Agent of an affidavit of an officer of any Lender as to the loss, theft, destruction or mutilation of any Note, and, in the case of any such mutilation, upon receipt by Credit Agent of such Note, Borrowers will issue, in lieu thereof, a replacement note in the same principal amount thereof and otherwise of like tenor.

1.7. Joint and Several Liability

Advances shall be made to any Borrower (except to the extent otherwise provided herein), as shall be requested in the Advance Request, but each Advance, regardless of which Borrower it is made to, shall be deemed made to or for the benefit of all Borrowers, and all Borrowers jointly and severally shall be obligated to repay all Advances. With respect to the obligations to repay Advances made to the other Borrowers, each Borrower agrees to the terms set forth in Exhibit N.

1.8. Limitation on Warehousing Advances

Lenders will make Warehousing Advances against Eligible Assets upon the request of Borrowers, in the manner provided in Article 2, for the purposes set forth in Section 7.14. Lenders’ obligation to make Warehousing Advances against Eligible Assets is subject to the limitations set forth in Exhibit H.

End of Article 1

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2. PROCEDURES FOR OBTAINING ADVANCES

2.1. Warehousing Advances and Swingline Advances

2.1 (a) To obtain a Warehousing Advance or a Swingline Advance under this Agreement, a Borrower must deliver to Credit Agent either a completed and signed request for a Warehousing Advance or a Swingline Advance on the then current form approved by Credit Agent, or an Electronic Advance Request, together with a list of the Mortgage Loans for which the request is being made (“Warehousing Advance Request”), not later than (i) in the case of Electronic Advance Requests, 3:30 p.m. on the Business Day, and (ii) in all other cases, 1 Business Day before the Business Day on which a Borrower desires the Warehousing Advance or Swingline Advance. Subject to the delivery of a Warehousing Advance Request and the satisfaction of the conditions and limitations of this Agreement, including the conditions set forth in Sections 5.1 and 5.2, a Borrower may obtain a Warehousing Advance or a Swingline Advance under this Agreement upon compliance with the procedures set forth in this Section and in the applicable Exhibit B, including delivery to Credit Agent of all required Collateral Documents. Credit Agent’s current form of Warehousing Advance Request is set forth in the applicable Exhibit A. Upon not less than 3 Business Days’ prior Notice to Borrowers, Credit Agent may modify its form of Warehousing Advance Request and any other Exhibit or document referred to in this Section to conform to either current legal requirements or Credit Agent practices and, as so modified, those Exhibits and documents will become part of this Agreement. Credit Agent will promptly notify Lenders of any changes made to any document under the preceding sentence.

2.1 (b) In making the determination whether a Warehousing Advance or Swingline Advance will be made against an Eligible Asset, Credit Agent will be permitted to rely, without independent investigation of the correctness thereof, on the most recent information supplied by Borrowers to Credit Agent with respect to the Weighted Average Committed Purchase Price.

2.1 (c) Credit Agent has a reasonable time to examine Borrowers’ Advance Request and the Collateral Documents to be delivered by Borrower before funding the requested Advance, and may reject any Eligible Asset that does not meet the requirements of this Agreement or of the related Purchase Commitment.

2.1 (d) Borrowers must hold or cause a custodian to hold, in trust for Credit Agent, those original Collateral Documents of which only copies are required to be delivered to Credit Agent under Exhibit B. Unless a Pledged Loan is being held by an Investor for purchase or has been redeemed from pledge by Borrowers, promptly upon request by Credit Agent or, if the recorded Collateral Documents have not yet been returned from the recording office, immediately upon receipt by Borrowers or a custodian of those recorded Collateral Documents, Borrowers must deliver or cause a custodian to deliver to Credit Agent any or all of the original Collateral Documents.

2.1 (e) To fund Warehousing Advances and Swingline Advances under this Agreement, Credit Agent will cause the Funding Bank to credit the Wire Disbursement Account upon compliance by Borrowers with the terms of the Loan Documents. Credit Agent will determine, in its sole discretion, the method by which Advances and other amounts on deposit in the Wire Disbursement Account are disbursed by the Funding Bank to or for the account of Borrowers.

End of Article 2

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3. INTEREST, PRINCIPAL AND FEES

3.1. Interest

3.1 (a) Except as otherwise provided in this Section, Borrowers must pay interest on the unpaid amount of each Advance from the date the Advance is made until it is paid in full at the Interest Rate specified in Exhibit H.

3.1 (b) Borrowers and any Lender may enter into an agreement (the “Balance Funded Agreement”) pursuant to which Borrowers agree to maintain Eligible Balances on deposit with such Lender or a Designated Bank in consideration of the funding of all or a portion of such Lender’s Warehousing Advances at a Balance Funded Rate or another reduction in the interest and fees payable to such Lender. Borrowers may give written notice to any Lender with which it has a Balance Funded Agreement, as and when provided in such Balance Funded Agreement, of Borrowers’ election to have a portion (the “Balance Funded Portion”) of the principal amount of such Lender’s Warehousing Advances bear interest at the Balance Funded Rate during any calendar month. In the event Borrowers elect to have all or a portion of any Lender’s Warehousing Advances bear interest at the Balance Funded Rate during any month, such Lender shall notify the Credit Agent no later than 12:00 Noon on the second Business Day of the following month of the estimated amount by which the interest to be paid by Borrowers on such Lender’s Warehousing Advances during such month was reduced as a result of the application of such Balance Funded Agreement. If the Eligible Balances maintained by Borrowers with such Lender or its Designated Bank during such month are less than the Balance Funded Portion, if the estimate provided by a Lender pursuant to the previous sentence is not accurate, or if a Lender agrees to another reduction in the interest and fees payable to such Lender, the Lender may charge and separately bill Borrowers a deficiency fee (a “Balance Deficiency Fee”), or credit Borrowers with any amount by which interest billed exceeded interest actually due, the amount of which shall be set forth in the Balance Funded Agreement between Borrowers and such Lender.

3.1 (c) Credit Agent computes interest on the basis of the actual number of days in each month and a year of 360 days. Interest shall be due and payable in accordance with Section 3.9.

3.1 (d) If, for any reason (1) Borrowers repay an Advance on the same day that it was made by Credit Agent, or (2) Borrowers instruct Credit Agent not to make a previously requested Advance after Credit Agent has reserved funds or made other arrangements necessary to enable Credit Agent to fund that Advance, Borrowers must pay Credit Agent for the benefit of Lenders an administrative fee equal to 1 day of interest on that Advance at the Interest Rate that would otherwise have been applicable under Exhibit H for the applicable Eligible Asset type.

3.1 (e) After an Event of Default occurs and upon Notice to Borrowers by Credit Agent, the unpaid amount of each Advance will bear interest at the Default Rate until the Event of Default has been waived or cured, as provided in this Agreement, or the Advances have been paid in full.

3.1 (f) Credit Agent will adjust the rates of interest provided for in this Agreement as of the effective date of each change in the applicable index. Credit Agent’s determination of such rates of interest as of any date of determination is conclusive and binding, absent manifest error.

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3.2. Interest Limitation

Credit Agent and Lenders do not intend, by reason of this Agreement, the Notes or any other Loan Document, to receive interest in excess of the amount permitted by applicable law. If Credit Agent or any Lender receives any interest in excess of the amount permitted by applicable law, whether by reason of acceleration of the maturity of this Agreement, the Notes or otherwise, Credit Agent will apply the excess to the unpaid principal balance of the Warehousing Advances and not to the payment of interest. If all Warehousing Advances have been paid in full and the Warehousing Commitment has expired or have been terminated, Credit Agent will remit any excess to Borrowers. This Section controls every other provision of all agreements between Borrowers, Credit Agent and Lenders and is binding upon and available to any subsequent holder of the Notes.

3.3. Principal Payments

3.3 (a) Borrowers must pay to Credit Agent (i) for the pro rata benefit of Lenders in the case of Warehousing Advances, and (ii) for RFC in the case of Swingline Advances, the outstanding principal amount of all Advances on the Warehousing Maturity Date. In addition, on the last Business Day of each Quarterly Accordion Period, Borrowers must pay to Credit Agent for the pro rata benefit of the Lenders, the outstanding principal amount of all Warehousing Advances in excess of the Warehousing Credit Limit as of the next Business Day.

3.3 (b) Except as otherwise provided in Section 3.1(d), Borrowers may prepay any portion of the Advances without premium or penalty at any time pursuant to Section 3.4 or Section 4.3(d). If at any time:

(1) the Warehousing Advances outstanding under this Agreement exceed the Warehousing Credit Limit, or

(2) the Advances outstanding under this Agreement exceed the Aggregate Warehousing Collateral Value,

Borrowers must immediately pay to Credit Agent for the benefit of Lenders, without the necessity of prior demand or Notice from Credit Agent, and Borrowers authorize Credit Agent to cause the Funding Bank to charge Borrowers’ Operating Account for, the amount of such excess.

3.3 (c) Borrowers must pay to Credit Agent for the pro rata benefit of Lenders, without the necessity of prior demand or Notice from Credit Agent, and Borrowers authorize Credit Agent to cause the Funding Bank to charge Borrowers’ Operating Account for, or reduce the Buydown by, the amount of any outstanding Advance against a specific Pledged Asset upon the earliest occurrence of any of the following events:

(1) One (1) Business Day elapses from the date an Advance was made if the Pledged Loan to be funded by that Advance has not closed and funded.

(2) Fifteen (15) Business Days elapse without the return of a Collateral Document delivered by Credit Agent to a Borrower under a Trust Receipt for correction or completion.

(3) On the date on which a Pledged Asset is determined to have been originated based on untrue, incomplete or inaccurate information or otherwise to be subject to fraud, whether or not any Borrower had knowledge of the misrepresentation, incomplete or inaccurate information or fraud, or on the date on which any

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Borrower knows, has reason to know, or receives Notice from Credit Agent, that (A) one or more of the representations and warranties set forth in Article 9 were inaccurate or incomplete in any material respect on any date when made or deemed made or became inaccurate or incomplete after any such date with respect to such Pledged Asset, or (B) any Borrower has failed to perform or comply with any covenant, term or condition set forth in Article 9 with respect to such Pledged Asset.

(4) Except in the case of Foreclosure Claim Receivables and Foreclosure Mortgage Loans, on the date a Pledged Asset or a Lien prior to a Mortgage securing repayment of a Pledged Asset has been in default for a period of 60 days or more.

(5) Upon the sale, other disposition or prepayment of any Pledged Asset or, with respect to a Pledged Loan included in an Eligible Mortgage Pool, upon the sale or other disposition of the related Agency Security.

(6) One (1) Business Day immediately preceding the date scheduled for the foreclosure or trustee sale of the real property and improvements securing a Pledged Loan, unless such foreclosure or trustee sale will give rise to a Foreclosure Claim Receivable against which the related Advance may remain outstanding hereunder.

(7) If the outstanding Advances against Pledged Loans exceed the aggregate Purchase Commitments for Pledged Loans.

3.3 (d) Upon telephonic or written Notice to Borrowers by Credit Agent, Borrowers must pay to Credit Agent for the pro rata benefit of Lenders, and Borrowers authorize Credit Agent to cause the Funding Bank to charge Borrowers’ Operating Account for, or reduce the Buydown by, the amount of any outstanding Advance against a specific Pledged Asset upon the earliest occurrence of any of the following events:

(1) For any Pledged Loan, the Warehouse Period elapses.

(2) Forty-five (45) days elapse from the date a Pledged Loan was delivered to an Investor or Approved Custodian for examination and purchase or for inclusion in a Mortgage Pool, without the purchase being made or an Eligible Mortgage Pool being initially certified, or upon rejection of a Pledged Loan as unsatisfactory by an Investor or Approved Custodian.

(3) Seven (7) Business Days elapse from the date a Wet Settlement Advance was made against a Pledged Loan without receipt by Credit Agent of all Collateral Documents relating to the Pledged Loan.

(4) Three (3) Business Days after the mandatory delivery date of the related Purchase Commitment if the specific Pledged Loan or the Pledged Security backed by that Pledged Loan has not been delivered under the Purchase Commitment prior to such mandatory delivery date, or on the date the related Purchase Commitment expires or is terminated, unless, in each case, the Pledged Loan or Pledged Security is eligible for delivery to another Investor under a comparable Purchase Commitment.

(5) With respect to any Pledged Loan, any of the Collateral Documents, upon examination by Credit Agent (and at the reasonable discretion of the Credit Agent), are found not to be in compliance with the requirements of this

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Agreement or the related Purchase Commitment (if a Purchase Commitment is required by Exhibit H), unless such non-compliance is, in Credit Agent’s reasonable judgment, readily curable.

(6) If, after giving effect to a new Advance against a Pledged Asset or to the payment of existing Advances against Pledged Assets, any of the limitations set forth in Exhibit H have been exceeded.

3.3 (e) In addition to the payments required by Sections 3.3(a), 3.3(c) and 3.3(d), if the principal amount of any Pledged Asset is prepaid in whole or in part while an Advance is outstanding against the Pledged Asset, Borrowers must pay to Credit Agent, without the necessity of prior demand or Notice from Credit Agent, and Borrowers authorize Credit Agent to cause the Funding Bank to charge Borrowers’ Operating Account for the amount of the prepayment to be applied against the Advance.

3.3 (f) The proceeds of the sale or other disposition of Pledged Assets must be paid directly by the Investor or other obligor to the Cash Collateral Account. Borrowers must give Notice to Credit Agent in writing, by telephone or by RFConnects Delivery to Credit Agent (and if by telephone, followed promptly by written Notice) of the Pledged Assets for which proceeds have been received. Upon receipt of Borrowers’ Notice, Credit Agent will apply any proceeds deposited into the Cash Collateral Account to the payment of the Advances related to the Pledged Assets identified by Borrowers in their Notice, and those Pledged Assets will be considered to have been redeemed from pledge. Credit Agent is entitled to rely upon Borrowers’ affirmation that deposits in the Cash Collateral Account represent payments from Investors or obligors for the purchase of the Pledged Assets specified by Borrowers in their Notice. If the payment from an Investor for the purchase of Pledged Assets is less than the outstanding Advances against the Pledged Assets identified by Borrowers in their Notice, Borrowers must pay to Credit Agent, and Borrowers authorize Credit Agent to cause the Funding Bank to charge Borrowers’ Operating Account in, an amount equal to that deficiency. As long as no Default or Event of Default exists, Credit Agent will return to Borrowers any excess payment from an Investor or obligor for Pledged Assets. For the purposes of this Section 3.3(f), payments made by check into the Cash Collateral Account will be deemed received when the check has cleared in accordance with Credit Agent’s usual procedures.

3.3 (g) Credit Agent reserves the right to revalue any Pledged Loan or Pledged Security that is not covered by a Purchase Commitment from Fannie Mae or Freddie Mac. Credit Agent reserves the right to revalue any Pledged Loan or Pledged Security that is to be exchanged for an Agency Security if that Agency Security is not covered by a Purchase Commitment. Credit Agent reserves the right to revalue any other Pledged Asset. Borrowers must pay to Credit Agent, without the necessity of prior demand or Notice from Credit Agent, and Borrowers authorize Credit Agent to cause the Funding Bank to charge Borrowers’ Operating Account for, any amount required after any such revaluation to reduce the principal amount of the Advances outstanding against the revalued Eligible Asset to an amount equal to the Advance Rate for the applicable type of Eligible Asset multiplied by the Fair Market Value of the Eligible Asset.

3.3 (h) Upon the occurrence of any event described in Section 10.1(g) with respect to Lennar, Borrowers shall, at the request of Credit Agent or Majority Lenders, repay all Advances outstanding against Agreements for Deed, Construction/Perm Mortgage Loans and Unimproved Land Loans, and no further Advances will thereafter be made against Agreements for Deed, Construction/Perm Mortgage Loans or Unimproved Land Loans.

3.3 (i) Prior to the occurrence of an Event of Default and acceleration of all Advances outstanding hereunder or termination of the Warehousing Commitment, amounts received by Credit Agent as proceeds of the sale or other disposition of Pledged Assets, shall be allocated among Lenders as follows:

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(1) First, to RFC until the aggregate outstanding principal amount of the Swingline Advances have been paid in full; and

(2) Second, pro rata to Lenders in accordance with their respective Percentage Shares, until the principal amount of the related Warehousing Advances have been paid in full; and.

(3) Finally, the balance, if any, to Borrowers.

Following the occurrence of an Event of Default and acceleration of any Obligations outstanding hereunder or termination of the Warehousing Commitment, all amounts received by Credit Agent on account of the Obligations shall be disbursed by Credit Agent in accordance with the provisions of Section 10.3 hereof.

3.3 (j) In addition to the payments required pursuant to Sections 3.3(a) – 3.3(i), Borrowers shall repay the Warehousing Advances and Swingline Advances as set forth in Exhibit H.

3.3 (k) Credit Agent and Lenders agree that, solely for purposes of calculating interest payable in connection with Swingline Advances, any Release Amount received by the Credit Agent and applied to Swingline Advances shall be deemed to have been applied to outstanding Swingline Advances on the Business Day on which the Credit Agent actually receives such Release Amount (in each case, the “Receipt Date”) provided that (i) no Default or Event of Default exists as of such Receipt Date or at any time thereafter through and including the date on which the Credit Agent applies such Release Amount to Swingline Advances (in each case, the “Credit Date”), and (ii) the outstanding principal balance of all Swingline Advances would be greater than or equal to zero on the Receipt Date and at all times thereafter through and including the applicable Credit Date after giving effect to the application of (1) such Release Amount, (2) all Buydowns, and (3) any other payment of the Swingline Advances. If the foregoing conditions are not satisfied with respect to any Release Amount received by the Credit Agent and applied to Swingline Advances, the Credit Agent will credit the amount of such Release Amount to such Swingline Advance on the applicable Credit Date.

3.4. Buydowns

Borrowers may prepay a portion of the Warehousing Advances outstanding under this Agreement (individually “Buydown” and collectively “Buydowns”) upon Notice to Credit Agent not later than (a) 1:00 p.m. on the Business Day immediately preceding the Business Day on which Borrowers desire to make a Buydown in the amount of $10,000,000 or more or (b) 3:30 p.m. on the Business Day on which Borrower desires to make a Buydown in an amount less than $10,000,000. Each Buydown must be in an amount not less than $1,000,000, and Borrowers may not make Buydowns that exceed the aggregate principal balance of all Warehousing Advances outstanding under this Agreement. A Buydown is a reduction in the aggregate amount of the Warehousing Advances outstanding under this Agreement, but does not represent the prepayment of any particular Warehousing Advance for the purposes of any Pledged Assets specifically related to such Warehousing Advances, and does not entitle Borrowers to the release of any Collateral, including Collateral consisting of the proceeds of Pledged Assets described in Sections 3.3(e) or 3.3(f). To reduce interest payable by Borrowers, Credit Agent may apply Buydowns to Warehousing Advances outstanding under this Agreement in any order determined by Credit Agent in its sole discretion. Subject to the satisfaction of the conditions set forth in Sections 5.2(d) and 5.2(e) (which apply as if the requested reborrowing were a Warehousing Advance), Borrowers may, from the Closing Date to the Business Day immediately preceding the

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Warehousing Maturity Date, reborrow all or any portion of the Buydowns upon Notice to Credit Agent not later than (m) 1:00 p.m. on the Business Day immediately preceding the Business Day on which Borrowers desire to reborrow $10,000,000 or more or (n) 3:30 p.m. on the Business Day that Borrowers desire to reborrow an amount less than $10,000,000. If Credit Agent receives Buydowns or a combination of Buydowns and payments of Warehousing Advances that exceed the aggregate principal balance of the Warehousing Advances outstanding under this Agreement (“Excess Buydown”), as long as no Default or Event of Default exists, Borrowers may request that Credit Agent return all or any portion of an Excess Buydown upon Notice to Credit Agent not later than (y) 1:00 p.m. on the Business Day immediately preceding the Business Day on which Borrowers request the return of $10,000,000 or more or (z) 3:30 p.m. on the Business Day that Borrower requests the return of less than $10,000,000. Alternatively, Credit Agent may, in its sole discretion, return to Borrowers all or any portion of an Excess Buydown by causing the Funding Bank to credit the Operating Account in that amount. Credit Agent will notify each Lender not later than 1:00 p.m. on the Business Day of (i) a reborrowing of the Buydown, or (ii) the return of any Excess Buydown, and each Lender will make its Percentage Share of the (1) requested reborrowing, or (2) the Excess Buydown, available to Credit Agent in immediately available funds at the office of Credit Agent by 4:00 p.m. on that Business Day. Neither Credit Agent nor any Lender has any obligation to pay or provide to Borrowers any interest, dividends or other benefits on an Excess Buydown.

3.5. Warehousing Commitment Fees

Borrowers must pay to each Lender, through Credit Agent, an annual non-refundable fee (“Warehousing Commitment Fee”) in the amount set forth in Exhibit I. The Warehousing Commitment Fee is payable in advance on the Closing Date and on each anniversary of the Closing Date. If any Lender increases its Warehousing Commitment Amount, or if the Warehousing Credit Limit is increased by an Additional Lender becoming a party to this Agreement, Borrowers will pay the prorated portion of the applicable Warehousing Commitment Fee on the amount of such increase or the amount of such Additional Lender’s Warehousing Commitment Amount from the effective date of such increase to the Warehousing Maturity Date. If, at any time, the Warehousing Maturity Date of any Commitment is extended, Borrowers will pay an additional Warehousing Commitment Fee in the prorated amount determined pursuant to the calculations set forth in Exhibit I from the day after the original Warehousing Maturity Date to the extended Warehousing Maturity Date. Borrowers are not entitled to a reduction in the amount of the Warehousing Comitment Fee if (a) the Warehousing Commitment Amount is reduced or (b) the Warehousing Commitment is terminated at the request of Borrowers or as a result of an Event of Default. Credit Agent’s determination of the Warehousing Comitment Fee for any period is conclusive and binding, absent manifest error.

3.6. Agent’s Fee

Borrowers shall pay to Credit Agent, for its own account, such fees as shall be separately agreed between Borrowers and Credit Agent.

3.7. Loan Package Fees, Wire Fees, Warehousing Fees

At the time of each Advance against an Eligible Asset, Borrowers will incur a loan package fee (“Loan Package Fee”) and a wire fee (“Wire Fee”). Loan Package Fees and Wire Fees may, at Credit Agent’s discretion, be billed separately or combined into a single warehousing fee (“Warehousing Fee”). Borrowers must pay all Loan Package Fees, Wire Fees or Warehousing Fees in the amount separately agreed between Borrowers and Credit Agent within 9 days after the date of Credit Agent’s invoice or, if applicable, within 2 days after the date of Credit Agent’s account analysis statement.

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3.8. Miscellaneous Fees and Charges

Borrowers must reimburse Credit Agent for all Miscellaneous Fees and Charges. Borrowers must pay all Miscellaneous Fees and Charges within 9 days after the date of Credit Agent’s invoice or, if applicable, within 2 days after the date of Credit Agent’s account analysis statement.

3.9. Method of Making Payments

3.9 (a) Credit Agent shall, on or before the 5th Business Day of each month, deliver to Borrowers billings for interest due and payable on Advances, Agent’s Fees, Miscellaneous Charges and other fees and charges calculated through the end of the preceding month. On or before the 10^th Business Day of each month, Borrowers will pay to Credit Agent the full amount of interest, fees and changes billed as described above.

3.9 (b) All payments made on account of the Obligations shall be made by Borrowers to Credit Agent for distribution to Lenders, except for Balance Deficiency Fees, which shall be made directly to the applicable Lender, and fees and charges payable to Credit Agent for its own account. All payments made on account of the principal of and interest on the Warehousing Advances or Swingline Advances in which the Lenders have paid for their participations pursuant to Section 1.3 shall be distributed to the Lenders on a pro-rata basis. All payments made on account of the Obligations shall be made without setoff or counterclaim, free and clear of and without deduction for any taxes, fees or other charges of any nature whatsoever imposed by any taxing authority, and must be received by Credit Agent by 4:00 p.m. on the day of payment, it being expressly agreed and understood that if a payment is received after 4:00 p.m. by Credit Agent such payment will be considered to have been made on the next succeeding Business Day and interest thereon shall be payable by Borrowers at the then applicable rate during such extension. No principal payments resulting from the sale of Pledged Mortgages or Pledged Securities shall be deemed to have been received by Credit Agent until Credit Agent has also received the Notice required under Section 4.3(f). All payments shall be made in lawful money of the United States of America in immediately available funds transferred via wire to the Cash Collateral Account. If any payment required to be made by Borrowers hereunder becomes due and payable on a day other than a Business Day, the due date thereof shall be extended to the next succeeding Business Day and interest shall be payable on Advances so extended at the then applicable rate during such extension.

3.9 (c) All amounts received by Credit Agent on account of the Obligations (except amounts received in respect of fees, Miscellaneous Charges or expenses payable hereunder to Credit Agent for its own account, and amounts payable to RFC for Swingline Advances) shall be disbursed to the applicable Lenders by wire transfer by 12:00 noon on the Business Day after the date of receipt.

3.9 (d) Without limiting any other right that Credit Agent or any Lender may have under applicable law or otherwise, while a Default or Event of Default exists, Borrowers authorize Credit Agent to cause the Funding Bank to charge Borrower’s Operating Account for any Obligations due and owing, without the necessity of prior demand or Notice from Credit Agent.

3.10. Illegality

In the event that any Lender shall have determined (which determination shall be conclusive and binding absent manifest error) at any time that the introduction of, or any change in, any

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applicable law, rule, regulation, order or decree or in the interpretation or the administration thereof by any Person charged with the interpretation or administration thereof, or compliance by such Lender with any request or directive (whether or not having the force of law) of any such Person, shall make it unlawful or impossible for such Lender to charge interest at the Balance Funded Rate based on Borrowers’ Eligible Balances as contemplated by this Agreement, then such Lender shall forthwith give Notice thereof to Credit Agent and Borrowers describing such illegality in reasonable detail. Upon the giving of such Notice, the obligation of such Lender to charge interest at the Balance Funded Rate based on Borrowers’ Eligible Balances shall be immediately suspended for the duration of such illegality and with respect to Advances bearing interest at the Balance Funded Rate, each such Advance of such Lender shall bear interest at the applicable Interest Rate described in Exhibit H. If and when such illegality ceases to exist, such Lender shall notify Credit Agent and Borrowers thereof and such suspension shall cease.

3.11. Increased Costs; Capital Requirements

In the event any applicable law, order, regulation or directive issued by any governmental or monetary authority, or any change therein or in the governmental or judicial interpretation or application thereof, or compliance by any Lender with any request or directive (whether or not having the force of law) by any governmental or monetary authority:

3.11 (a) Does or shall subject any Lender to any tax of any kind whatsoever with respect to this Agreement or any Advances made hereunder, or change the basis of taxation on payments to such Lender of principal, fees, interest or any other amount payable hereunder (except for change in the rate of tax on the overall gross or net income of such Lender by the jurisdiction in which such Lender principal office is located); or

3.11 (b) Does or shall impose, modify or hold applicable any reserve, capital requirement, special deposit, compulsory loan or similar requirement against assets held by, or deposits or other liabilities in or for the account of, advances or loans by, or other credit extended by, or any other acquisition of funds by, such Lender which are not otherwise included in the determination of the interest rate as calculated hereunder;

and the result of any of the foregoing is to increase the cost to such Lender of making, renewing or maintaining any Advance or to reduce any amount receivable in respect thereof or to reduce the rate of return on the capital of such Lender or any Person controlling such Lender as it relates to credit facilities in the nature of that evidenced by this Agreement, then, in any such case, Borrowers shall promptly pay any additional amounts necessary to compensate such Lender for such additional cost or reduced amounts receivable or reduced rate of return as determined by such Lender with respect to this Agreement or Advances made hereunder. If a Lender becomes entitled to claim any additional amounts pursuant to this Section, it shall notify Borrowers through Credit Agent of the event by reason of which it has become so entitled and Borrowers shall pay such amount within 15 days thereafter. A certificate as to any additional amount payable pursuant to the foregoing sentence containing the calculation thereof in reasonable detail submitted by a Lender, through Credit Agent, to Borrowers shall be conclusive in the absence of manifest error.

3.12. Withholding Taxes

3.12 (a)(1) Any and all payments by Borrowers hereunder or under the Notes shall be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto imposed on it by any jurisdiction (excluding, in the case of each Lender and Credit Agent, (y) franchise taxes imposed on or measured by its income by the jurisdiction under the laws of which such Lender or Credit Agent, as the case may be, is organized or any political subdivision thereof, and, (z) if

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such Lender or Credit Agent is entitled at such time to a total or partial exemption from withholding that is required to be evidenced by a United States Internal Revenue Service Form, taxes imposed on it by reason of any failure of such Lender or Credit Agent to deliver to Credit Agent or the Borrowers, from time to time as required by Credit Agent or Borrowers, such Form, completed in a manner reasonably satisfactory to Credit Agent or the Borrowers) (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as “Taxes”). If Borrowers shall be required by law to deduct any taxes from or in respect of any sum payable hereunder or under any Note to any Lender or Credit Agent (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 3.12) such Lender or Credit Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) Borrowers shall make such deductions, and (iii) Borrowers shall pay the full amount deducted to the relevant taxing authority or other authority in accordance with applicable law.

(2) Borrowers will indemnify each Lender and Credit Agent for the full amount of taxes (including, without limitation, any taxes imposed by any jurisdiction on amounts payable under this Section 3.12 paid by such Lender or Credit Agent (as the case may be), and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such taxes were correctly or legally asserted. This indemnification shall be made within 30 days from the date such Lender or Credit Agent (as the case may be) makes written demand therefor.

(3) Within 30 days after the date of any payment of taxes, Borrowers will furnish to Credit Agent the original or a certified copy of a receipt evidencing payment thereof.

(4) Prior to the Closing Date, in the case of each Lender which is an original signatory hereto, and on the date of the assignment pursuant to which it becomes a Lender, in the case of each other Lender, and from time to time thereafter if requested by Borrowers or Credit Agent, each Lender organized under the laws of a jurisdiction outside the United States that is entitled to an exemption from United States withholding tax, or that is subject to such tax at a reduced rate under an applicable tax treaty, shall provide Credit Agent and Borrowers with an Internal Revenue Service Form W-8BEN or W-8ECI or other applicable form, certificate or document prescribed by the Internal Revenue Service of the United States certifying as to such Lender’s entitlement to such exemption or reduced rate with respect to all payments to be made to such Lender hereunder and under the Notes. Unless Borrowers and Credit Agent have received forms or other documents satisfactory to them indicating that payments hereunder or under any Note are not subject to United States withholding tax or are subject to such tax at a rate reduced by an applicable tax treaty, Borrowers or Credit Agent shall withhold taxes from such payments at the applicable statutory rate in the case of payments to or for any Lender organized under the laws of a jurisdiction outside the United States.

(5) Any Lender claiming any additional amounts payable pursuant to this Section 3.12 shall use its best efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its applicable lending office to a jurisdiction in which such Lender already has a lending office if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts which may thereafter accrue and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.

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(6) Without prejudice to the survival of any other agreement of the Borrowers hereunder, the agreements and obligations of the Borrowers contained in this Section 3.12 shall survive the payment in full of principal and interest hereunder and under the Notes.

3.12 (b) If Borrowers become obligated to pay additional amounts described in Section 3.12(a) as a result of any condition described in such Section and payment of such amount is demanded by any Lender, then unless a Default or an Event of Default shall have occurred and be continuing or such Lender has theretofore taken steps that will promptly remove or cure the conditions creating the cause for such obligation to pay such additional amounts, or has revoked such election, as the case may be, Borrowers may, on 10 Business Days’ prior written Notice to Credit Agent, who shall promptly send a copy of such notice to each Lender, cause such Lender to (and such Lender shall, upon payment in full of all amounts outstanding in respect of such Lender’s Advances, including accrued interest thereon, and all other amounts due and payable to such Lender hereunder) assign pursuant to Section 12.7 all of its rights and obligations under this Agreement to a Lender or other Person selected by Borrowers and reasonably acceptable to Credit Agent.

End of Article 3

Page 3-10

4. COLLATERAL

4.1. Grant of Security Interest

As security for the payment of the Notes and for the performance of all of Borrowers’ Obligations, Borrowers grant a security interest to Credit Agent, for the benefit of the Lenders, in all of Borrowers’ right, title and interest in and to the following described property, whether now owned or acquired after the date of this Agreement (“Collateral”):

4.1 (a) All amounts advanced by Credit Agent to or for the account of Borrowers under this Agreement to fund a Mortgage Loan until that Mortgage Loan is closed and those funds disbursed.

4.1 (b) All Mortgage Loans, including all Mortgage Notes, Mortgages and Security Agreements evidencing or securing those Mortgage Loans, (1) that are delivered or caused to be delivered to Credit Agent or any Lender (including delivery to a third party on behalf of Credit Agent), or that otherwise come into the possession, custody or control of Credit Agent or any Lender (including the possession, custody or control of a third party on behalf of Credit Agent) for the purpose of pledge, or (2) in respect of which Credit Agent has made an Advance under this Agreement (all of the foregoing, collectively, “Pledged Loans”).

4.1 (c) All Agreements for Deed in respect of which Advances have been made under this Agreement (collectively, “Pledged Agreements for Deed”)

4.1 (d) All Mortgage-backed Securities that are created in whole or in part on the basis of Pledged Loans or that are delivered or caused to be delivered to Credit Agent or any Lender (including delivery to a third party on behalf of Credit Agent), or that otherwise come into the possession, custody or control of Credit Agent or any Lender (including the possession, custody or control of a third party on behalf of Credit Agent) or that are registered by book-entry in the name of Credit Agent or any Lender (including registration in the name of a third party on behalf of Credit Agent), in each case for the purpose of pledge, or in respect of which an Advance has been made by Credit Agent under this Agreement (collectively, “Pledged Securities”).

4.1 (e) All private mortgage insurance and all commitments issued by the VA or FHA to insure or guarantee any Pledged Loans; all Purchase Commitments held by Borrowers covering Pledged Loans or Pledged Securities, and all proceeds from the sale of Pledged Loans or Pledged Securities to Investors pursuant to those Purchase Commitments; and all personal property, contract rights, servicing rights or contracts and servicing fees and income or other proceeds, amounts and payments payable to Borrowers as compensation or reimbursement, accounts, payments, intangibles and general intangibles of every kind relating to Pledged Loans, Pledged Securities, Purchase Commitments, VA commitments or guaranties, FHA commitments, private mortgage insurance and commitments, and all other documents or instruments relating to Pledged Loans and Pledged Securities, including any interest of Borrowers in any fire, casualty or hazard insurance policies and any awards made by any public body or decreed by any court of competent jurisdiction for a taking or for degradation of value in any eminent domain proceeding as the same relate to Pledged Loans.

4.1 (f) All accounts, payment intangibles and general intangibles owned by Borrowers (“Receivables”) for the payment of money against (1) VA under a VA Guaranty of, FHA or a private mortgage insurer under an FHA or private insurer’s mortgage insurance policy

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insuring payment of, or any other Person under any other agreement (including a Servicing Contract) relating to, all or part of a defaulted Mortgage Loan (A) repurchased by Borrowers from an investor or out of a pool of Mortgage Loans serviced by Borrowers or (B) being serviced by Borrowers, (2) obligors and their accounts, Fannie Mae, Freddie Mac, Ginnie Mae or any other investor under a Servicing Contract covering, or out of the proceeds of any sale of or foreclosure sale in respect of, any Mortgage Loan (A) repurchased by Borrowers out of a pool of Mortgage Loans serviced by Borrowers or (B) being serviced by Borrowers, in either case, for the reimbursement of real estate taxes or assessments, or casualty or liability insurance premiums, paid by Borrowers in connection with Mortgage Loans and (3) obligors and their accounts, or Fannie Mae, Freddie Mac, Ginnie Mae or any other investor under or in respect of any Mortgage Loans serviced by Borrowers for repayment of advances made by Borrowers to cover shortages in principal and interest payments.

4.1 (g) All escrow accounts, documents, instruments, files, surveys, certificates, correspondence, appraisals, computer programs, tapes, discs, cards, accounting records (including all information, records, tapes, data, programs, discs and cards necessary or helpful in the administration or servicing of the Collateral) and other information and data of Borrowers relating to the Collateral.

4.1 (h) All cash delivered to or otherwise in the possession of Credit Agent or any Lender, the Funding Bank or Credit Agent’s agent, bailee or custodian or designated on the books and records of Borrowers as assigned and pledged to Credit Agent, including all cash deposited in the Cash Collateral Account and the Wire Disbursement Account.

4.1 (i) All Hedging Arrangements related to the Collateral (“Pledged Hedging Arrangements”) and Borrowers’ accounts in which those Hedging Arrangements are held (“Pledged Hedging Accounts”), including all rights to payment arising under the Pledged Hedging Arrangements and the Pledged Hedging Accounts, except that Credit Agent’s security interest in the Pledged Hedging Arrangements and Pledged Hedging Accounts applies only to benefits, including rights to payment, related to the Collateral.

4.1 (j) All shares of the capital stock of UAMC Asset now owned or hereafter acquired by any Borrower (collectively, the “Pledged Shares”); all certificates representing the Pledged Shares; and all dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Shares.

4.1 (k) All accounts, contract rights, payment intangibles and general intangibles related to the Collateral.

4.1 (l) All cash and non-cash proceeds of the Collateral, including all dividends, distributions and other rights in connection with, and all additions to, modifications of and replacements for, the Collateral, and all products and proceeds of the Collateral, together with whatever is receivable or received when the Collateral or proceeds of Collateral are sold, collected, exchanged or otherwise disposed of, whether such disposition is voluntary or involuntary, including all rights to payment with respect to any cause of action affecting or relating to the Collateral or proceeds of Collateral.

4.2. Maintenance of Collateral Records

As long as the Warehousing Commitment is outstanding or there remain any Obligations to be paid or performed under this Agreement or under any other Loan Document, each Borrower must preserve and maintain, at its respective chief executive office and principal place of business or in a regional office approved by Credit Agent, or in the office of a computer service bureau engaged

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by Borrowers and approved by Credit Agent and, upon request, make available to Credit Agent or Lenders, the originals, or copies in any case where the originals have been delivered to Credit Agent, Lenders or to an Investor, of its Mortgage Notes, Mortgages and Security Agreements included in Pledged Loans, its Agreements for Deeds, Mortgage-backed Securities delivered to Credit Agent as Pledged Securities, Purchase Commitments, and all related Mortgage Loan documents and instruments, and all files, surveys, certificates, correspondence, appraisals, computer programs, tapes, discs, cards, accounting records and other information and data relating to the Collateral.

4.3. Release of Security Interest in Pledged Assets

4.3 (a) Except as provided in Section 4.3(b), Credit Agent will release its security interest in Pledged Loans and Agreements for Deed only against payment to Credit Agent of the Release Amount in connection with those Pledged Loans and Agreements for Deed. If Pledged Loans are transferred to a pool custodian or an Investor for inclusion in a Mortgage Pool and Credit Agent’s security interest in the Pledged Loans included in the Mortgage Pool is not released before the issuance of the related Mortgage-backed Security, then that Mortgage-backed Security, when issued, is a Pledged Security, Credit Agent’s security interest continues in the Pledged Loans backing that Pledged Security and Credit Agent is entitled to possession of the Pledged Security in the manner provided in this Agreement.

4.3 (b) If Pledged Loans are transferred to an Approved Custodian and included in an Eligible Mortgage Pool, Credit Agent’s security interest in the Pledged Loans included in the Eligible Mortgage Pool will be released upon the delivery of the Agency Security to Credit Agent (including delivery to or registration in the name of a third party on behalf of Credit Agent) and that Agency Security is a Pledged Security. Credit Agent’s security interest in that Pledged Security will be released only against payment to Credit Agent of the Release Amount in connection with the Mortgage Loans backing that Pledged Security.

4.3 (c) Credit Agent has the exclusive right to possession of all Pledged Securities or, if Pledged Securities are issued in book-entry form or issued in certificated form and delivered to a clearing corporation (as that term is defined in the Uniform Commercial Code of Minnesota) or its nominee, Credit Agent has the right to have the Pledged Securities registered in the name of a securities intermediary (as that term is defined in the Uniform Commercial Code of Minnesota) in an account containing only customer securities and credited to an account of Credit Agent with respect to which Credit Agent is the entitlement holder. Credit Agent has no duty or obligation to deliver Pledged Securities to an Investor or to credit Pledged Securities to the account of an Investor or an Investor’s designee except against payment for those Pledged Securities. Borrowers acknowledge that Credit Agent may enter into one or more standing arrangements with securities intermediaries with respect to Pledged Securities issued in book entry form or issued in certificated form and delivered to a clearing corporation or its designee, under which the Pledged Securities are registered in the name of the securities intermediary, and Borrowers agree, upon request of Credit Agent, to execute and deliver to those securities intermediaries Borrowers’ written concurrence in any such standing arrangements.

4.3 (d) As long as no Default or Event of Default exists or would occur as a result, Borrowers may redeem a Pledged Loan, a Pledged Security or an Agreement for Deed from Credit Agent’s security interest by notifying Credit Agent of its intention to redeem the Pledged Loan, Pledged Security or Agreement for Deed from pledge and either (1) paying, or causing an Investor to pay, to Credit Agent, for application as a prepayment on the principal balance of the Warehousing Notes, the Release Amount in connection with the

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Pledged Loan or the Pledged Loans backing that Pledged Security or the Agreement for Deed, or (2) delivering substitute Collateral that, in addition to being acceptable to Credit Agent in its sole discretion, will, when included with the remaining Collateral included in the calculation of Aggregate Warehousing Collateral Value, result in an Aggregate Warehousing Collateral Value that is at least equal to the aggregate outstanding Advances.

4.3 (e) After a Default or Event of Default occurs, Credit Agent may, with no liability to Borrowers or any Person, continue to release its security interest in any Pledged Loan, Pledged Security or Pledged Agreement for Deed against payment of the Release Amount for that Pledged Loan, or for the Pledged Loans backing that Pledged Security or for that Pledged Agreement for Deed.

4.3 (f) The amount to be paid by Borrowers to obtain the release of Credit Agent’s security interest in a Pledged Loan or Pledged Agreement for Deed (“Release Amount”) will be (1) in connection with the sale of a Pledged Loan or Pledged Agreement for Deed by Borrowers, the payment required in any bailee letter pursuant to which Credit Agent ships that Pledged Loan or Pledged Agreement for Deed to an Investor, Approved Custodian, pool custodian or other party, (2) in connection with the sale of a Pledged Loan or Pledged Agreement for Deed by Credit Agent while an Event of Default exists, the amount paid to Credit Agent in a commercially reasonable disposition of that Pledged Loan or Pledged Agreement for Deed and (3) otherwise, until an Event of Default occurs, the principal amount of the Warehousing Advance outstanding against the Pledged Loan or Pledged Agreement for Deed.

4.4. Collection and Servicing Rights

4.4 (a) If no Event of Default exists, Borrowers may service and receive and collect directly all sums payable to Borrowers in respect of the Collateral other than proceeds of any Purchase Commitment or proceeds of the sale of any Collateral. All proceeds of any Purchase Commitment or any other sale of Collateral must be paid directly to the Cash Collateral Account for application as provided in this Agreement.

4.4 (b) After an Event of Default, Credit Agent or its designee is entitled to service and receive and collect all sums payable to Borrowers in respect of the Collateral, and in such case (1) Credit Agent or its designee in its discretion may, in its own name, in the name of Borrowers or otherwise, demand, sue for, collect or receive any money or property at any time payable or receivable on account of or in exchange for any of the Collateral, but Credit Agent has no obligation to do so, (2) Borrowers must, if Credit Agent requests them to do so, hold in trust for the benefit of Credit Agent and immediately pay to Credit Agent at its office designated by Notice, all amounts received by Borrowers upon or in respect of any of the Collateral, advising Credit Agent as to the source of those funds and (3) all amounts so received and collected by Credit Agent will be held by it as part of the Collateral and applied by Credit Agent as provided in this Agreement.

4.5. Return of Collateral at End of Warehousing Commitment

If (a) the Warehousing Commitment has expired or been terminated, and (b) no Advances, interest or other Obligations are outstanding and unpaid, Credit Agent will release its security interest and will deliver all Collateral in its possession to Borrowers at Borrowers’ expense. Borrowers’ acknowledgement or receipt for any Collateral released or delivered to Borrowers under any provision of this Agreement is a complete and full acquittance for the Collateral so returned, and Credit Agent is discharged from any liability or responsibility for that Collateral.

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4.6. Delivery of Collateral Documents

4.6 (a) Credit Agent may deliver documents relating to the Collateral to Borrowers for correction or completion under a Trust Receipt.

4.6 (b) If no Default or Event of Default exists, upon delivery by Borrowers to Credit Agent of shipping instructions pursuant to the applicable Exhibit B, Credit Agent will deliver the Mortgage Notes evidencing Pledged Loans or Pledged Securities, together with all related loan documents and pool documents previously received by Credit Agent under the requirements of the applicable Exhibit B, to the designated Investor or Approved Custodian or to another party designated by Borrowers and acceptable to Credit Agent in its sole discretion.

4.6 (c) If a Default or Event of Default exists, Credit Agent may, without liability to Borrowers or any other Person, continue to deliver Pledged Loans or Pledged Securities, together with all related loan documents and pool documents in Credit Agent’s possession, to the applicable Investor, or Approved Custodian or to another party acceptable to Credit Agent in its sole discretion.

4.6 (d) Upon receipt of Notice from Borrowers under Section 3.3(g), and payment of the Release Amount with respect to a Pledged Asset identified by Borrowers, Credit Agent will, at Borrowers’ request, release to Borrowers any Collateral Documents relating to the redeemed Pledged Asset or the Pledged Loans backing a Pledged Security that Credit Agent has in its possession and that have not been delivered to an Investor or Approved Custodian; provided, that Credit Agent shall, if requested by an Investor or Approved Custodian or consistent with past practices, provide the Collateral Documents for any Pledged Asset purchased to such Investor, and the Collateral Documents for any Pledged Loan backing Mortgage-backed Securities to the Approved Custodian.

4.7. Borrowers Remain Liable

Anything herein to the contrary notwithstanding, Borrowers shall remain liable under each item of the Collateral to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms thereof and any other agreement giving rise thereto, and in accordance with and pursuant to the terms and provisions thereof. Whether or not Credit Agent has exercised any rights in any of the Collateral, neither Credit Agent, nor any Lender shall have any obligation or liability under any of the Collateral (or any agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by Credit Agent of any payment relating thereto, nor shall Credit Agent nor any Lender be obligated in any manner to perform any of the obligations of Borrowers under or pursuant to any of the Collateral (or any agreement giving rise thereto) to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party under any of the Collateral (or any agreement giving rise thereto), to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.

4.8. Further Assurance

Borrowers authorize Credit Agent to file any financing statements, and Borrowers agree to take whatever other actions are requested by Credit Agent to perfect and continue Credit Agent’s security interest in the Collateral. Borrowers will execute and cooperate with Credit Agent in obtaining from third parties control agreements in form satisfactory to Credit Agent with respect to collateral consisting of investment property, deposit accounts, letter-of-credit rights, and electronic chattel paper.

End of Article 4

Page 4-5

5. CONDITIONS PRECEDENT

5.1. Initial Advance

Lenders’ obligation to make Warehousing Advances is subject to the satisfaction, in the sole discretion of Credit Agent, of the following conditions precedent:

5.1 (a) Credit Agent must receive the following, all of which must be satisfactory in form and content to Credit Agent, in its sole discretion:

(1) The Notes and this Agreement duly executed by Borrowers.

(2) The Lennar Undertaking, on the form prescribed by Credit Agent, duly executed by Lennar.

(3) A certificate of UAMCLLC stating that there has been no change in either UAMCLLC ‘s articles of organization or operating agreement since those delivered in connection with the Existing Agreement.

(4) Certificates of good standing dated within 60 days of the date of this Agreement, together with a certification from the Franchise Tax Board or other state tax authority stating that UAMCLLC is in good standing with the Franchise Tax Board or such state tax authority, if applicable.

(5) A resolution, consent or approval of all of the members of UAMCLLC authorizing the execution, delivery and performance of this Agreement and the other Loan Documents, each Advance Request and all other agreements, instruments or documents to be delivered by UAMCLLC under this Agreement.

(6) A certificate as to the incumbency and authenticity of the signatures of the managers of UAMCLLC executing this Agreement and the other Loan Documents.

(7) Assumed Name Certificates dated within 60 days of the date of this Agreement for any assumed name used by UAMCLLC in the conduct of its business.

(8) A certificate of EHMI stating that there has been no change in either EHMI’s articles of incorporation or bylaws since those delivered in connection with the Existing Agreement.

(9) Certificates of good standing dated within 60 days of the date of this Agreement, together with a certification from the Franchise Tax Board or other state tax authority stating that EHMI is in good standing with the Franchise Tax Board or such state tax authority, if applicable.

(10) A resolution of the board of directors of EHMI authorizing the execution, delivery and performance of this Agreement and the other Loan Documents, each Advance Request and all other agreements, instruments or documents to be delivered by EHMI under this Agreement.

(11) A certificate as to the incumbency and authenticity of the signatures of the officers of EHMI executing this Agreement and the other Loan Documents.

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(12) Assumed Name Certificates dated within 60 days of the date of this Agreement for any assumed name used by EHMI in the conduct of its business.

(13) A certificate of EHMCA stating that there has been no change in either EHMCA’s articles of incorporation or bylaws since those delivered in connection with the Existing Agreement.

(14) Certificates of good standing dated within 60 days of the date of this Agreement, together with a certification from the Franchise Tax Board or other state tax authority stating that EHMCA is in good standing with the Franchise Tax Board or such state tax authority, if applicable.

(15) A resolution of the board of directors of EHMCA authorizing the execution, delivery and performance of this Agreement and the other Loan Documents, each Advance Request and all other agreements, instruments or documents to be delivered by EHMCA under this Agreement.

(16) A certificate as to the incumbency and authenticity of the signatures of the officers of EHMCA executing this Agreement and the other Loan Documents.

(17) Assumed Name Certificates dated within 60 days of the date of this Agreement for any assumed name used by EHMCA in the conduct of its business.

(18) A certificate of UAMCC stating that there has been no change in either UAMCC’s articles of incorporation or bylaws since those delivered in connection with the Existing Agreement.

(19) Certificates of good standing dated within 60 days of the date of this Agreement, together with a certification from the Franchise Tax Board or other state tax authority stating that UAMCC is in good standing with the Franchise Tax Board or such state tax authority, if applicable.

(20) A resolution of the board of directors of UAMCC authorizing the execution, delivery and performance of this Agreement and the other Loan Documents, each Advance Request and all other agreements, instruments or documents to be delivered by UAMCC under this Agreement.

(21) A certificate as to the incumbency and authenticity of the signatures of the officers of UAMCC executing this Agreement and the other Loan Documents.

(22) Assumed Name Certificates dated within 60 days of the date of this Agreement for any assumed name used by UAMCC in the conduct of its business.

(23) A certificate of UAMC Asset stating that there has been no change in either UAMC Asset articles of incorporation or bylaws since those delivered in connection with the Existing Agreement.

(24) Certificates of good standing dated within 60 days of the date of this Agreement, together with a certification from the Franchise Tax Board or other state tax authority stating that UAMC Asset is in good standing with the Franchise Tax Board or such state tax authority, if applicable.

(25) A resolution of the board of directors of UAMC Asset authorizing the execution, delivery and performance of this Agreement and the other Loan Documents, each Advance Request and all other agreements, instruments or documents to be delivered by UAMC Asset under this Agreement.

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(26) A certificate as to the incumbency and authenticity of the signatures of the officers of UAMC Asset executing this Agreement and the other Loan Documents.

(27) Assumed Name Certificates dated within 60 days of the date of this Agreement for any assumed name used by UAMC Asset in the conduct of its business.

(28) A certificate of UAMCP stating that there has been no change in either UAMCP’s articles of incorporation or bylaws since those delivered in connection with the Existing Agreement.

(29) Certificates of good standing dated within 60 days of the date of this Agreement, together with a certification from the Franchise Tax Board or other state tax authority stating that UAMCP is in good standing with the Franchise Tax Board or such state tax authority, if applicable.

(30) A resolution of the board of directors of UAMCP authorizing the execution, delivery and performance of this Agreement and the other Loan Documents, each Advance Request and all other agreements, instruments or documents to be delivered by UAMCP under this Agreement.

(31) A certificate as to the incumbency and authenticity of the signatures of the officers of UAMCP executing this Agreement and the other Loan Documents.

(32) Assumed Name Certificates dated within 60 days of the date of this Agreement for any assumed name used by UAMCP in the conduct of its business.

(33) A certificate of EHMLLC stating that there has been no change in either EHMLLC’s articles of organization or operating agreement since those delivered in connection with the Existing Agreement.

(34) Certificates of good standing dated within 60 days of the date of this Agreement, together with a certification from the Franchise Tax Board or other state tax authority stating that EHMLLC is in good standing with the Franchise Tax Board or such state tax authority, if applicable.

(35) A resolution, consent or approval of all of the members of EHMLLC authorizing the execution, delivery and performance of this Agreement and the other Loan Documents, each Advance Request and all other agreements, instruments or documents to be delivered by EHMLLC under this Agreement.

(36) A certificate as to the incumbency and authenticity of the signatures of the managers of EHMLLC executing this Agreement and the other Loan Documents.

(37) Assumed Name Certificates dated within 60 days of the date of this Agreement for any assumed name used by EHMLLC in the conduct of its business.

(38) A certificate of Lennar stating that there has been no change in either Lennar’s articles or certificate of incorporation or bylaws since those delivered in connection with the Existing Agreement,

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(39) Certificates of good standing dated within 60 days of the date of this Agreement, together with a certification from the Franchise Tax Board or other state tax authority stating that Lennar is in good standing with the Franchise Tax Board or such state tax authority, if applicable.

(40) A resolution of the board of directors of Lennar, certified as of the date of the Agreement by its corporate secretary, authorizing the execution, delivery and performance of Lennar Undertaking, and all other agreements, instruments or documents to be delivered by Lennar under this Agreement.

(41) A certificate as to the incumbency and authenticity of the signatures of the officers of Lennar executing Lennar Undertaking and all other agreements, instruments or documents to be delivered under this Agreement (Lender being entitled to rely on that certificate until a new incumbency certificate has been furnished to Lender).

(42) A favorable written opinion of counsel to Borrowers and Lennar (or of separate counsel at the option of Borrowers and Lennar), addressed to Lenders and dated as of the date of this Agreement, covering such matters as Lenders may reasonably request.

(43) Uniform Commercial Code, tax lien and judgment searches of the appropriate public records for each Borrower that do not disclose the existence of any prior Lien on the Collateral other than in favor of Credit Agent or as permitted under this Agreement.

(44) Copies of the certificates, documents or other written instruments that evidence Borrowers’ eligibility described in Section 9.1, all in form and substance satisfactory to Credit Agent.

(45) Copies of each Borrowers’ errors and omissions insurance policy or mortgage impairment insurance policy, and blanket bond coverage policy, or certificates in lieu of policies, showing compliance by each Borrower as of the date of this Agreement with the provisions of Section 7.9.

(46) An agreement among each Borrower that is selling Loans to Fannie Mae, Credit Agent and Fannie Mae in which Fannie Mae agrees to send all cash proceeds of Mortgage Loans sold by such Borrower to Fannie Mae to the Cash Collateral Account, each in form and substance satisfactory to Credit Agreement.

(47) Receipt by Credit Agent and Lenders of any fees due on the date of this Agreement.

(48) An executed Electronic Tracking Agreement among Borrowers, Credit Agent and Mortgage Electronic Registration Systems, Inc. (“MERS”), and MERCORP, Inc., pursuant to which Credit Agent will have the authority to, among other things, withdraw Mortgages from the MERS system, if either the Mortgage Loan has been registered on the MERS system naming Borrowers as servicer or subservicer, or the Mortgage Loan has not yet been registered on the MERS system.

5.1 (b) If, as of the date of this Agreement, any Borrower has any indebtedness for borrowed money to any of its managers, members or Affiliates or any director, officer or shareholder of any manager, member or Affiliate of any manager or member, which indebtedness, when added to all other such indebtedness of each Borrower, results in an aggregate amount of such indebtedness in excess of $35,000,000, the Person to

Page 5-4

whom that Borrower is indebted must have executed a Subordination of Debt Agreement, on the form prescribed by Credit Agent; and Credit Agent must have received an executed copy of that Subordination of Debt Agreement, certified by the secretary of the respective Borrower to be true and complete and in full force and effect as of the date of the Advance.

5.1 (c) No Borrower must have incurred any material liabilities, direct or contingent, other than in the ordinary course of its business, since the Audited Statement Date.

5.2. Each Advance

Lenders’ obligation to make each Warehousing Advance is subject to the satisfaction, in the sole discretion of Credit Agent, as of the date of each Advance, of the following additional conditions precedent:

5.2 (a) Borrowers must have delivered to Credit Agent the applicable Warehousing Advance Request and Collateral Documents required by, and must have satisfied the procedures and substantive requirements set forth in, Article 2 and the Exhibits described in that Article. All items delivered to Credit Agent must be satisfactory to Credit Agent in form and content, and Credit Agent may reject any item that does not satisfy the requirements of this Agreement or any applicable Purchase Commitment.

5.2 (b) Credit Agent must have received evidence satisfactory to it confirming the making or continuation of any book entry or the due filing and recording in all appropriate offices of all financing statements and other instruments necessary to perfect the security interest of Credit Agent in the Collateral under the Uniform Commercial Code or other applicable law.

5.2 (c) The representations and warranties of Borrowers contained in Article 6 and Article 9 and the representations and warranties of Lennar under the Lennar Undertaking must be accurate and complete in all material respects as if made on and as of the date of each Advance.

5.2 (d) Borrowers must have performed all agreements to be performed by each of them under this Agreement, and after giving effect to the requested Advance, no Default or Event of Default will exist under this Agreement.

5.2 (e) After giving effect to the requested Advance, the Advances outstanding under this Agreement will not exceed the lesser of (i) the Warehousing Credit Limit or (ii) the Aggregate Warehousing Collateral Value.

5.2 (f) Lennar must have performed all agreements to be performed by it under the Lennar Undertaking.

Delivery of a Warehousing Advance Request by a Borrower will be deemed a representation by Borrowers that all conditions set forth in this Section have been satisfied as of the date of the Advance.

5.3. Force Majeure

Notwithstanding Borrowers’ satisfaction of the conditions set forth in this Agreement, Credit Agent and Lenders have no obligation to make a Warehousing Advance, if Lenders or Credit Agent are prevented from obtaining the funds necessary to make an Advance, or are otherwise prevented from making an Advance as a result of (a) any fire, flood or other casualty, failure of power, strike,

Page 5-5

lockout or other labor trouble, banking moratorium, embargo, sabotage, confiscation, condemnation, riot, civil disturbance, insurrection, act of terrorism, war or other activity of armed forces, act of God or other similar reason beyond the control of Lenders or Credit Agent or (b) any bank’s (including the Funding Bank’s) failure to wire all or any portion of an Advance to the Person identified in the related Warehousing Advance Request as the intended mortgagor of the Mortgage Loan to be funded with such Advance (or portion of such Advance) if such failure did not directly result from (i) Lenders’ or Credit Agent’s failure to provide information with respect to such identified mortgagor to such bank within a reasonable time after Borrowers furnished such information to Lenders and Credit Agent in complete and proper form, or (ii) Lenders’ or Credit Agent’s failure to provide routine wire-release authorizations to such bank within a reasonable time after all other conditions precedent to such Advance were properly satisfied. Lenders and Credit Agent will make the requested Advance as soon as reasonably possible following the occurrence of such an event.

End of Article 5

Page 5-6

6. GENERAL REPRESENTATIONS AND WARRANTIES

Each Borrower represents and warrants to Credit Agent and Lenders, as of the date of this Agreement and as of the date of each Warehousing Advance Request and the making of each Advance, that:

6.1. Place of Business

As of the Closing Date, and thereafter until Borrowers provide Credit Agent with Notice of any change:

6.1 (a) UAMCLLC’s chief executive office and principal place of business is 311 Park Place Boulevard, 5^th Floor, Clearwater, FL 33758.

6.1 (b) EHMI’s chief executive office and principal place of business is 11000 NE 33^rd Place, Suite 300, Bellevue, Washington 98004.

6.1 (c) EHMCA’s chief executive office and principal place of business is 24896 Chrisanta Drive, Mission Viejo, CA 92691.

6.1 (d) UAMCC’s chief executive office and principal place of business is 24896 Chrisanta Drive, Mission Viejo, CA 92691.

6.1 (e) UAMC Asset’s chief executive office and principal place of business is 700 NW 107^th Avenue, 3rd Floor, Miami, Florida 33173.

6.1 (f) UAMCP’s chief executive office and principal place of business is 700 NW 107^th Avenue, Miami, Florida 33172.

6.1 (g) EHMLLC’s chief executive office and principal place of business is 11000 NE 33^rd Place, Suite 300, Bellevue, Washington 98004.

From and after the time Borrower provides Lenders with Notice of any change of address, the new address shall remain the chief executive office and principal place of business of the applicable Borrower(s) until Notice of a subsequent change of address is given.

6.2. Organization; Good Standing; Subsidiaries

UAMCLLC is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Florida, and has the full legal power and authority to own its property and to carry on its business as currently conducted. EHMI is a corporation duly organized, validly existing and in good standing under the laws of the State of Washington, and has the full legal power and authority to own its property and to carry on its business as currently conducted. EHMCA is a corporation duly organized, validly existing and in good standing under the laws of the State of California, and has the full legal power and authority to own its property and to carry on its business as currently conducted. UAMCC is a corporation duly organized, validly existing and in good standing under the laws of the State of California, and has the full legal power and authority to own its property and to carry on its business as currently conducted. UAMC Asset is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada, and has the full legal power and authority to own its property and to carry on its business as currently conducted. UAMCP is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida, and has the full legal power and authority to own its property and to carry on its business as currently conducted. EHMLLC is a

Page 6-1

limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, and has the full legal power and authority to own its property and to carry on its business as currently conducted. Each Subsidiary of each Borrower is duly organized, validly existing and in good standing under the laws of its jurisdiction of formation, and has the full legal power and authority to own its property and conduct its business as currently conducted. Each Borrower and each Subsidiary of each Borrower is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction in which the transaction of its business makes qualification necessary, except in jurisdictions, if any, where a failure to be in good standing has no material adverse effect on Borrowers’ or the Subsidiaries’ business, operations, assets or financial condition as a whole. For the purposes of this Agreement, good standing includes qualification for any and all licenses and payment of any and all taxes required in the jurisdiction of its incorporation and in each jurisdiction in which Borrower transacts business. As of the date of this Agreement, no Borrower has any Subsidiaries except as set forth on Exhibit D, which sets forth with respect to each Subsidiary, its name, address, place of incorporation, each state in which it is qualified as a foreign corporation, and the percentage ownership of its capital stock by the respective Borrower.

6.3. Authorization and Enforceability

Each Borrower has the power and authority to execute, deliver and perform this Agreement, the Notes and the other Loan Documents to which Borrowers are party and to make the borrowings under this Agreement. The execution, delivery and performance by Borrowers of this Agreement, the Notes and the other Loan Documents to which Borrowers are party and the making of the borrowings under this Agreement and the Notes, have been duly and validly authorized by all necessary company action on the part of each Borrower (none of which actions has been modified or rescinded, and all of which actions are in full force and effect) and do not and will not (a) conflict with or violate any provision of law, of any judgments binding upon any Borrower, or of the organizational documents of each Borrower, or (b) conflict with or result in a breach of, constitute a default or require any consent under, or result in or require the acceleration of any indebtedness of any Borrower under any agreement, instrument or indenture to which any Borrower is a party or by which any Borrower or its property may be bound or affected, or result in the creation of any Lien upon any property or assets of any Borrower (other than the Lien on the Collateral granted under this Agreement). This Agreement, the Notes and the other Loan Documents to which Borrowers are party constitute the legal, valid and binding obligations of Borrowers, enforceable in accordance with their respective terms, except that enforceability may be limited by bankruptcy, insolvency or other such laws affecting the enforcement of creditors’ rights and general principles of equity.

6.4. Authorization and Enforceability of Lennar Undertaking

Lennar has the power and authority to execute, deliver and perform the Lennar Undertaking. The Lennar Undertaking constitutes the legal, valid, and binding obligation of Lennar, enforceable in accordance with its terms, except that the enforceability may be limited by bankruptcy, insolvency or other such laws affecting creditors’ rights and general principles of equity.

6.5. Approvals

The execution and delivery of this Agreement, the Notes and the other Loan Documents and the performance of each Borrower’s obligations under this Agreement, the Notes and the other Loan Documents and the validity and enforceability of this Agreement, the Notes and the other Loan Documents do not require any license, consent, approval or other action of any agency, board, bureau, commission, instrumentality or other administrative or regulatory body (in each case, whether federal, state or local, domestic or foreign) other than those that have been obtained and remain in full force and effect.

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6.6. Financial Condition

The balance sheet of UAMCLLC (and its Subsidiaries, on a consolidated basis) as of each Statement Date, and the related statements of income, cash flows and changes in stockholders’ equity for the fiscal period ended on each Statement Date, previously furnished to Credit Agent, fairly present the financial condition of UAMCLLC (and its Subsidiaries) as at that Statement Date and the results of its operations for the fiscal period ended on that Statement Date. Each Borrower had, on each Statement Date, no known material liabilities, direct or indirect, fixed or contingent, matured or unmatured, or liabilities for taxes, long-term leases or unusual forward or long-term commitments not disclosed by, or reserved against in, said balance sheet and related statements, and at the present time there are no material unrealized or anticipated losses from any loans, advances or other commitments of any Borrower except as previously disclosed to Credit Agent in writing. Those financial statements were prepared in accordance with GAAP applied on a consistent basis throughout the periods involved. Since the Audited Statement Date, there has been no material adverse change in the business, operations, assets or financial condition of any Borrower, nor is any Borrower aware of any state of facts that (with or without notice or lapse of time or both) would or could result in any such material adverse change.

6.7. Litigation

There are no actions, claims, suits or proceedings pending or, to any Borrower’s knowledge, threatened or reasonably anticipated against or affecting Borrowers or any Subsidiary of Borrowers in any court or before any arbitrator or before any agency, board, bureau, commission, instrumentality or other administrative or regulatory body (in each case, whether federal, state or local, domestic or foreign) that, if adversely determined, may reasonably be expected to result in a material adverse change in any Borrower’s business, operations, assets or financial condition as a whole, or that would affect the validity or enforceability of this Agreement, the Notes or any other Loan Document.

6.8. Compliance with Laws

No Borrower nor any Subsidiary of any Borrower is in violation of any provision of any law, or of any judgment, award, rule, regulation, order, decree, writ or injunction of any court or any agency, board, bureau, commission, instrumentality or other administrative or regulatory body (in each case, whether federal, state or local, domestic or foreign) that could result in a material adverse change in any Borrower’s business, operations, assets or financial condition as a whole or that would affect the validity or enforceability of this Agreement, the Notes or any other Loan Document.

6.9. Regulation U

No Borrower is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock, and no part of the proceeds of any Advance made under this Agreement will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock.

6.10. Investment Company Act

No Borrower is an “investment company” or controlled by an “investment company” within the meaning of the Investment Company Act.

Page 6-3

6.11. Payment of Taxes

Each Borrower and each of their respective Subsidiaries has filed or caused to be filed all federal, state and local income, excise, property and other tax returns that are required to be filed with respect to the operations of Borrowers and their Subsidiaries, all such returns are true and correct and Borrowers and each of their Subsidiaries has paid or caused to be paid all taxes shown on those returns or on any assessment, to the extent that those taxes have become due, including all FICA payments and withholding taxes, if appropriate. The amounts reserved as a liability for income and other taxes payable in the financial statements described in Section 6.6 are sufficient for payment of all unpaid federal, state and local income, excise, property and other taxes, whether or not disputed, of Borrowers and their Subsidiaries accrued for or applicable to the period and on the dates of those financial statements and all years and periods prior to those financial statements and for which Borrowers and their Subsidiaries may be liable in their own right or as transferee of the assets of, or as successor to, any other Person. No tax Liens have been filed and no material claims are being asserted against any Borrower, any Subsidiary of any Borrower or any property of any Borrower or any Subsidiary of any Borrower with respect to any taxes, fees or charges.

6.12. Agreements

No Borrower nor any Subsidiary of any Borrower is a party to any agreement, instrument or indenture or subject to any restriction materially and adversely affecting its business, operations, assets or financial condition, except as disclosed in the financial statements described in Section 6.6. No Borrower nor any Subsidiary of any Borrower is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in the Existing Agreement or in any other agreement, instrument, or indenture which default could result in a material adverse change in any Borrower’s business, operations, assets or financial condition as a whole. No holder of any indebtedness of any Borrower or of any of their respective Subsidiaries has given notice of any asserted default under that indebtedness, and no liquidation or dissolution of any Borrower or of any of their Subsidiaries and no receivership, insolvency, bankruptcy, reorganization or other similar proceedings relative to Borrowers or of any of their Subsidiaries or any of their properties is pending, or to the knowledge of Borrowers, threatened.

6.13. Title to Properties

Each Borrower and each Subsidiary of each Borrower has good, valid, insurable and (in the case of real property) marketable title to all of its properties and assets (whether real or personal, tangible or intangible) reflected on the financial statements described in Section 6.6, except for those properties and assets that Borrowers have disposed of since the date of those financial statements either in the ordinary course of business or because they were no longer used or useful in the conduct of Borrowers’ or the respective Subsidiary’s business. All of Borrowers’ properties and assets are free and clear of all Liens except as disclosed in Borrowers’ financial statements.

6.14. ERISA

Each Plan is in compliance with all applicable requirements of ERISA and the Internal Revenue Code and with all material applicable rulings and regulations issued under the provisions of ERISA and the Internal Revenue Code setting forth those requirements, except where any failure to comply would not result in a material loss to Borrowers or any ERISA Affiliate. All of the minimum funding standards or other contribution obligations applicable to each Plan have been satisfied. No Plan is a Multiemployer Plan or a defined-benefit pension plan subject to Title IV of ERISA.

Page 6-4

6.15. No Retiree Benefits

Except as required under Section 4980B of the Internal Revenue Code, Section 601 of ERISA or applicable state law, no Borrower or any Subsidiary of any Borrower is obligated to provide post-retirement medical or insurance benefits with respect to employees or former employees.

6.16. Assumed Names

No Borrower originates Mortgage Loans or otherwise conducts business under any names other than its legal name and the assumed names set forth on Exhibit G. Each Borrower has made all filings and taken all other action as may be required under the laws of any jurisdiction in which it originates Mortgage Loans or otherwise conducts business under any assumed name. To the best of Borrowers’ knowledge, each Borrower’s use of the assumed names set forth on Exhibit G does not conflict with any other Person’s legal rights to any such name, nor otherwise give rise to any liability by Borrowers to any other Person. Borrowers may amend Exhibit G to add or delete any assumed names used by Borrowers to conduct business. An amendment to Exhibit G to add an assumed name is not effective until Borrowers have delivered to Credit Agent an assumed name certificate in the jurisdictions in which the assumed name is to be used, which must be satisfactory in form and content to Credit Agent, in its sole discretion. In connection with any amendment to delete a name from Exhibit G, Borrowers represent and warrant that they have ceased using that assumed name in all jurisdictions.

6.17. Servicing

Exhibit C is a true and complete list of Borrowers’ Servicing Portfolio. All of Borrowers’ Servicing Contracts are in full force and effect, and are unencumbered by Liens other than Liens disclosed in Exhibit C. No default or event that, with notice or lapse of time or both, would become a default, exists under any of Borrowers’ Servicing Contracts.

End of Article 6

Page 6-5

7. AFFIRMATIVE COVENANTS

As long as the Warehousing Commitment is outstanding or there remain any Obligations to be paid or performed under this Agreement or under any other Loan Document, Borrowers must:

7.1. Payment of Obligations

Punctually pay or cause to be paid all Obligations, including the Obligations payable under this Agreement and the Notes, in accordance with their terms.

7.2. Financial Statements

Deliver to Credit Agent and each Lender:

7.2 (a) As soon as available and in any event within 45 days after the end of each fiscal quarter, other than the last fiscal quarter of UAMCLLC’s fiscal year, an interim statement of income of UAMCLLC (and its Subsidiaries, on a consolidated basis) for the immediately preceding fiscal quarter, and the related balance sheet as at the end of the immediately preceding fiscal quarter, all in reasonable detail, subject, however, to year-end audit adjustments.

7.2 (b) As soon as available and in any event within 90 days after the end of each fiscal year of Borrowers, fiscal year-end statements of income, changes in members’ equity and cash flow of UAMCLLC (and its Subsidiaries, on a consolidated basis) for that year, and the related balance sheet as of the end of that year (setting forth in comparative form the corresponding figures for the preceding fiscal year), all in reasonable detail and accompanied by (1) an opinion as to those financial statements in form and substance satisfactory to Credit Agent and prepared by independent certified public accountants of recognized standing acceptable to Credit Agent and (2) any management letters, management reports or other supplementary comments or reports delivered by those accountants to any Borrower or its board of directors.

7.2 (c) Together with each delivery of financial statements required by this Section, a Compliance Certificate for each Borrower substantially in the form of Exhibit E.

7.2 (d) Copies of all regular or periodic financial and other reports that any Borrower files with the Securities and Exchange Commission or any successor governmental agency or other entity.

7.3. Other Borrower Reports

Deliver to Credit Agent and each Lender:

7.3 (a) If at any time Borrowers’ consolidated Servicing Portfolio exceeds $500,000,000, then as soon as available and in any event within 45 days after the end of each Calendar Quarter, a consolidated report (“Servicing Portfolio Report”) as of the end of the Calendar Quarter, as to all Mortgage Loans the servicing rights to which are owned by Borrowers (specified by investor type, recourse and non-recourse) regardless of whether the Mortgage Loans are Pledged Loans. The Servicing Portfolio Report must indicate which Mortgage Loans (1) are current and in good standing, (2) are more than 30, 60 or 90 days past due, (3) are the subject of pending bankruptcy or foreclosure proceedings, or (4) have been converted (through foreclosure or other proceedings in lieu of foreclosure) into real estate owned by Borrowers.

Page 7-1

7.3 (b) With each Officer’s Certificate, a monthly status report on each Construction/Perm Mortgage Loan, including, without limitation, the loan number, mortgagor name(s), property address, general contractor name, completion status (percent completed or staged draw no. and brief description), estimated completion date (if completion date is behind schedule, then an explanation of delay), date of last on-site inspection, and Pledged Mortgage payment status.

7.3 (c) Weekly or more frequently as Credit Agent may from time to time request, a commitment summary and pipeline report substantially in the form of Exhibit O (“Commitment Summary Report”) including a report on Borrower’s Weighted Average Committed Purchase Price for each type of Mortgage Loan owned by Borrowers and dated as of the close of business on the first Business Day of each week and provided to Credit Agent by facsimile by the close of business on the next succeeding Business Day.

7.3 (d) As soon as available and in any event within 45 days after the end of each fiscal quarter, a consolidated loan production report as of the end of that fiscal quarter, presenting the total dollar volume and the number of Mortgage Loans originated and closed or purchased during that fiscal quarter and for the fiscal year-to-date, in form acceptable to Credit Agent in its sole discretion.

7.3 (e) Upon request by Credit Agent or any Lender a copy of the most recent 10-Q and 10-K of Lennar filed with the Securities and Exchange Commission.

7.3 (f) Other reports in respect of Pledged Assets, including copies of purchase confirmations issued by Investors purchasing Pledged Loans from Borrowers, in such detail and at such times as Credit Agent in its discretion may reasonably request.

7.3 (g) With reasonable promptness, such further information regarding the business, operations, assets or financial condition of each Borrower as Credit Agent, or any Lender, through Credit Agent, may reasonably request, including copies of any audits completed by HUD, Ginnie Mae, Fannie Mae or Freddie Mac.

7.4. Maintenance of Existence; Conduct of Business

Preserve and maintain each Borrower’s organizational existence in good standing and all of its rights, privileges, licenses and franchises necessary or desirable in the normal conduct of its business, including its eligibility as lender, seller/servicer or issuer as described under Section 9.1; conduct its business in an orderly and efficient manner; maintain a net worth of acceptable assets as required for maintaining each Borrower’s eligibility as lender, seller/servicer or issuer as described under Section 9.1; and make no material change in the nature or character of its business or engage in any business in which it was not engaged on the date of this Agreement.

7.5. Compliance with Applicable Laws

Comply with the requirements of all applicable laws, rules, regulations and orders of any agency, board, bureau, commission, instrumentality or other administrative or regulatory body (in each case, whether federal, state or local, domestic or foreign), a breach of which could result in a material adverse change in each Borrower’s business, operations, assets, or financial condition as a whole or on the enforceability of this Agreement, the Notes, any other Loan Document or any Collateral, except where contested in good faith and by appropriate proceedings.

Page 7-2

7.6. Inspection of Properties and Books; Operational Reviews

7.6 (a) Permit Credit Agent, any Lender or any Participant (and their authorized representatives) to discuss the business, operations, assets and financial condition of each Borrower and their respective Subsidiaries with each Borrower’s officers, agents and employees, and to examine and make copies or extracts of each Borrower’s and their respective Subsidiaries’ books of account, all at such reasonable times and, as long as no Default or Event of Default has occurred and is continuing, on such reasonable Notice, as Credit Agent, any Lender or any Participant may request.

7.6 (b) Provide its accountants with a copy of this Agreement promptly after its execution and authorize and instruct them to answer candidly all questions that the officers of Credit Agent, any Lender or any Participant or any authorized representatives of Credit Agent, any Lender or any Participant may address to them in reference to the financial condition or affairs of each Borrower and their respective Subsidiaries. As long as no Default or Event of Default has occurred and is continuing, Credit Agent or any Lender will provide Borrowers with advance notice of any such inquiry to Borrowers’ accountants. Each Borrower may have its representatives in attendance at any meetings held between the officers or other representatives of Credit Agent, any Lender or any Participant and each Borrower’s accountants under this authorization.

7.6 (c) Permit Credit Agent, any Lender or any Participant (and their authorized representatives) access to each Borrower’s premises and records for the purpose of conducting a review of each Borrower’s general mortgage business methods, policies and procedures, auditing its loan files and reviewing the financial and operational aspects of such Borrower’s business.

7.7. Notice

Give prompt Notice to Credit Agent of (a) any action, suit or proceeding instituted by or against any Borrower or any of its Subsidiaries in any federal or state court or before any agency, board, bureau, commission, instrumentality or other administrative or regulatory body (in each case, whether federal, state or local, domestic or foreign), which action, suit or proceeding has at issue in excess of $1,000,000, or any such proceedings threatened against any Borrower or any of its Subsidiaries in writing containing the details of that action, suit or proceeding; (b) the filing, recording or assessment of any Lien for any federal, state or local taxes, assessments or other governmental charges against any Borrower, any of its Subsidiaries or any of their respective assets, other than a Lien for taxes, assessments or other governmental charges on real property securing or that previously secured an individual Mortgage Loan that is not a Pledged Loan; (c) an Event of Default; (d) a Default that continues for more than 4 days; (e) the suspension, revocation or termination of any Borrower’s eligibility, in any respect, as lender, seller/servicer or issuer as described under Section 9.1 or the suspension, revocation or termination of any other license or approval required for any Borrower to engage in the business of originating, acquiring and, if applicable, servicing Mortgage Loans; (f) the imposition of any other adverse regulatory or administrative action or sanction on or against Borrower by any agency, board, bureau, commission, instrumentality or other administrative or regulatory body (in each case, whether federal, state or local, domestic or foreign) that could result in a material adverse change in any Borrower’s business, operations, assets or financial condition as a whole or that could affect the validity or enforceability of any Pledged Loan; (g) the transfer, loss, nonrenewal or termination of any Servicing Contracts to which any Borrower is a party, or which is held for the benefit of such Borrower, and the reason for that transfer, loss, nonrenewal or termination; (h) any Prohibited Transaction with respect to any Plan, specifying the nature of the Prohibited Transaction and what action such Borrower proposes to take with respect to it; and (i) any other action, event or condition of any nature that could lead to or result in a material adverse change in the business, operations, assets or financial condition of Borrowers or any of their respective Subsidiaries.

Page 7-3

7.8. Payment of Debt, Taxes and Other Obligations

Pay, perform and discharge, or cause to be paid, performed and discharged, all of the obligations and indebtedness of each Borrower and its Subsidiaries, all taxes, assessments and governmental charges or levies imposed upon Borrowers or their respective Subsidiaries or upon their respective income, receipts or properties before those taxes, assessments and governmental charges or levies become past due, and all lawful claims for labor, materials and supplies or otherwise that, if unpaid, could become a Lien or charge upon any of their respective properties or assets. Each Borrower and their respective Subsidiaries are not required to pay, however, any taxes, assessments and governmental charges or levies or claims for labor, materials or supplies for which such Borrower or its Subsidiaries have obtained an adequate bond or insurance or that are being contested in good faith and by proper proceedings that are being reasonably and diligently pursued and for which proper reserves have been created.

7.9. Insurance

Maintain blanket bond coverage and errors and omissions insurance or mortgage impairment insurance, with such companies and in such amounts as satisfy prevailing requirements applicable to a lender, seller/servicer or issuer as described under Section 9.1, and liability insurance and fire and other hazard insurance on its properties, in each case with responsible insurance companies acceptable to Credit Agent, in such amounts and against such risks as is customarily carried by similar businesses operating in the same location. Within 30 days after Notice from Credit Agent, obtain such additional insurance as Credit Agent may reasonably require, all at the sole expense of Borrowers. Copies of such policies must be furnished to Credit Agent without charge upon request of Credit Agent.

7.10. Closing Instructions

Indemnify and hold Credit Agent and Lenders harmless from and against any loss, including reasonable attorneys’ fees and costs, attributable to the failure of any title insurance company, agent or attorney to comply with any Borrower’s disbursement or instruction letter relating to any Mortgage Loan. Credit Agent has the right to pre-approve Borrowers’ choice of title insurance company, agent or attorney and Borrowers’ disbursement or instruction letter to them in any case in which Borrowers intend to obtain a Warehousing Advance against the Mortgage Loan to be created at settlement or to pledge that Mortgage Loan as Collateral under this Agreement.

7.11. Subordination of Certain Indebtedness

Cause any indebtedness of any Borrower for borrowed money to any member, manager or Affiliate or any shareholder, director or officer of any manager, member or Affiliate of Borrower, which indebtedness, when added to all other such indebtedness of each Borrower, results in an aggregate amount of such indebtedness in excess of $35,000,000, to be subordinated to the Obligations by the (a) execution and delivery to Credit Agent of a Subordination of Debt Agreement, on the form prescribed by Credit Agent, certified by the corporate secretary of that Borrower to be true and complete and in full force and effect and (b) delivery to Credit Agent of the original promissory note evidencing such indebtedness.

7.12. Other Loan Obligations

Perform all material obligations under the terms of each loan agreement, note, mortgage, security agreement or debt instrument by which any Borrower is bound or to which any of its property is subject, and promptly notify Credit Agent in writing of a declared default under or the termination, cancellation, reduction or nonrenewal of any of its other lines of credit or agreements with any other lender. Exhibit F is a true and complete list of all such lines of credit or agreements as of the date of this Agreement. Borrowers must give Credit Agent at least 30 days Notice before entering into any additional lines of credit or agreements.

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7.13. ERISA

Maintain (and cause each ERISA Affiliate to maintain) each Plan in compliance with all material applicable requirements of ERISA and of the Internal Revenue Code and with all applicable rulings and regulations issued under the provisions of ERISA and of the Internal Revenue Code, and not itself or permit any ERISA Affiliate to, (a) engage in any transaction in connection with which any Borrower or any ERISA Affiliate would be subject to either a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Internal Revenue Code, in either case in an amount exceeding $25,000 or (b) fail to make full payment when due of all amounts that, under the provisions of any Plan, any Borrower or any ERISA Affiliate is required to pay as contributions to that Plan, or permit to exist any accumulated funding deficiency (as such term is defined in Section 302 of ERISA and Section 412 of the Internal Revenue Code), whether or not waived, with respect to any Plan in an aggregate amount exceeding $25,000.

7.14. Use of Proceeds of Advances

Use the proceeds of each Advance solely for the purpose of funding Eligible Assets and against the pledge of those Eligible Assets as Collateral or, in the case of Advances against Foreclosure Mortgage Loans and Foreclosure Claim Receivables, repaying Advances outstanding against or repurchase obligations with respect to the related Mortgage Loans.

End of Article 7

Page 7-5

8. NEGATIVE COVENANTS

As long as the Warehousing Commitment is outstanding or there remain any Obligations to be paid or performed, Borrowers must not, either directly or indirectly, without the prior written consent of Credit Agent:

8.1. Contingent Liabilities

Assume, guarantee, endorse or otherwise become contingently liable for the obligation of any Person (including any Subsidiary that is not a Borrower), except (a) by endorsement of negotiable instruments for deposit or collection in the ordinary course of business, and (b) for obligations arising in connection with the sale of Mortgage Loans without credit recourse (but subject to recourse for breaches of normal representations, warranties and other provisions) in the ordinary course of Borrowers’ business, obligations arising in connection with the sale of Mortgage Loans without credit recourse (but subject to recourse for breaches of normal representations, warranties and other provisions) to UAMC Capital in connection with the UAMC Capital Warehousing Facility, and other contingent liabilities in an aggregate amount not greater than $10,000,000.

8.2. Restrictions on Fundamental Changes

8.2 (a) Consolidate, merge or enter into any analogous reorganization or transaction with any Person, except that any Borrower may merge with another Borrower and any Borrower may enter into a merger if the surviving corporation will be a wholly-owned Subsidiary of UAMCLLC.

8.2 (b) Liquidate, wind up or dissolve (or suffer any liquidation or dissolution).

8.2 (c) Cease actively to engage in the business of originating or acquiring Mortgage Loans or, if applicable, servicing Mortgage Loans, or make any other material change in the nature or scope of the business in which each Borrower engages as of the date of this Agreement.

8.2 (d) Sell, assign, lease, convey, transfer or otherwise dispose of (whether in one transaction or a series of transactions) all or any substantial part of each Borrower’s business or assets, whether now owned or acquired after the Closing Date, other than, in the ordinary course of business and to the extent not otherwise prohibited by this Agreement, sales of (1) Mortgage Loans, (2) Mortgage-backed Securities and (3) Servicing Contracts.

8.2 (e) Change its name or jurisdiction of incorporation or formation without providing 30 days prior written notice to Credit Agent.

8.3. Deferral of Subordinated Debt

Pay any Subordinated Debt of any Borrower in advance of its stated maturity or, after a Default or Event of Default under this Agreement has occurred, make any payment of any kind on any Subordinated Debt of any Borrower until all of the Obligations have been paid and performed in full and any applicable preference period has expired.

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8.4. Loss of Eligibility, Licenses or Approvals

Take any action, or fail or omit to take any action, that would (a) cause any Borrower to lose all or any part of its status as an eligible lender, seller/servicer or issuer as described under Section 9.1 or all or any part of any other license or approval required for any Borrower to engage in the business of originating, acquiring and, if applicable, servicing Mortgage Loans or (b) result in the imposition of any other adverse regulatory or administrative action or sanction on or against any Borrower by any agency, board, bureau, commission, instrumentality or other administrative or regulatory body (in each case, whether federal, state or local, domestic or foreign) that could result in a material adverse change in any Borrower’s business, operations, assets or financial condition as a whole or that could affect the validity or enforceability of any Pledged Loan.

8.5. Accounting Changes

Make, or permit any Subsidiary of any Borrower to make, any significant change in accounting treatment or reporting practices, except as required by GAAP, or change its fiscal year or the fiscal year of any Subsidiary of any Borrower.

8.6. Leverage Ratio

Permit UAMCLLC’s Leverage Ratio at any time to exceed 10 to 1.

8.7. Minimum Tangible Net Worth

Permit UAMCLLC’s Tangible Net Worth at any time to be less than (i) $25,000,000, as long as Lennar’s long term debt ratings are the equivalent of BBB- or higher, or (ii) $75,000,000, if at any time any two of Fitch, S&P or Moody’s downgrades Lennar’s long term debt rating to less than the equivalent of BBB-.

8.8. Minimum Modified Tangible Net Worth

Permit UAMCLLC’s Modified Tangible Net Worth at any time to be less than $100,000,000.

8.9. Distributions to Members

Make any distributions to UAMCLLC’s or EHMLLC’s Members or EHMI’s, EHMCA’s, UAMCC’s, UAMC Asset’s or UAMCP’s shareholders (including any purchase or redemption of stock) if a Default or Event of Default exists or would occur as a result of the dividend or distribution.

8.10. Transactions with Affiliates

Directly or indirectly (a) make any loan, advance, extension of credit or capital contribution to any of Borrowers’ Affiliates, except (i) any Borrower may make loans, advances, extensions of credit or capital contributions to another Borrower, (ii) UAMCLLC may make loans to Lennar and Lennar Financial Services, LLC, and (iii) Borrowers may make additional loans, advances, extensions of credit and capital contributions to Affiliates in an aggregate amount at any time outstanding not in excess of $30,000,000, in each case (i), (ii) and (iii) above, as long as no Default or Event of Default exists or would occur as a result of such actions, (b) sell, transfer, pledge or assign any of its assets to or on behalf of those Affiliates, except for sales and repurchases of Mortgage Loans to and from UAMC Capital (which may be evidenced by appropriate intercompany accounting entries) in connection with the UAMC Capital Warehousing Facility, or (c) pay management fees to or on behalf of those Affiliates.

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8.11. Recourse Servicing Contracts

Acquire or enter into Servicing Contracts under which Borrowers must repurchase or indemnify the holder of the Mortgage Loans as a result of defaults on the Mortgage Loans at any time during the term of those Mortgage Loans (but subject to recourse for breaches of normal representations, warranties and other provisions), if the aggregate principal amount of Mortgage Loans serviced pursuant to such Servicing Contracts would exceed by all Borrowers $250,000,000.

8.12. Limitation on Liens.

Create, incur, assume or permit to exist any Lien with respect to any property now owned or hereafter acquired by any Borrower or any Subsidiary, or any income or profits therefrom, except (a) the security interests granted to Credit Agent, for the benefit of Lenders, under the Loan Documents; (b) Liens described on Exhibit L; (c) Liens in connection with deposits or pledges to secure payment of workers’ compensation, unemployment insurance, old age pensions or other social security obligations, in the ordinary course of business of any Borrower or any Subsidiary; (d) Liens for taxes, fees, assessments and governmental charges not delinquent or which are being contested in good faith by appropriate proceedings and for which appropriate reserves have been established in accordance with GAAP; (e) encumbrances consisting of zoning regulations, easements, rights of way, survey exceptions and other similar restrictions on the use of real property and minor irregularities in title thereto which do not materially impair their use in operation of its business; (f) contingent Liens on office equipment arising under leases of office space; (g) Liens on equipment to secure Debt incurred to finance the acquisition of such Equipment, including, without limitations, capitalized leases, (h) Liens incurred in connection with gestation agreements with respect to the property described in the definition of such term, and (i) other Liens, provided the Debt secured by such Liens is permitted pursuant to Section 8.13.

8.13. Limitation on Debt.

Incur or permit to remain outstanding any Debt other than (a) Debt incurred under this Agreement, (b) Debt described on Exhibit M hereto, (c) Debt incurred to finance the acquisition by any Borrower or a Subsidiary of equipment used in the ordinary course of its business, (d) Debt incurred under gestation agreements, (e) current liabilities, not overdue unless contested in good faith, incurred by any Borrower or any Subsidiary otherwise than for borrowed money, (f) deferred taxes arising from capitalized excess servicing fees and capitalized servicing rights, (g) Subordinated Debt, (h) Debt arising under Hedging Arrangements, and (i) other Debt in an aggregate amount at any time outstanding of not more than $50,000,000.

End of Article 8

Page 8-3

9. SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING COLLATERAL

9.1. Special Representations and Warranties Concerning Eligibility as Seller/Servicer of Mortgage Loans

Borrowers represent and warrant to Credit Agent and Lenders, as of the date of this Agreement and as of the date of each Warehousing Advance Request and the making of each Warehousing Advance, that each Borrower is approved and qualified and in good standing as a lender, seller/servicer or issuer, as set forth below, and meets all requirements applicable to its status as such:

9.1 (a) UAMCLLC is approved and qualified and in good standing as a lender or seller/servicer, as set forth below, and meets all requirements applicable to its status as:

(i) A HUD-approved non-supervised mortgagee, eligible to originate, purchase, hold, sell and service FHA fully insured Mortgage Loans.

(ii) A Ginnie Mae-approved seller/servicer of Mortgage Loans and issuer of Mortgage-backed Securities guaranteed by Ginnie Mae.

(iii) A lender in good-standing under the VA loan guarantee program eligible to originate, purchase, hold, sell and service VA-guaranteed Mortgage Loans.

(iv) A Fannie Mae-approved seller/servicer of Mortgage Loans, eligible to originate, purchase, hold, sell and service Mortgage Loans to be sold to Fannie Mae.

(v) A Freddie Mac-approved seller/servicer of Mortgage Loans, eligible to originate, purchase, hold, sell and service Mortgage Loans to be sold to Freddie Mac.

(vi) An RFC-approved seller/servicer of Mortgage Loans, eligible to originate, purchase, hold, sell and service Loans to be sold to RFC.

9.1 (b) EHMI is approved and qualified and in good standing as a lender or seller/servicer, as set forth below, and meets all requirements applicable to its status as:

(i) A HUD-approved non-supervised mortgagee, eligible to originate, purchase, hold, sell and service FHA fully insured Mortgage Loans.

(ii) A Ginnie Mae-approved seller/servicer of Mortgage Loans and issuer of Mortgage-backed Securities guaranteed by Ginnie Mae.

(iii) A lender in good-standing under the VA loan guarantee program eligible to originate, purchase, hold, sell and service VA-guaranteed Mortgage Loans.

(iv) A Fannie Mae-approved seller/servicer of Mortgage Loans, eligible to originate, purchase, hold, sell and service Mortgage Loans to be sold to Fannie Mae.

(v) A Freddie Mac-approved seller/servicer of Mortgage Loans, eligible to originate, purchase, hold, sell and service Mortgage Loans to be sold to Freddie Mac.

(vi) An RFC-approved seller/servicer of Mortgage Loans, eligible to originate, purchase, hold, sell and service Loans to be sold to RFC.

Page 9-1

9.1 (c) EHMCA is approved and qualified and in good standing as a lender or seller/servicer, as set forth below, and meets all requirements applicable to its status as:

(i) A HUD-approved non-supervised mortgagee, eligible to originate, purchase, hold, sell and service FHA fully insured Mortgage Loans.

(ii) A lender in good-standing under the VA loan guarantee program eligible to originate, purchase, hold, sell and service VA-guaranteed Mortgage Loans.

9.1 (d) UAMCC is approved and qualified and in good standing as a lender or seller/servicer, as set forth below, and meets all requirements applicable to its status as:

(i) A HUD-approved non-supervised mortgagee, eligible to originate, purchase, hold, sell and service FHA fully insured Mortgage Loans.

(ii) A lender in good-standing under the VA loan guarantee program eligible to originate, purchase, hold, sell and service VA-guaranteed Mortgage Loans.

9.1 (e) UMACP is approved and qualified and in good standing as a lender or seller/servicer, as set forth below, and meets all requirements applicable to its status as:

(iii) A HUD-approved non-supervised mortgagee, eligible to originate, purchase, hold, sell and service FHA fully insured Mortgage Loans.

(iv) A lender in good-standing under the VA loan guarantee program eligible to originate, purchase, hold, sell and service VA-guaranteed Mortgage Loans.

9.1 (f) EHMLLC is approved and qualified and in good standing as a lender or seller/servicer, as set forth below, and meets all requirements applicable to its status as:

(iii) A HUD-approved non-supervised mortgagee, eligible to originate, purchase, hold, sell and service FHA fully insured Mortgage Loans.

(iv) A Ginnie Mae-approved seller/servicer of Mortgage Loans and issuer of Mortgage-backed Securities guaranteed by Ginnie Mae.

(v) A lender in good-standing under the VA loan guarantee program eligible to originate, purchase, hold, sell and service VA-guaranteed Mortgage Loans.

(vi) A Fannie Mae-approved seller/servicer of Mortgage Loans, eligible to originate, purchase, hold, sell and service Mortgage Loans to be sold to Fannie Mae.

(vii) A Freddie Mac-approved seller/servicer of Mortgage Loans, eligible to originate, purchase, hold, sell and service Mortgage Loans to be sold to Freddie Mac.

(viii) A lender in good-standing under the VA loan guarantee program eligible to originate, purchase, hold, sell and service VA-guaranteed Mortgage Loans.

9.2. Special Representations and Warranties Concerning Warehousing Collateral

Each Borrower represents and warrants to Credit Agent and Lenders, as of the date of this Agreement and as of the date of each Warehousing Advance Request and the making of each Advance, that:

Page 9-2

9.2 (a) No Borrower has selected the Collateral in a manner so as to affect adversely Lenders’ interests.

9.2 (b) Borrowers are the legal and equitable owner and holder, free and clear of all Liens (other than Liens granted under this Agreement) of the Pledged Assets. All Pledged Assets and related Purchase Commitments have been duly authorized and validly issued to Borrowers, and all of the foregoing items of Collateral comply with all of the requirements of this Agreement, and have been and will continue to be validly pledged or assigned to Credit Agent, subject to no other Liens.

9.2 (c) Each Borrower has, and will continue to have, the full right, power and authority to pledge the Collateral pledged and to be pledged by it under this Agreement.

9.2 (d) Each Mortgage Loan and each related document included in the Pledged Loans (1) has been duly executed and delivered by the parties to that Mortgage Loan and that related document, (2) has been made in compliance with all applicable laws, rules and regulations (including all laws, rules and regulations relating to usury), (3) is and will continue to be a legal, valid and binding obligation, enforceable in accordance with its terms, without setoff, counterclaim or defense in favor of the mortgagor under the Mortgage Loan or any other obligor on the Mortgage Note, (4) has not been modified, amended or any requirements of which waived, except in writing that is part of the Collateral Documents, and (5) is an Eligible Asset as described on Exhibit H.

9.2 (e) Each Pledged Loan is secured by a Mortgage, and each Pledged Agreement for Deed constitutes a Lien, on real property and improvements located in one of the states of the United States or the District of Columbia.

9.2 (f) Except for open-ended Second Mortgage Loans, Construction/Perm Mortgage Loans and Third Party Builder Construction Mortgage Loans, each Pledged Loan has been closed or will be closed and funded with the Advance made against it.

9.2 (g) Each First Mortgage Loan is secured by a First Mortgage on the real property and improvements described in or covered by that Mortgage.

9.2 (h) Each First Mortgage Loan has or will have a title insurance policy, in ALTA form or equivalent, from a recognized title insurance company, insuring the priority of the Lien of the Mortgage and meeting the usual requirements of Investors purchasing those Mortgage Loans.

9.2 (i) Each Second Mortgage Loan is secured by a Second Mortgage on the real property and improvements described in or covered by that Mortgage.

9.2 (j) To the extent required by the related Purchase Commitment or by Investors generally for similar Mortgage Loans, each Second Mortgage Loan has or will have a title insurance policy, in ALTA form or equivalent, from a recognized title insurance company, insuring the priority of the Lien of the Mortgage and meeting the usual requirements of Investors purchasing those Mortgage Loans.

9.2 (k) Each First Mortgage Loan has been evaluated or appraised in accordance with Title XI of FIRREA.

9.2 (l) Each Second Mortgage Loan has been evaluated or appraised in accordance with industry standards for Investors providing Purchase Commitments for and purchasing those Mortgage Loans.

Page 9-3

9.2 (m) The Mortgage Note for each Pledged Loan is (1) payable or endorsed to the order of Borrower, (2) an “instrument” within the meaning of Article 9 of the Uniform Commercial Code of all applicable jurisdictions and (3) is denominated and payable in United States dollars.

9.2 (n) No default has existed for 60 days or more under any Mortgage Loan included in the Pledged Loans, except for a Foreclosure Mortgage Loan, or under any Pledged Agreement for Deed.

9.2 (o) No party to an Eligible Asset or any related document is in violation of any applicable law, rule or regulation that would impair the collectibility of the Eligible Asset or the performance by the mortgagor or any other obligor of its obligations under the Eligible Asset or any related document.

9.2 (p) No party involved in the origination of a Pledged Asset, including the originator, broker, title company or appraiser, was named on the version of the Exclusionary List in effect on the date of the Mortgage Note for that particular Mortgage Loan.

9.2 (q) All fire and casualty policies covering the real property and improvements encumbered by each Mortgage included in the Pledged Loans and each Pledged Agreement for Deed (1) name and will continue to name a Borrower and its successors and assigns as the insured under a standard mortgagee clause, (2) are and will continue to be in full force and effect and (3) afford and will continue to afford insurance against fire and such other risks as are usually insured against in the broad form of extended coverage insurance generally available.

9.2 (r) Pledged Loans and Pledged Agreements for Deed secured by real property and improvements located in a special flood hazard area designated as such by the Director of the Federal Emergency Management Agency are and will continue to be covered by special flood insurance under the National Flood Insurance Program.

9.2 (s) The real property and improvements securing each Pledged Asset are free of damage or waste and are in good repair, and no improvement located on or being a part of such real property violates any applicable zoning law or regulation.

9.2 (t) No notice of any partial or total condemnation has been given with respect to the real property and improvements securing any Pledged Asset.

9.2 (u) Each Pledged Loan against which an Advance has been or will be made on the basis of a Purchase Commitment meets all of the requirements of that Purchase Commitment, and each Pledged Security against which an Advance is outstanding meets all of the requirements of the related Purchase Commitment.

9.2 (v) Pledged Loans that are intended to be exchanged for Agency Securities comply or, prior to the issuance of the Agency Securities will comply, with the requirements of any governmental instrumentality, department or agency issuing or guaranteeing the Agency Securities.

9.2 (w) Pledged Loans that are intended to be used in the formation of Mortgage-backed Securities (other than Agency Securities) comply with the requirements of the issuer of the Mortgage-backed Securities (or its sponsor) and of the Rating Agencies.

9.2 (x) The original assignments of Mortgage delivered to Credit Agent for each Pledged Loan and Pledged Agreement for Deed are in recordable form and comply with all applicable laws and regulations governing the filing and recording of such documents.

Page 9-4

9.2 (y) None of the mortgagors, guarantors or other obligors of any Pledged Asset is a Person named in any Restriction List and to whom the provision of financial services is prohibited or otherwise restricted by applicable law.

9.2 (z) No Pledged Loan is a Discontinued Loan.

9.2 (aa) Each Pledged Asset secured by real property to which a Manufactured Home is affixed will create a valid Lien on that Manufactured Home that will have priority over any other Lien on the Manufactured Home, whether or not arising under applicable real property law.

9.3. Special Affirmative Covenants Concerning Warehousing Collateral

As long as the Warehousing Commitment is outstanding or there remain any Obligations to be paid or performed under this Agreement or under any other Loan Document, each Borrower will:

9.3 (a) Warrant and defend the right, title and interest of Credit Agent and Lenders in and to the Collateral against the claims and demands of all Persons.

9.3 (b) Service or cause to be serviced all Pledged Loans in accordance with the standard requirements of the issuers of Purchase Commitments covering them and all applicable HUD, Fannie Mae and Freddie Mac requirements, including taking all actions necessary to enforce the obligations of the obligors under such Mortgage Loans. Service or cause to be serviced all Mortgage Loans backing Pledged Securities in accordance with applicable governmental requirements and requirements of issuers of Purchase Commitments covering them. Hold all escrow funds collected in respect of Pledged Loans and Mortgage Loans backing Pledged Securities in trust, without commingling the same with non-custodial funds, and apply them for the purposes for which those funds were collected.

9.3 (c) Execute and deliver to Credit Agent with respect to the Collateral those further instruments of sale, pledge, assignment or transfer, and those powers of attorney, as required by Credit Agent, and do and perform all matters and things necessary or desirable to be done or observed, for the purpose of effectively creating, maintaining and preserving the security and benefits intended to be afforded Credit Agent under this Agreement.

9.3 (d) Notify Credit Agent within 2 Business Days of any default under, or of the termination of, any Purchase Commitment relating to any Pledged Loan, Eligible Mortgage Pool, or Pledged Security.

9.3 (e) Promptly comply in all respects with the terms and conditions of all Purchase Commitments, and all extensions, renewals and modifications or substitutions of or to all Purchase Commitments. Deliver or cause to be delivered to the Investor the Pledged Loans and Pledged Securities to be sold under each Purchase Commitment not later than the mandatory delivery date of the Pledged Loans or Pledged Securities under the Purchase Commitment.

9.3 (f) Compare the names of every mortgagor, guarantor and other obligor of every Mortgage Loan, together with appropriate identifying information concerning those Persons obtained by any Borrower, against every Restriction List, and make certain that none of the mortgagors, guarantors or other obligors of any Mortgage Loan is a Person named in any Restriction List and to whom the provision of financial services is prohibited or otherwise restricted by applicable law.

Page 9-5

9.3 (g) Prior to the origination by any Borrower of any Mortgage Loans for sale to Fannie Mae, enter into an agreement among such Borrower, Lender and Fannie Mae, pursuant to which Fannie Mae agrees to send all cash proceeds of Mortgage Loans sold by such Borrower to Fannie Mae to the Cash Collateral Account.

9.3 (h) Prior to the origination by any Borrower of any Mortgage Loan to be registered on the MERS system, obtain the approval of Credit Agent and enter into an Electronic Tracking Agreement.

9.4. Special Negative Covenants Concerning Warehousing Collateral

As long as the Warehousing Commitment is outstanding or there remain any Obligations to be paid or performed, no Borrower will, either directly or indirectly, without the prior written consent of Credit Agent:

9.4 (a) Amend or modify, or waive any of the terms and conditions of, or settle or compromise any claim in respect of, any Pledged Asset, except in a manner consistent with the terms of the related Purchase Commitment, if applicable, and any FHA Insurance policy or VA guaranty.

9.4 (b) Sell, transfer or assign, or grant any option with respect to, or pledge (except under this Agreement and, with respect to each Pledged Asset, the related Purchase Commitment) any of the Collateral or any interest in any of the Collateral.

9.4 (c) Make any compromise, adjustment or settlement in respect of any of the Collateral or accept any consideration other than cash in payment or liquidation of the Collateral.

9.4 (d) Cause UAMC Asset to issue any stock or other securities in addition to or in substitution for the Pledged Shares, except to UAMCLLC, and UAMCLLC will pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any and all additional shares of stock or other securities of UAMC Asset.

9.5. Special Affirmative Covenants Concerning Construction/Perm Mortgage Loans and Third-Party Builder Construction Mortgage Loans

As long as the Warehousing Commitment is outstanding or there remain any Obligations to be paid or performed under this Agreement or under any other Loan Document, each Borrower will:

9.5 (a) Prior to the submission of a request for an initial Warehousing Advance against a Third Party Builder Construction Mortgage Loan, Borrowers reviewed the financial and business ability of the builder to complete the improvements to the premises encumbered by a Pledged Mortgage in a timely and cost efficient manner.

9.5 (b) Notify Credit Agent within 2 Business Days of the following events: (1) a lien filed against premises encumbered by a Pledged Mortgage and not removed within 15 days of the filing, (2) a Pledged Mortgage being out of balance with the Cost Breakdown and not brought back in balance by the mortgagor within 15 days after such determination by such Borrower, and (3) any damage or destruction of the premises encumbered by a Pledged Mortgage.

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9.6. Special Representations Concerning Construction/Perm Mortgage Loans and Third Party Builder Construction Mortgage Loans

Borrowers represent and warrant to Credit Agent and Lenders, as of the date of this Agreement and as of the date of each Advance Request, that:

9.6 (a) Each Construction/Perm Mortgage Loan and Third Party Builder Construction Loan included in the Pledged Loans (1) has an American Land Title Association Lender’s construction loan policy or commitment, (2) has “all risk” builder’s insurance and workers’ compensation insurance, (3) has a survey prepared and certified by a duly registered surveyor or title company showing no encroachments of the improvements or the proposed improvements to be constructed on the premises encumbered by the Pledged Loan on to other lands or easements or restrictions, unless such encroachments have been insured over or are acceptable to the Investor, (4) has building permits and all necessary licenses and approvals for the construction of the improvements on the premises encumbered by the Pledged Loan, (5) has a “as completed” appraisal, (6) has a fixed price general contract issued by a licensed contractor, and (7) has all necessary utilities available to the premises encumbered by the Pledged Loan.

9.6 (b) Prior to the initial Advance against a Construction/Perm Mortgage Loan or a Third Party Builder Construction Mortgage Loan included in the Pledged Loans, Borrowers shall have received (1) a Cost Breakdown, (2) a draw schedule, and (3) an inspection report.

9.6 (c) Prior to each Advance against a Construction/Perm Mortgage Loan or a Third Party Builder Construction Mortgage Loan included in the Pledged Loans, Borrowers (i) shall have received (A) an inspection report confirming completion of the work for which such Advance is being requested and the Total Hard Costs are adequate to complete the improvements and (B) invoices for each soft cost reimbursement for which such Advance is being requested, and (ii) shall not have received a notice of intent to assert a Lien from any contract, subcontractor, material supplier or other Person.

9.6 (d) Prior to the final Advance against a Construction/Perm Mortgage Loan or a Third Party Builder Construction Mortgage Loan included in the Pledged Loans, Borrowers shall have received, (1) a final inspection report or certificate of occupancy confirming completion of all work in accordance with the plans and specifications, (2) final lien waivers, (3) final certificate of appraiser that the premises encumbered by the Pledged Loan equals the As Completed Appraised Value, and (4) a datedown endorsement from the title insurance company showing clear title as of the date of disbursement of such Advance.

9.6 (e) Within 15 days after the final Advance against a Construction/Perm Mortgage Loan or a Third Party Builder Construction Mortgage Loan included in the Pledged Loan, Borrowers shall receive any Mortgage Note modification or modified Mortgage Note delivered in connection with a Construction/Perm Mortgage Loan and a Mortgage Note or Wet Settlement package evidencing a Mortgage Loan which refinances a related Mortgage Loan.

9.7. Special Representations and Warranties Concerning Receivables

Borrowers hereby represent and warrant to Credit Agent and Lenders, as of the date of this Agreement and as of the date of each Advance Request and the making of each Advance that:

9.7 (a) Borrowers are the legal and equitable owners and holders, free and clear of all Liens (other than Liens granted hereunder) of the Receivables, and the Receivables have been and will continue to be subject to a security interest in favor of the Credit Agent, subject to no other Liens.

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9.7 (b) Borrowers have, and will continue to have, the full right, power and authority to grant a security interest in the Receivables to the Credit Agent.

9.7 (c) Each Receivable is a valid, enforceable right to retain amounts received from obligors under Mortgage Loans serviced by Borrowers, or a valid, enforceable right to payment from Fannie Mae, Freddie Mac, Ginnie Mae, VA, FHA or a private mortgage insurer, is currently due, and as to which no condition exists that will impair or materially delay payment thereof.

9.7 (d) To the best of Borrowers’ knowledge, with respect to any Receivables, the mortgagor who is liable for payments that will be applicable to such Receivables, or Fannie Mae, Freddie Mac, Ginnie Mae, FHA, VA or the private mortgage insurer, obligated thereon, has no defense, setoff, claim or counterclaim against Borrowers which can be asserted against the Credit Agent, whether in any proceeding to enforce the Credit Agent’s security interest in such Receivable or otherwise.

9.7 (e) Except for the Acknowledgment Agreements, to the extent required, no consent of any Person is required for the grant of a security interest in the Receivables to the Credit Agent, and no consent will need to be obtained upon the occurrence of an Event of Default for the Credit Agent to exercise its rights with respect to any of the Receivables.

9.8. Special Representations Concerning Pledged Shares

Borrowers hereby represent and warrant to Credit Agent and Lenders, as of the date of this Agreement and as of the date of each Advance Request for an Advance and the making of each such Advance, that:

9.8 (a) UAMCLLC has title to the Pledged Shares and will have title to all further Pledged Shares hereafter issued, free of all Liens except the security interest in favor of the Credit Agent.

9.8 (b) UAMCLLC has full power and authority to subject the Pledged Shares to the security interest created hereby.

9.8 (c) No financing statement covering all or part of the Pledged Shares is on file in any public office (except for any financing statements filed by the Credit Agent).

9.8 (d) The Pledged Shares have been duly authorized and validly issued by UAMC Asset and are fully paid and non-assessable. The certificates representing the Pledged Shares are genuine. The Pledged Shares are not subject to any offset or similar right or claim of the issuers thereof.

9.8 (e) The Pledged Shares have been delivered to the Credit Agent and constitute 100% of the issued and outstanding shares of capital stock of UAMC Asset.

9.9. Special Representations and Warranties Concerning Foreclosure Claim Receivables and Foreclosure Mortgage Loans

Borrowers hereby represent and warrant to Credit Agent and Lenders, as of the date of this Agreement and as of the date of each Advance Request for an Advance against Foreclosure Claim Receivables or Foreclosure Mortgage Loans and the making of each such Advance, that:

Page 9-8

9.9 (a) The Mortgage Loan with respect to which such Advance was made by Borrowers is in foreclosure, or there will be commenced and continuing bankruptcy or similar proceedings involving the obligor on such Mortgage Loan, or a Borrower has commenced loss mitigation action with respect to such Mortgage Loans.

9.9 (b) In the event the obligor on such Mortgage Loan fails to make the payment as to which said receivable relates, Borrowers are entitled to reimbursement therefore on a priority basis pursuant to the terms of the applicable Servicing Contract out of proceeds of the sale or other disposition or liquidation of said Mortgage Loan or out of insurance proceeds, including, without limitation, private mortgage insurance proceeds and the proceeds of any guaranty of the obligations of the obligor thereunder.

9.9 (c) Said receivable is and will be free and clear of all Liens, claims and encumbrances, except Liens in favor of the Credit Agent for the benefit of the Lenders.

9.10. Voting Rights; Dividends; Etc.

9.10 (a) Subject to paragraph (d) of this Section 9.10, UAMCLLC shall be entitled to exercise or refrain form exercising any and all voting and other consensual rights pertaining to the Pledged Shares for any purpose not inconsistent with the terms of this Agreement; provided, however, that UAMCLLC shall not exercise or refrain from exercising any such right if such action could reasonably be expected to have a material adverse effect on the value of the Collateral or any material part thereof.

9.10 (b) Any and all dividends paid in respect of the Pledged Shares after the occurrence and during the continuance of any Default or Event of Default shall be forthwith delivered to the Credit Agent to hold as Collateral and shall, if received by any Borrower, be received in trust for the benefit of Lenders, be segregated from the other property or funds of Borrowers, and be forthwith delivered to Credit Agent as Collateral in the same form as so received (with any necessary endorsement or assignment). Each Borrower shall, upon request by Lenders, promptly execute all such documents and do all such acts as may be necessary or desirable to give effect to the provisions of this Section 9.10(b).

9.10 (c) Credit Agent will execute and deliver (or cause to be executed and delivered) to UAMCLLC all such proxies and other instruments as UAMCLLC may reasonable request for the purpose of enabling UAMCLLC to exercise the voting and other rights that it is entitled to exercise pursuant to Section 9.10(a) and to receive the dividends that it is authorized to receive and retain pursuant to Section 9.10(b).

9.10 (d) Upon the occurrence and during the continuance of any Event of Default, Credit Agent shall have the right in its sole discretion, and Borrowers shall execute and deliver all such proxies and other instruments as may be necessary or appropriate to give effect to such right, to terminate all rights of Borrowers to exercise or refrain from exercising the voting and other consensual rights that it would otherwise be entitled to exercise pursuant to Section 9.10(a) hereof, and all such rights shall thereupon become vested in Credit Agent who will thereupon have the sole right to exercise or refrain from exercising such voting and other consensual rights; provided, however, that Credit Agent and Lenders shall not be deemed to possess or have control over any voting rights with respect to any Collateral unless and until Credit Agent has given written notice to Borrowers that any further exercise of such voting rights by Borrowers is prohibited and that Credit Agent and/or its assigns will henceforth exercise such voting rights; and provided further, that neither the registration of any item of Collateral in Credit Agent’s name nor the exercise of any voting rights with respect thereto shall be deemed to constitute a retention by Credit Agent or Lenders of any such Collateral in satisfaction of the Obligations or any part thereof.

End of Article 9

Page 9-9

10. DEFAULTS; REMEDIES

10.1. Events of Default

The occurrence of any of the following is an event of default (“Event of Default”):

10.1 (a) Any Borrower fails to pay the principal of any Advance when due, whether at stated maturity, by acceleration, or otherwise; or fails to pay any installment of interest on any Advance within 9 days after the date of Credit Agent’s invoice or, if applicable, within 2 days after the date of Credit Agent’s account analysis statement; or fails to pay, within any applicable grace period, any other amount due under this Agreement or any other Obligation of Borrowers to Credit Agent and Lenders.

10.1 (b) Any Borrower fails to perform or comply with any term or condition applicable to it contained in Sections 7.4 or 7.14, 9.10 or in any Section of Article 8.

10.1 (c) The suspension, revocation or termination of any Borrower’s eligibility, in any respect, as lender, seller/servicer or issuer as described under Article 9 or of any other license or approval required for any Borrower to engage in the business of originating, acquiring and, if applicable, servicing Mortgage Loans; or the imposition of any other adverse regulatory or administrative action or sanction on or against any Borrower by any agency, board, bureau, commission, instrumentality or other administrative or regulatory body (in each case, whether federal, state or local, domestic or foreign) that could result in a material adverse change in any Borrower’s business, operations, assets or financial condition as a whole or that could affect the validity or enforceability of any Pledged Asset.

10.1 (d) Any Borrower or any of their Subsidiaries, other than USH Funding Inc. or Edgewater Reinsurance Ltd., fails to pay, or defaults in the payment of any principal or interest on, any other indebtedness or any contingent obligation within any applicable grace period; breaches or defaults with respect to any other material term of any other indebtedness or of any loan agreement, mortgage, indenture or other agreement relating to that indebtedness, if the effect of that breach or default is to cause, or to permit the holder or holders of that indebtedness (or a trustee on behalf of such holder or holders) to cause, indebtedness of Borrower or its Subsidiaries, other than USH Funding Inc. or Edgewater Reinsurance Ltd., in the aggregate amount of $2,000,000 or more to become or be declared due before its stated maturity (upon the giving or receiving of notice, lapse of time, both, or otherwise).

10.1 (e) Any representation or warranty made or deemed made by any Borrower under this Agreement, in any other Loan Document or in any written statement or certificate at any time given by such Borrower, other than the representations and warranties set forth in Article 9 with respect to specific Pledged Loans, is inaccurate or incomplete in any material respect on the date as of which it is made or deemed made.

10.1 (f) Any Borrower defaults in the performance of or compliance with any term contained in this Agreement or any other Loan Document other than those referred to in Sections 10.1(a), 10.1(b), 10.1(c), 10.1(d) or 10.1(e) and such default has not been remedied or waived within 30 days after the earliest of (1) receipt by Borrowers of Notice from Credit Agent of that default, (2) receipt by Credit Agent of Notice from Borrowers of that default or (3) the date Borrowers should have notified Credit Agent of that default under Section 7.7(c) or 7.7(d).

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10.1 (g) An “event of default” (however defined) occurs under any agreement between Borrowers and Credit Agent other than this Agreement and the other Loan Documents.

10.1 (h) A case (whether voluntary or involuntary) is filed by or against any Borrower under any applicable bankruptcy, insolvency or other similar federal or state law; or a court of competent jurisdiction appoints a receiver (interim or permanent), liquidator, sequestrator, trustee, custodian or other officer having similar powers over any Borrower or over all or a substantial part of their respective properties or assets; or any Borrower (1) consents to the appointment of or possession by a receiver (interim or permanent), liquidator, sequestrator, trustee, custodian or other officer having similar powers over any Borrower, or over all or a substantial part of their respective properties or assets, (2) makes an assignment for the benefit of creditors, or (3) fails, or admits in writing its inability, to pay its debts as those debts become due.

10.1 (i) Any Borrower fails to perform any contractual obligation to repurchase Mortgage Loans, if such obligations in the aggregate exceed $2,000,000.

10.1 (j) Any money judgment, writ or warrant of attachment or similar process involving an amount in excess of $2,000,000 is entered or filed against any Borrower or any of their Subsidiaries or any of their respective properties or assets and remains undischarged, unvacated, unbonded or unstayed for a period of 30 days or 5 days before the date of any proposed sale under that money judgment, writ or warrant of attachment or similar process.

10.1 (k) Any order, judgment or decree decreeing the dissolution of any Borrower is entered and remains undischarged or unstayed for a period of 20 days.

10.1 (l) Any Borrower purports to disavow any of its Obligations or contests the validity or enforceability of any Loan Document.

10.1 (m) Lennar purports to disavow any of its obligations under the Lennar Undertaking or contests the validity or enforceability of the Lennar Undertaking.

10.1 (n) Credit Agent’s or Lenders’ security interest on any portion of the Collateral becomes unenforceable or otherwise impaired and all Advances made against any of that Collateral are not paid in full, or the impairment is not cured, within 10 days after earliest of (i) receipt by Borrower of Notice from Credit Agent of the impairment, (ii) receipt by Credit Agent of Notice from Borrower of the impairment, or (iii) the date Borrower should have notified Credit Agent of the impairment under Article 7.

10.1 (o) A material adverse change occurs in any Borrower’s financial condition, business, properties or assets, operations or prospects, or in any Borrower’s ability to repay the Obligations.

10.1 (p) Any Lien for any tax, assessment or other governmental charge is filed or is otherwise enforced against any Borrower or any of its property including any of the Collateral, other than a Lien for taxes, assessments or other governmental charges on real property securing or that previously secured an individual Mortgage Loan that is not a Pledged Loan.

10.1 (q) UAMCLLC ceases to own, directly, all of the capital stock of each other Borrower, or Lennar ceases to own, directly or indirectly, a majority of each class of the capital stock of UAMCLLC.

Page 10-2

10.1 (r) UAMC Asset shall incur any Debt, other than Debt owed to Lenders, or any Pledged Asset owned by UAMC Asset shall become subject to any Lien, other than Liens in favor of the Credit Agent.

10.1 (s) The existence of any Default or Event of Default under Section 10.1 of the Existing Agreement, whether or not known by Credit Agent or any Lender.

10.2. Remedies

10.2 (a) If a Lender shall have knowledge of a Default or an Event of Default, it shall immediately give Notice thereof to Credit Agent. If Credit Agent has knowledge of a Default or an Event of Default, it shall give Notice thereof to each Lender and to Borrowers. Credit Agent will not be deemed to have knowledge or Notice of the occurrence of a Default or an Event of Default unless Credit Agent has received Notice from a Lender or a Borrower. No Lender will be deemed to have knowledge or Notice of the occurrence of a Default or an Event of Default unless such Lender has received Notice from the Credit Agent or a Borrower.

10.2 (b) If an Event of Default described in Section 10.1(h) occurs with respect to any Borrower, the Warehousing Commitment will automatically terminate and the unpaid principal amount of and accrued interest on the Notes and all other Obligations will automatically become due and payable, without presentment, demand or other Notice or requirements of any kind, all of which Borrowers expressly waive.

10.2 (c) If any other Event of Default occurs, Majority Lenders may, by Notice to each Borrower, terminate the Warehousing Commitment and declare the Obligations to be immediately due and payable.

10.2 (d) If any Event of Default occurs, Credit Agent may, on behalf of Lenders, and shall at the direction of the Majority Lenders (subject to Section 11.3(c)), also take any of the following actions:

(1) Foreclose upon or otherwise enforce its security interest in any Lien on the Collateral to secure all payments and performance of the Obligations in any manner permitted by law or provided for in the Loan Documents.

(2) Notify all obligors under any of the Collateral that the Collateral has been assigned to Credit Agent (or to another Person designated by Credit Agent) and that all payments on that Collateral are to be made directly to Credit Agent (or such other Person); settle, compromise or release, in whole or in part, any amounts any obligor or Investor owes on any of the Collateral on terms acceptable to Credit Agent; enforce payment and prosecute any action or proceeding involving any of the Collateral; and where any Collateral is in default, foreclose on and enforce any Liens securing that Collateral in any manner permitted by law and sell any property acquired as a result of those enforcement actions.

(3) Prepare and submit for filing Uniform Commercial Code amendment statements evidencing the assignment to Credit Agent or its designee of any Uniform Commercial Code financing statement filed in connection with any item of Collateral.

(4) Act, or contract with a third party to act, at Borrowers’ expense, as servicer or subservicer of Collateral requiring servicing, and perform all obligations required under any Collateral, including Servicing Contracts and Purchase Commitments.

Page 10-3

(5) Require Borrowers to assemble and make available to Credit Agent the Collateral and all related books and records at a place designated by Credit Agent.

(6) Enter onto property where any Collateral or related books and records are located and take possession of those items with or without judicial process; and obtain access to Borrowers’ data processing equipment, computer hardware and software relating to the Collateral and use all of the foregoing and the information contained in the foregoing in any manner Credit Agent deems necessary for the purpose of effectuating its rights under this Agreement and any other Loan Document.

(7) Before the disposition of the Collateral, prepare it for disposition in any manner and to the extent Credit Agent deems appropriate.

(8) Exercise all rights and remedies of a secured creditor under the Uniform Commercial Code of Minnesota or other applicable law, including selling or otherwise disposing of all or any portion of the Collateral at one or more public or private sales, whether or not the Collateral is present at the place of sale, for cash or credit or future delivery, on terms and conditions and in the manner as Credit Agent may determine, including sale under any applicable Purchase Commitment. Borrowers waive any right they may have to prior notice of the sale of all or any portion of the Collateral to the extent allowed by applicable law. If notice is required under applicable law, Credit Agent will give Borrowers not less than 10 days’ notice of any public sale or of the date after which any private sale may be held. Borrowers agree that 10 days’ notice is reasonable notice. Credit Agent may, without notice or publication, adjourn any public or private sale one or more times by announcement at the time and place fixed for the sale, and the sale may be held at any time or place announced at the adjournment. In the case of a sale of all or any portion of the Collateral on credit or for future delivery, the Collateral sold on those terms may be retained by Credit Agent until the purchaser pays the selling price or takes possession of the Collateral. Credit Agent has no liability to Borrowers if a purchaser fails to pay for or take possession of Collateral sold on those terms, and in the case of any such failure, Credit Agent may sell the Collateral again upon notice complying with this Section.

(9) Instead of or in conjunction with exercising the power of sale authorized by Section 10.2(c)(8), Credit Agent may proceed by suit at law or in equity to collect all amounts due on the Collateral, or to foreclose Credit Agent ‘s Lien on and sell all or any portion of the Collateral pursuant to a judgment or decree of a court of competent jurisdiction.

(10) Proceed against Borrowers on the Notes or against Lennar under the Lennar Undertaking.

(11) Retain all excess proceeds from the sale or other disposition of the Collateral, and apply them to the payment of the Obligations under Section 10.3.

Credit Agent will follow the instructions of the Majority Lenders in exercising or not exercising its rights under this Section 10.2, but (i) Credit Agent will have no obligation to take or not to take any action which it believes may expose it to any liability, and (ii) Credit Agent may, but is under no obligation to, await instructions from the Majority Lenders before exercising or not exercising its rights under this Section 10.2.

Page 10-4

10.2 (e) Neither Credit Agent nor any Lender will incur liability as a result of the commercially reasonable sale or other disposition of all or any portion of the Collateral at any public or private sale or other disposition. Borrowers waive (to the extent permitted by law) any claims they may have against Credit Agent or any Lender arising by reason of the fact that the price at which the Collateral may have been sold at a private sale was less than the price that Credit Agent might have obtained at a public sale, or was less than the aggregate amount of the outstanding Advances, accrued and unpaid interest on those Advances, and unpaid fees, even if Credit Agent accepts the first offer received and does not offer the Collateral to more than one offeree. Borrowers agree that any sale of Collateral under the terms of a Purchase Commitment, or any other disposition of Collateral arranged by Borrowers, whether before or after the occurrence of an Event of Default, will be deemed to have been made in a commercially reasonable manner.

10.2 (f) Each Borrower acknowledges that Mortgage Loans are collateral of a type that is the subject of widely distributed standard price quotations and that Mortgage-backed Securities are collateral of a type that is customarily sold on a recognized market. Each Borrower waives any right it may have to prior notice of the sale of Pledged Securities, and agrees that Credit Agent or Lenders may purchase Pledged Loans and Pledged Securities at a private sale of such Collateral.

10.2 (g) Each Borrower specifically waives and releases (to the extent permitted by law) any equity or right of redemption, stay or appraisal that Borrowers have or may have under any rule of law or statute now existing or adopted after the date of this Agreement, and any right to require Credit Agent to (1) proceed against any Person, (2) proceed against or exhaust any of the Collateral or pursue its rights and remedies against the Collateral in any particular order, or (3) pursue any other remedy within its power. Credit Agent is not required to take any action to preserve any rights of Borrowers against holders of mortgages having priority to the Lien of any Mortgage or Security Agreement included in the Collateral or to preserve Borrowers’ rights against other prior parties.

10.2 (h) Credit Agent may, but is not obligated to, advance any sums or do any act or thing necessary to uphold or enforce the Lien and priority of, or the security intended to be afforded by, any Mortgage or Security Agreement included in the Collateral, including payment of delinquent taxes or assessments and insurance premiums. All advances, charges, costs and expenses, including reasonable attorneys’ fees and disbursements, incurred or paid by Credit Agent in exercising any right, power or remedy conferred by this Agreement, or in the enforcement of this Agreement, together with interest on those amounts at the Default Rate, from the time paid by Credit Agent until repaid by Borrowers, are deemed to be principal outstanding under this Agreement and the Notes.

10.2 (i) No failure or delay on the part of Credit Agent or any Lender to exercise any right, power or remedy provided in this Agreement or under any other Loan Document, at law or in equity, will operate as a waiver of that right, power or remedy. No single or partial exercise by Credit Agent or any Lender of any right, power or remedy provided under this Agreement or any other Loan Document, at law or in equity, precludes any other or further exercise of that right, power, or remedy by Credit Agent or any Lender, or Credit Agent’s or any Lender’s exercise of any other right, power or remedy. Without limiting the foregoing, Borrowers waive all defenses based on the statute of limitations to the extent permitted by law. The remedies provided in this Agreement and the other Loan Documents are cumulative and are not exclusive of any remedies provided at law or in equity.

10.2 (j) Borrowers grant Credit Agent and Lenders a license or other right to use, without charge, Borrowers’ computer programs, other programs, labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks and

Page 10-5

advertising matter, or any property of a similar nature, as it pertains to the Collateral, in advertising for sale and selling any of the Collateral and Borrowers’ rights under all licenses and all other agreements related to the foregoing inure to Credit Agent’s and Lenders’ benefit until the Obligations are paid in full.

10.3. Application of Proceeds

The proceeds of any sale, disposition or other enforcement of Credit Agent’s security interest in and Lien on all or any part of the Collateral shall be applied by Credit Agent as follows:

10.3 (a) First, to the payment of the costs and expenses of such sale or enforcement, including reasonable compensation to Credit Agent’s agents and counsel, and all expenses, liabilities and advances made or incurred by or on behalf of Credit Agent in connection therewith.

Second, to the payment of the costs and expenses of such sale or enforcement, including reasonable compensation to the Lenders’ agents and counsel, and all expenses, liabilities and advances made or incurred by or on behalf of any Lender in connection therewith.

Third, to RFC, in an amount equal to the amount of accrued interest owed to RFC in respect of Swingline Advances, until paid in full.

Fourth, to RFC until the principal amount of all Swingline Advances outstanding are paid in full.

Fifth, to Lenders holding Warehousing Advances, pro rata in accordance with their respective Percentage Shares of accrued interest owed to each of them in respect to Warehousing Advances until the amount is paid in full.

Sixth, to Lenders holding Warehousing Advances, pro rata in accordance with their respective Percentage Shares, until the principal amounts of all Warehousing Advances outstanding are paid in full.

Seventh, to Lenders holding Warehousing Advances, pro rata in accordance with their respective Percentage Shares, until all fees and other Obligations accrued by or due each Lender and Credit Agent are paid in full.

Eighth, to the remaining Obligations.

Finally, to the payment to Borrowers, or to their successors or assigns, or as a court of competent jurisdiction may direct, of any surplus then remaining from such proceeds.

If the proceeds of any such sale, disposition or other enforcement are insufficient to cover the costs and expenses of such sale, as aforesaid, and the payment in full of all Obligations, Borrowers will remain liable for any deficiency.

10.4. Credit Agent Appointed Attorney-in-Fact

Each Borrower appoints Credit Agent its attorney-in-fact, with full power of substitution, for the purpose of carrying out the provisions of this Agreement, the Notes and the other Loan Documents and taking any action and executing any instruments that Credit Agent deems necessary or advisable to accomplish that purpose. Borrowers’ appointment of Credit Agent as attorney-in-fact is irrevocable and coupled with an interest. Without limiting the generality of the

Page 10-6

foregoing, Credit Agent may give notice of its security interest in and Lien on the Collateral to any Person, either in Borrowers’ name or in its own name, endorse all Pledged Loans or Pledged Securities payable to the order of Borrowers, change or cause to be changed the book-entry registration or name of subscriber or Investor on any Pledged Security, prepare and submit for filing Uniform Commercial Code amendment statements with respect to any Uniform Commercial Code financing statements filed in connection with any item of Collateral or receive, endorse and collect all checks made payable to the order of Borrowers representing payment on account of the principal of or interest on, or the proceeds of sale of, any of the Pledged Loans or Pledged Securities and give full discharge for those transactions.

10.5. Right of Set-Off

If Borrowers default in the payment of any Obligation or in the performance of any of their duties under the Loan Documents, each Lender may, without Notice to or demand on Borrowers (which Notice or demand each Borrower expressly waives), set-off, appropriate or apply any property of Borrowers held at any time by each Lender, or any indebtedness at any time owed by each Lender to or for the account of Borrowers, against the Obligations, whether or not those Obligations have matured.

10.6. Sharing of Payments

If upon the occurrence of an Event of Default and acceleration of the Obligations any Lender shall hold or receive and retain any payment, whether by setoff, application of deposit balance or security, or otherwise, in respect of the Obligations, then such Lender shall purchase from the other Lenders for cash and at face value and without recourse, such participation in the Obligations held by them as shall be necessary to cause such payment to be shared ratably with each of them; provided, that if such payment or part thereof is thereafter recovered from such purchasing Lender, the related purchases from the other Lenders shall be rescinded ratably and the purchase price restored as to the portion of such excess payment so recovered, but without interest thereon unless the purchasing Lender is required to pay interest on such amounts to the Person recovering such payment, in which case with interest thereon, computed at the same rate, and on the same basis, as the interest that the purchasing Lender is required to pay. If any Lender receives a payment from Borrowers not in respect of the Obligations, but relating to another relationship of such Lender and Borrowers, such Lender may apply the payment first to the indebtedness arising out of the other relationship and then against the Obligations as provided above.

End of Article 10

Page 10-7

11. AGENT

11.1. Appointment

Each Lender hereby irrevocably designates and appoints Credit Agent as the agent of such Lender under the Loan Documents and each such Lender hereby irrevocably authorizes Credit Agent to take such action on its behalf under the provisions of the Loan Documents and to exercise such powers and perform such duties as are expressly delegated to Credit Agent by the terms of the Loan Documents, together with such other powers as are reasonably incidental thereto. Credit Agent hereby accepts such appointment and agrees to act in accordance with this Agreement.

11.2. Duties of Agent

11.2 (a) The provisions of the Loan Documents set forth the exclusive duties of Credit Agent and no implied duties or obligations shall be read into the Loan Documents against Credit Agent. Credit Agent shall not be bound in any way by any agreement or contract other than the Loan Documents and any other agreement to which it is a party. Credit Agent shall act as an independent contractor in performing its obligations as Credit Agent under the Loan Documents and nothing herein contained shall be deemed to create any fiduciary relationship among or between Credit Agent, Borrowers or the Lenders.

11.2 (b) Credit Agent shall examine the Pledged Loans delivered by or on behalf of the Borrowers hereunder to determine whether each Pledged Loan: (i) includes the documents and instruments to be delivered for each Pledged Loan required pursuant to Section 2.1 and the applicable Exhibits, (ii) conforms with the requirements of this Agreement (including the limitations of Exhibit H), and (iii) is otherwise in conformity with any customary collateral review criteria that Credit Agent may use from time to time. If Credit Agent shall have determined that any Mortgage Loan delivered to Credit Agent does not meet the requirements of this Agreement, Credit Agent may return to Borrowers all Collateral Documents relating thereto.

11.2 (c) As to any Pledged Loan against which Advances may be made, if Credit Agent shall note any minor discrepancies or deficiencies in any Collateral Documents pertaining thereto, Credit Agent shall: (a) immediately notify Borrowers thereof, (b) if such discrepancies or deficiencies can be cured without returning any Collateral Documents to Borrowers, request that Borrowers cure such discrepancies or deficiencies immediately, and (c) if such discrepancies or deficiencies can only be cured by returning Collateral Documents to Borrowers, return any Collateral Documents containing any discrepancy or deficiency to Borrowers for correction against a Trust Receipt pursuant to Section 4.6(a).

11.2 (d) Not later than the 10^th day of each month, Credit Agent will deliver to each Lender a loans-in-warehouse report for the immediately preceding month setting forth in detail all Pledged Loans and Advances against such Pledged Loans for such month.

11.3. Standard of Care

Credit Agent shall act in accordance with customary standards for those engaged as credit agents or collateral agents of commercial transactions in similar capacities.

11.3 (a) Credit Agent is not required to ascertain or inquire as to the performance or observance of any of the conditions or agreements to be performed or observed by any other party, except as specifically provided in the Loan Documents. Credit Agent disclaims any

Page 11-1

responsibility for the validity or accuracy of the recitals to the Loan Documents and any representations and warranties contained herein, unless specifically identified as recitals, representations or warranties of Credit Agent.

11.3 (b) Credit Agent has no responsibility for ascertaining the value, collectibility, insurability, enforceability, effectiveness or suitability of any Collateral, the title of any party therein, the validity or adequacy of the security afforded thereby, or the validity of the Loan Documents (except as to (i) its authority to enter into this Agreement and the other Loan Documents and (ii) its undertaking to perform its duties and obligations hereunder and thereunder).

11.3 (c) No provision of this Agreement requires Credit Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if, in its sole judgment, it shall believe that repayment of such funds or adequate indemnity against such risk or liability is not assured to it.

11.3 (d) Credit Agent is not responsible for preparing or filing any reports or returns relating to federal, state or local income taxes with respect to this Agreement, other than for its compensation or for reimbursement of expenses.

11.4. Delegation of Duties

Credit Agent may execute any of its duties under the Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Credit Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.

11.5. Exculpatory Provisions

Credit Agent or any of its respective officers, directors, employees, agents, attorneys-in-fact or Affiliates shall not be (a) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with the Loan Documents (except for its or such Person’s own gross negligence or willful misconduct), or (b) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by Borrowers or any officer thereof contained in the Loan Documents or in any certificate, report, statement or other document referred to or provided for in, or received by Credit Agent under or in connection with, the Loan Documents or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of the Loan Documents or for any failure of Borrowers to perform their obligations under any Loan Document. Credit Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, the Loan Documents or to inspect the properties, books or records of Borrowers or any of their Subsidiaries.

11.6. Reliance by Agent

Credit Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certification, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation reasonably believed by it to be correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to Borrowers), independent accountants (including, without limitation, accountants to Borrowers) and other experts selected by Credit Agent. Credit Agent may deem and treat the payee of any Note as the owner thereof for all purposes. Credit Agent shall be fully justified in failing or refusing to take any

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action under the Loan Documents unless it shall first receive such advice or concurrence of the Majority Lenders or all of the Lenders, as appropriate, or it shall first be indemnified to its satisfaction by the Lenders ratably in accordance with their respective Percentage Shares against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any action (except for liabilities and expenses resulting from Credit Agent’s gross negligence or willful misconduct), (b) Credit Agent shall in all cases be fully protected in acting, or in refraining from acting, under the Loan Documents in accordance with a request of the Majority Lenders or all of the Lenders, as appropriate, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders, (c) Credit Agent shall be fully justified in failing or refusing to take any action under the Loan Documents unless it shall first receive such advice or concurrence of Credit Agent, and (d) Credit Agent shall in all cases be fully protected in acting, or in refraining from acting, under the Loan Documents in accordance with a request of or instructions from Credit Agent, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders.

11.7. Non-Reliance on Agent or Other Lenders

Each Lender expressly acknowledges that neither Credit Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to such Lender and that no act by Credit Agent hereafter taken, including any review of the affairs of Borrowers, shall be deemed to constitute any representation or warranty by Credit Agent to any Lender. Each Lender represents to Credit Agent that it has, independently and without reliance upon Credit Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of Borrowers and made its own decision to enter into and make Warehousing Advances under the Agreement. Each Lender also represents that it will, independently and without reliance upon Credit Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under the Agreement, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of Borrowers. Except for notices, reports and other documents expressly required to be furnished to Lenders by Credit Agent hereunder, Credit Agent shall have no duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, financial or other condition or creditworthiness of Borrowers or any Subsidiary which may come into the possession of Credit Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.

11.8. Agent in Individual Capacity

Credit Agent may make loans to, purchase Mortgage Loans and other assets from, and generally engage in any kind of business with Borrowers as though it were not an agent hereunder. With respect to the Warehousing Advances made or renewed by it and any Note issued to it, Credit Agent shall have the same rights and powers under the Loan Documents as any Lender and may exercise the same as though it were not Credit Agent, and the terms “Lender” and “Lenders” shall include Credit Agent in its individual capacity.

11.9. Successor Agent

Credit Agent may resign as such at any time upon giving 30 days Notice to Borrowers and Lenders. Credit Agent may be removed immediately with cause or at any time upon 10 days Notice from the Majority Lenders to Credit Agent and Borrowers. Upon Notice of such resignation or removal, the Majority Lenders may appoint a successor Credit Agent (which successor Credit Agent, assuming that no Default or Event of Default exists, shall be reasonably acceptable to Borrowers). The date on which Borrowers, Credit Agent and Lenders have received Notice from

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such successor of its acceptance of appointment as Credit Agent shall constitute the effective date of resignation or removal of the resigning or removed Credit Agent. If no successor Credit Agent shall have been so appointed by the Majority Lenders, and shall have accepted such appointment within the allotted time period, then, upon 5 days Notice to Borrowers, the resigned or removed Credit Agent may, on behalf of the Lenders, appoint a successor. Upon the effective date of resignation or removal of the resigning or removed Credit Agent, such successor will thereupon succeed to and become vested with all the rights, powers, privileges, and duties of the resigning or removed Credit Agent, but the resigning or removed Credit Agent shall not be discharged from any liability as a result of its or its directors’, officers’, agents’, or employees’ gross negligence or willful misconduct in the performance of its duties and obligations under this Agreement prior to the effective date of its resignation or removal. Upon the effective date of its resignation or removal, Credit Agent shall assign all of its right, title and security interest in and to all Collateral to its successor, without recourse, warranty or representation, express or implied.

11.10. Inspection

Each of the Lenders and their agents, accountants, attorneys and auditors will be permitted during normal business hours at any time and from time to time upon reasonable notice to the Credit Agent to examine (to the extent permitted by applicable law) the files, documents, records and other papers in the possession or under the control of the Credit Agent relating to any or all of the Collateral and to make copies thereof. As long as no Default or Event of Default shall have occurred and be continuing, any such activity will be at no cost or expense to Borrowers; if a Default or Event of Default shall have occurred and be continuing, all costs and expenses associated with the exercise from time to time by any Lender of its rights under this Section shall be promptly paid by Borrowers upon demand.

End of Article 11

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12. MISCELLANEOUS

12.1. Notices

Except where telephonic or facsimile notice is expressly authorized by this Agreement, all communications required or permitted to be given or made under this Agreement (“Notices”) must be in writing and must be sent by manual delivery, overnight courier or United States mail (postage prepaid), addressed as follows (or at such other address as may be designated by Borrowers, Lenders or Credit Agent in a Notice to the other):

If to Borrowers:	Universal American Mortgage Company, LLC 700 NW 107th Avenue, 3rd Floor Miami, FL 33172 Attention: Janice Munoz, Vice President and Treasurer Facsimile: (305) 229-6657
If to Credit Agent:	Residential Funding Corporation 7501 Wisconsin Avenue Bethesda, MD 20814 Attention: Jim Clapp, Director Facsimile: (301) 215-6288
If to Lenders:	As set forth on the signature pages hereof or of any amendment hereto.

In addition, Credit Agent will use its best efforts to provide a copy of any Notice to counsel as Borrower may designate, but failure to provide such copy shall not render any such Notice ineffective.

All periods of Notice will be measured from the date of delivery if delivered manually or by facsimile, from the first Business Day after the date of sending if sent by overnight courier or from 4 days after the date of mailing if sent by United States mail, except that Notices to Credit Agent under Article 2 and Section 3.3(f) will be deemed to have been given only when actually received by Credit Agent. Borrowers authorize Credit Agent to accept Borrowers’ bailee pledge agreements, Warehousing Advance Requests, shipping requests, wire transfer instructions and security delivery instructions transmitted to Credit Agent by facsimile or RFConnects Delivery, and those documents, when transmitted to Credit Agent by facsimile or by RFConnects Delivery, have the same force and effect as the originals.

12.2. Reimbursement Of Expenses; Indemnity

Borrowers must: (a) pay such document production fees as Credit Agent may require and all out-of-pocket costs and expenses of Credit Agent, including reasonable fees, service charges and disbursements of counsel (including allocated costs of internal counsel), in connection with the amendment, enforcement and administration of this Agreement, the Notes, and the other Loan Documents and the making and repayment of the Advances, and the payment of interest thereon; (b) indemnify, pay, and hold harmless Credit Agent, and any other holder of the Notes from and against, all present and future stamp, documentary and other similar taxes with respect to the foregoing matters and save Credit Agent, and any other holder of the Notes harmless from and against any and all liabilities with respect to or resulting from any delay or omission to pay such taxes; and (c) indemnify, pay and hold harmless Credit Agent, each Lender, any of their officers, directors, employees or agents and any other holder of the Notes (collectively, the

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“Indemnitees”) from and against all liabilities, obligations, actual losses, damages, penalties, judgments, direct suits, costs, expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel of the Indemnitees (including allocated costs of internal counsel), exclusive of indirect, consequential and other similar losses, in connection with any investigative, administrative or judicial proceeding, whether or not the Indemnitees have been designated as parties to such proceeding) that may be imposed upon, incurred by or asserted against such Indemnitees in any manner relating to or arising out of this Agreement, the Notes, or any other Loan Document or any of the transactions contemplated hereby or thereby, including against all liabilities, obligations, losses, damages, penalties, judgments, suits, costs, expenses and disbursements of every kind or nature (including the reasonable fees and disbursements of counsel to the Indemnitees (including allocated costs of internal counsel) in connection with any investigative, administrative or judicial proceeding, whether or not the Indemnitees have been designated as parties to such proceeding) arising from any breach of Sections 9.2(y) or 9.3(f) or the making of any Mortgage Loan in which any mortgagor, guarantor or other obligor is a Person named in any Restriction List and to whom the provision of financial services is prohibited or otherwise restricted by applicable law (collectively, the “Indemnified Liabilities”), except that Borrowers have no obligation under this Agreement to any Indemnity with respect to Indemnified Liabilities arising from the gross negligence or willful misconduct of Indemnitees. To the extent that the undertaking to indemnify, pay and hold harmless as set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, Borrowers must contribute the maximum portion that they are permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any of them. The agreement of Borrowers contained in this Article survives the expiration or termination of this Agreement and the payment in full of the Notes. Attorneys’ fees and disbursements incurred in enforcing, or on appeal from, a judgment under this Agreement are recoverable separately from and in addition to any other amount included in such judgment, and this clause is intended to be severable from the other provisions of this Agreement and to survive and not be merged into such judgment.

12.3. Indemnification by Lenders

Each Lender agrees to indemnify Credit Agent in its capacity as such (to the extent not reimbursed by Borrowers and without limiting the obligation of Borrowers to do so), ratably according to the respective amounts of their Percentage Shares, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including without limitation at any time following the payment of the Obligations) be imposed on, incurred by or asserted against Credit Agent in any way relating to or arising out of the Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by Credit Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Credit Agent’s gross negligence or willful misconduct. The agreements in this Section shall survive the payment of the Obligations and the termination of this Agreement. Attorneys’ fees and disbursements incurred in enforcing, or on appeal from, a judgment pursuant hereto shall be recoverable separately from and in addition to any other amount included in such judgment, and this clause is intended to be severable from the other provisions of this Agreement and to survive and not be merged into such judgment.

12.4. Financial Information

All financial statements and reports furnished to Credit Agent and Lenders under this Agreement must be prepared in accordance with GAAP, applied on a basis consistent with that applied in preparing the financial statements as at the end of and for each Borrower’s most recent fiscal year (except to the extent otherwise required to conform to good accounting practice).

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12.5. Terms Binding Upon Successors; Survival of Representations

The terms and provisions of this Agreement are binding upon and inure to the benefit of each Borrower, Credit Agent, each Lender and their respective successors and assigns. All of Borrowers’ representations, warranties, covenants and agreements survive the making of any Warehousing Advance, and except where a longer period is set forth in this Agreement, remain effective for as long as the Warehousing Commitment is outstanding or there remain any Obligations to be paid or performed.

12.6. Lenders in Individual Capacity

Any Lender and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with Borrowers, any Subsidiary and/or Lennar regardless of its capacity as a Lender hereunder. Any Lender may disclose to the other Lenders information regarding other relationships which it may have with Borrowers and Borrowers hereby consent to these disclosures.

12.7. Assignment and Participation

This Agreement and the Obligations of Borrowers may not be assigned by Borrowers. Any Lender may, subject to the limitations set forth below, assign or transfer, in whole or in part, its Warehousing Commitments in excess of $15,000,000 and the related Warehousing Advances, together with its corresponding rights under this Agreement and the other Loan Documents, and further any Lender may sell participations in all or any part of any of its Warehousing Commitment and the related Warehousing Advances or any other interest in the Obligations or any of its obligations hereunder to another Person, in which event: (a) in the case of an assignment, upon consent by Credit Agent and Borrowers (such consent in each case not to be unreasonably withheld), the assignee shall have, to the extent of such assignment (unless otherwise provided thereby), the same rights and benefits as it would have if it were a “Lender” hereunder, and, if the assignee has expressly assumed, for the benefit of Borrowers, such Lender’s obligations hereunder, such Lender shall be relieved of its obligations hereunder to the extent of such assignment and assumption, and (b) in the case of a participation, the participating Person’s (a “Participant”) rights against the Lender from whom it has purchased such participation in respect of such participation are those set forth in the agreement executed by such Lender in favor of the Participant relating thereto. Such Lender shall remain solely responsible to the other parties hereto for the performance of such Lender’s obligations under the Loan Documents, whether or not such Lender shall remain the holder of any Note. Such Lender shall retain all voting rights with respect to such Note, the Advances hereunder and such Lender’s Warehousing Commitment Amount. Borrowers, Credit Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under the Loan Documents. Without limiting any Lender’s exclusive right to collect and enforce the Obligations owed to it, Borrowers agree that each participation will give rise to a debtor-creditor relationship between Borrowers and Participant, and Borrowers authorize each Participant, upon an occurrence of an Event of Default, to proceed directly by right of setoff, bankers’ lien or otherwise, against any assets of Borrowers that may be held by that Participant. Notwithstanding the foregoing, nothing contained herein shall in any manner or to any extent affect the right of any Lender to pledge or assign Notes and interests in this Agreement to any Federal Reserve Bank pursuant to applicable laws and regulations, or to assign its Notes and its right to receive and retain payments on its Notes provided such Lender remains primarily and directly liable pursuant to the terms and conditions of this Agreement to keep, observe and perform all of its obligations under this Agreement, and all such assignments shall be treated, considered and administered as a sale of a participation and not as an assignment and shall be subject to and governed by the provisions of this Section. Any Lender may furnish any information concerning Borrowers in the possession of such Lender from time to time to Affiliates of such Lender and to assignees and Participants (including prospective assignees and Participants) and Borrowers hereby consent to the provision of such information.

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12.8. Quarterly Accordion Period Commitment Increases

On the first Business Day of each Quarterly Accordion Period, Credit Agent shall recompute the Percentage Share for each Lender based on the new Warehousing Credit Limit for such Quarterly Accordion Period and Credit Agent shall request Warehousing Advances from or shall direct prepayments to each Lender so that the total amount of all then outstanding Warehousing Advances are shared pro rata by each Lender. On the first Business Day following the last day of each Quarterly Accordion Period, (i) Credit Agent shall recompute the Percentage Share for each Lender based on the Warehousing Credit Limit as of such Business Day, (ii) Borrowers shall prepay the Warehousing Advances in an amount equal to the amount by which the aggregate unpaid principal balance of Warehousing Advances exceeds the Warehousing Commitment Amount, and (iii) Credit Agent shall request Warehousing Advances from or direct such prepayments to each Lender so that the total amount of all then outstanding Warehousing Advances are shared pro rata by each Lender.

12.9. Amendments

12.9 (a) This Agreement may not be amended or terms or provisions hereof waived unless such amendment or waiver is in writing and signed by the Majority Lenders, Credit Agent and Borrower; provided, however, that without the prior written consent of 100% of the Lenders, no amendment or waiver shall: (1) waive or amend any term or provision of Sections 7.4 or 7.14 hereof or the definition of any type of Collateral or the provisions of Section 4.1 hereof, (2) reduce the principal of, or rate of interest or fees on, the Warehousing Advances or any Lender’s Warehousing Commitment, (3) modify the Warehousing Credit Limit, (4) modify any Lender’s Percentage Share of the Warehousing Credit Limit, (5) modify the definition of “Majority Lenders,” or of the number or percentage of Lenders that are required to take action under the Loan Documents, (6) extend the Warehousing Maturity Date or modify the times that payments are due from Borrowers under this Agreement, (7) release any portion of the Collateral, except as expressly contemplated by the Loan Documents or in connection with a sale of such Collateral permitted hereunder, (8) release any Borrower from its obligations under Section 1.9, or amend or waive Section 1.9 or Exhibit N, (9) modify the several nature of each Lender’s obligations under this Agreements, (10) amend or waive the first sentence of Section 12.7, (11) amend or waive Section 3.10, Section 3.11, or Section 3.12, (12) amend Exhibit H, or (13) amend this Section. It is expressly agreed and understood that the failure by the Majority Lenders to elect to accelerate amounts outstanding hereunder or to terminate the obligation of Lenders to make Warehousing Advances hereunder shall not constitute an amendment or waiver of any term or provision of this Agreement.

12.9 (b) Borrowers hereby agree that they shall, upon requesting the third and any subsequent amendments of this Agreement or any other Loan Document or any waiver of any material term or provision of this Agreement or any other Loan Document (except an extension of the Warehousing Maturity Date), pay at the time of such request a modification fee (1) to Credit Agent in a minimum amount of $1,000 or such greater amount as may be notified to Borrowers by Credit Agent in its sole discretion and (2) to each Lender (except any Lender which becomes party to the Agreement by virtue of such amendment) in a minimum amount of $1,000 or such greater amount as may be notified to Borrowers by the Majority Lenders, acting through Credit Agent, in their sole discretion. The payment of such modification fees shall be in addition to and shall not limit Borrowers’ reimbursement obligations pursuant to Section 11.2 hereof, and any other fee or charge imposed by Credit Agent or Lenders as a condition to any amendment.

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12.10. Governing Law

This Agreement and the other Loan Documents are governed by the laws of the State of Minnesota, without reference to its principles of conflicts of laws.

12.11. Relationship of the Parties

This Agreement provides for the making and repayment of Warehousing Advances by Lenders (in their capacities as lenders) to Borrowers (in their capacity as a borrower), for the payment of interest on those Warehousing Advances and for the payment of certain fees by Borrowers to Lenders and Credit Agent. The relationship between Lenders and Borrowers is limited to that of creditor and secured party on the part of Lenders and of debtor on the part of Borrowers. The provisions of this Agreement and the other Loan Documents for compliance with financial covenants and the delivery of financial statements and other operating reports are intended solely for the benefit of Lenders and Credit Agent to protect their interest as a creditors and secured party. Nothing in this Agreement creates or may be construed as permitting or obligating Credit Agent or any Lender to act as a financial or business advisor or consultant to Borrowers, as permitting or obligating Lenders or Credit Agent to control Borrowers or to conduct Borrowers’ operations, as creating any fiduciary obligation on the part of Credit Agent or any Lender to Borrowers, or as creating any joint venture, agency, partnership or other relationship between Credit Agent or any Lender and Borrowers other than as explicitly and specifically stated in the Loan Documents. Borrowers acknowledge that they have had the opportunity to obtain the advice of experienced counsel of its own choice in connection with the negotiation and execution of the Loan Documents and to obtain the advice of that counsel with respect to all matters contained in the Loan Documents, including the waivers of jury trial and of punitive, consequential, special or indirect damages contained in Sections 12.18 and 12.19, respectively. Borrowers further acknowledge that they are experienced with respect to financial and credit matters and have made their own independent decisions to apply to Lenders for credit and to execute and deliver this Agreement.

12.12. Severability

If any provision of this Agreement or any other Loan Document is declared to be illegal or unenforceable in any respect, that provision is null and void and of no force and effect to the extent of the illegality or unenforceability, and does not affect the validity or enforceability of any other provision of the Agreement or such other Loan Document.

12.13. Consent to Credit References

Borrowers consent to the disclosure of information regarding each Borrower and its Subsidiaries and their relationships with Credit Agent and Lenders to Persons making credit inquiries to Credit Agent or any Lender. This consent is revocable by Borrowers at any time upon Notice to Credit Agent and Lenders as provided in Section 12.1.

12.14. Counterparts

This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together constitute but one and the same instrument.

12.15. Headings/Captions

The captions or headings in this Agreement and the other Loan Documents are for convenience only and in no way define, limit or describe the scope or intent of any provision of this Agreement or any other Loan Document.

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12.16. Entire Agreement

This Agreement, the Notes and the other Loan Documents represent the final agreement among the parties with respect to their subject matter, and may not be contradicted by evidence of prior or contemporaneous oral agreements among the parties. There are no oral agreements among the parties with respect to the subject matter of this Agreement, the Notes and the other Loan Documents.

12.17. Consent to Jurisdiction

AT THE OPTION OF CREDIT AGENT, THIS AGREEMENT, THE NOTES AND THE OTHER LOAN DOCUMENTS MAY BE ENFORCED IN ANY STATE OR FEDERAL COURT WITHIN THE STATE OF MINNESOTA. EACH BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF THOSE COURTS, AND WAIVES ANY OBJECTION TO THE JURISDICTION OR VENUE OF ANY OF THOSE COURTS, INCLUDING THE OBJECTION THAT VENUE IN THOSE COURTS IS NOT CONVENIENT. ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE COMMENCED AND INSTITUTED BY SERVICE OF PROCESS UPON EACH BORROWER BY FIRST CLASS REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO BORROWER AT ITS ADDRESS LAST KNOWN TO CREDIT AGENT. EACH BORROWER’S CONSENT AND AGREEMENT UNDER THIS SECTION DOES NOT AFFECT CREDIT AGENT’S RIGHT TO ACCOMPLISH SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY BORROWER IN ANY OTHER JURISDICTION OR COURT. IN THE EVENT ANY BORROWER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, CREDIT AGENT AT ITS OPTION MAY HAVE THE CASE TRANSFERRED TO A STATE OR FEDERAL COURT WITHIN THE STATE OF MINNESOTA OR, IF A TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, MAY HAVE BORROWER’S ACTION DISMISSED WITHOUT PREJUDICE.

12.18. Waiver of Jury Trial

EACH BORROWER, EACH OF LENDERS AND CREDIT AGENT EACH COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY, AND FULLY WAIVES ANY RIGHT TO TRIAL BY JURY TO THE EXTENT THAT ANY SUCH RIGHT NOW EXISTS OR HEREAFTER ARISES. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY, BY BORROWER AND CREDIT AGENT, AND IS INTENDED TO ENCOMPASS EACH INSTANCE AND EACH ISSUE FOR WHICH THE RIGHT TO TRIAL BY JURY WOULD OTHERWISE APPLY. CREDIT AGENT, EACH OF LENDERS AND BORROWER ARE EACH AUTHORIZED AND DIRECTED TO SUBMIT THIS AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER AND THE PARTIES TO THIS AGREEMENT AS CONCLUSIVE EVIDENCE OF THIS WAIVER OF THE RIGHT TO JURY TRIAL. FURTHER, EACH BORROWER, EACH OF LENDERS AND CREDIT AGENT EACH CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE OTHER PARTY, INCLUDING THE OTHER PARTY’S COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO ANY OF ITS REPRESENTATIVES OR AGENTS THAT THE OTHER PARTY WILL NOT SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL BY JURY.

12.19. Waiver of Punitive, Consequential, Special or Indirect Damages

BORROWERS WAIVE ANY RIGHT THEY MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES FROM CREDIT AGENT, ANY LENDER OR ANY OF

Page 12-6

THEIR AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY BORROWERS AGAINST ANY LENDER, CREDIT AGENT OR ANY OF THEIR AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT. THIS WAIVER OF THE RIGHT TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES IS KNOWINGLY AND VOLUNTARILY GIVEN BY BORROWERS, AND IS INTENDED TO ENCOMPASS EACH INSTANCE AND EACH ISSUE FOR WHICH THE RIGHT TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES WOULD OTHERWISE APPLY. CREDIT AGENT AND EACH LENDER IS AUTHORIZED AND DIRECTED TO SUBMIT THIS AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER AND THE PARTIES TO THIS AGREEMENT AS CONCLUSIVE EVIDENCE OF THIS WAIVER OF THE RIGHT TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES.

12.20. Confidentiality

The Credit Agent and each Lender shall use reasonable efforts to assure that information about the Borrower and its operations, affairs and financial condition, not generally disclosed to the public or to trade and other creditors, which is furnished to the Credit Agent or such Lender pursuant to the provisions hereof is used only for the purposes of this Agreement and any other relationship between the Credit Agent or such Lender and the Borrower and not divulged to any Person other than the Credit Agent, such Lender, its Affiliates and their respective officers, directors, employees and agents, except: (a) to their attorneys and accountants, (b) in connection with the enforcement of the rights of the Credit Agent or such Lender hereunder and under the other Loan Documents or otherwise in connection with applicable litigation, (c) in connection with assignments and participations and the solicitation of prospective assignees and participants referred to in Section 12.7 (provided such assignees, participants and prospecting assignees and participants agree to be bound by this Section 12.20) and (d) as may otherwise be required or requested by any regulatory authority having jurisdiction over the Credit Agent or by any applicable law, rule, regulation or judicial process, the opinion of the Credit Agent’s counsel concerning the making of such disclosure to be binding on the parties hereto.

12.21. Merger of Obligations

Each Borrower understands and agrees that its duties and obligations under the Existing Agreement merge with and into this Agreement, except as expressly modified by this Agreement. Each Borrower agrees that its duties and obligations under the Existing Agreement are not satisfied or extinguished by the execution and delivery of this Agreement.

End of Article 12

Page 12-7

13. DEFINITIONS

13.1. Defined Terms

As used in this Agreement and the Exhibits to this Agreement, the following terms have the following meanings or, as applicable, the meanings given to those terms elsewhere in this Agreement or in Exhibits to this Agreement:

“Acquisition Cost” means, with respect to any Mortgage Loan, the cash purchase price paid by Borrowers to acquire such Mortgage Loan minus any portion thereof attributable to amounts other than principal payable with respect to such Mortgage Loan.

“Additional Lender” means a Person admitted as a Lender under the Agreement by assignment or by the terms of an amendment hereto. Credit Agent will use its best efforts to notify Borrowers of the identity of any Person (other than RFC) proposed by Credit Agent to be admitted as a Lender at least 10 Business Days prior to the date on which such Person is proposed to be admitted as a Lender, provided that Credit Agent shall incur no liability to Borrowers or any other Person for any failure to give such notification.

“Advance” means a Warehousing Advance or a Swingline Advance.

“Advance Certificate” has the meaning set forth in Section 1.3.

“Advance Rate” means, with respect to any Eligible Loan, the Advance Rate set forth in Exhibit H for that type of Eligible Loan.

“Advance Request” means a Warehousing Advance Request Against Eligible Assets or a Warehousing Advance Request Against Construction/Perm Mortgage Loans.

“Affiliate” means, when used with reference to any Person, (a) each Person that, directly or indirectly, controls, is controlled by or is under common control with, the Person referred to, (b) each Person that beneficially owns or holds, directly or indirectly, 5% or more of any class of voting Equity Interests of the Person referred to, (c) each Person, 5% or more of the voting Equity Interests of which is beneficially owned or held, directly or indirectly, by the Person referred to, and (d) each of such Person’s officers, directors, joint venturers and partners. For these purposes, the term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the Person in question.

“Aged Mortgage Loans” means Mortgage Loans against which a Warehousing Advance has been outstanding for longer than the Standard Warehouse Period, provided that Aged Mortgage Loans are permitted for such type of Mortgage Loan.

“Aged Warehouse Period” means the maximum number of days a Warehouse Advance against Aged Mortgage Loans of a particular type may remain outstanding, as set forth in Exhibit H.

“Agency Security” means a Mortgage-backed Security issued or guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae.

“Agent’s Fee” has the meaning set forth in Section 3.6 of the Agreement.

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“Aggregate Warehousing Collateral Value” means, as of any date of determination, the total Warehousing Collateral Value of all Pledged Loans and Pledged Securities then subject to a perfected, first priority Lien in favor of Credit Agent and Lenders under this Agreement.

“Agreement” means this Third Amended and Restated Warehousing Credit and Security Agreement, either as originally executed or as it may be amended, restated, renewed or replaced

“Agreement for Deed” means an agreement between Lennar and the purchaser of the Single Family Properties in a development built by Lennar, pursuant to which the purchasers agree to make payments to Lennar and its assigns over a period of time and Lennar agrees, upon receipt of all such payments, to transfer title to the common areas in such development to such purchaser or a homeowners association.

“Appraised Property Value” means with respect to an interest in real property, the then current fair market value of the real property and any improvements on it as of recent date determined in accordance with Title XI of FIRREA by a qualified appraiser who is a member of the American Institute of Real Estate Appraisers or other group of professional appraisers.

“Approved Custodian” means a pool custodian or other Person that Lender deems acceptable, in its sole discretion, to hold Mortgage Loans for inclusion in a Mortgage Pool or to hold Mortgage Loans as agent for an Investor that has issued a Purchase Commitment for those Mortgage Loans.

“As Completed Appraised Value” means the value given by a state-certified appraiser to the real property and improvements on the real property based on the Total Hard Costs and plans and specifications for the improvements on the real property prior to the beginning of any construction or rehabilitation.

“Audited Statement Date” means the date of each Borrower’s most recent audited financial statements (and, if applicable, such Borrower’s Subsidiaries, on a consolidated basis) delivered to Credit Agent and Lenders under the Existing Agreement or this Agreement.

“Balance Deficiency Fee” has the meaning set forth in Section 3.1(b).

“Balance Funded Agreement” has the meaning set forth in Section 3.1(b).

“Balance Funded Portion” has the meaning set forth in Section 3.1(b).

“Balance Funded Rate” means, for Warehousing Advances made by any Lender that is a party to a Balance Funded Agreement, the applicable rate set forth Exhibit H.

“Borrowers” has the meaning set forth in the first paragraph of this Agreement.

“BPO Value” means, with respect to the improved real property, improvements and ownership interest and occupancy rights securing any Mortgage Loan, the lowest fair market value for such real property, improvements and ownership interest and occupancy rights as set forth in an opinion of a real estate broker acceptable to Credit Agent, in its sole discretion, as to the value of such improved real property if sold within a 60-day marketing period. Each such broker price opinion must be obtained from a real estate broker with substantial experience in the purchase and sale of similar properties in the geographic area in which the real property, improvements and ownership interest and occupancy rights to be valued is located and should be as of a date not more than 60 days prior to the date of the related Advance.

“Business Day” means any day other than Saturday, Sunday or any other day on which national banking associations are closed for business.

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“Buydown” has the meaning set forth in Section 3.4.

“Calendar Quarter” means the 3 month period beginning on each January 1, April 1, July 1 or October 1.

“Cash Collateral Account” means a demand deposit account maintained at the Funding Bank in Credit Agent’s name and designated for receipt of the proceeds of the sale or other disposition of Collateral.

“Closing Date” has the meaning set forth in the Recitals to this Agreement.

“Collateral” has the meaning set forth in Section 4.1.

“Collateral Documents” means, with respect to each Mortgage Loan, (a) the Mortgage Note, the Mortgage and all other documents including, if applicable, any Security Agreement, executed in connection with or relating to the Mortgage Loan; (b) as applicable, the original lender’s ALTA Policy of Title Insurance or its equivalent, documents evidencing the FHA Commitment to Insure, the VA Guaranty or private mortgage insurance, the appraisal, the Regulation Z statement, the environmental assessment, the engineering report, certificates of casualty or hazard insurance, credit information on the maker of the Mortgage Note, the HUD-1 or corresponding purchase advice; (c) any other document listed in Exhibit B; and (d) any other document that is customarily desired for inspection or transfer incidental to the purchase of any Mortgage Note by an Investor or that is customarily executed by the seller of a Mortgage Note to an Investor.

“Commitment Increase” has the meaning set forth in Section 12.8.

“Committed Purchase Price” means for an Eligible Loan (a) the dollar price as set forth in the Purchase Commitment or, if the price is not expressed in dollars, the product of the Mortgage Note Amount multiplied by the price (expressed as a percentage) as set forth in the Purchase Commitment for the Eligible Loan, or (b) if the Eligible Loan is to be used to back an Agency Security, an amount equal to the product of the Mortgage Note Amount multiplied by the price (expressed as a percentage) as set forth in the Purchase Commitment for the Agency Security.

“Compliance Certificate” means a certificate executed on behalf of Borrowers by UAMCLLC’s manager having principal financial accounting responsibilities, substantially in the form of Exhibit E.

“Construction/Perm Mortgage Loan” has the meaning set forth in Exhibit H.

“Cost Breakdown” means a list of the costs and expenses to be financed by Advances against a Third Party Builder Construction Mortgage Loan or a Construction/Perm Mortgage Loan, including, without limitation, real property acquisition costs, hard and soft construction costs, architectural fees, the Rehab Escrow and any other costs and expenses budgeted to construct and complete the improvements.

“Credit Agent” has the meaning set forth in the first paragraph of this Agreement.

“Credit Score” means a mortgagor’s overall consumer credit rating, represented by a single numeric credit score using the Fair, Isaac consumer credit scoring system, provided by a credit repository acceptable to Credit Agent and the Investor that issued the Purchase Commitment covering the related Mortgage Loan (if a Purchase Commitment is required by Exhibit H).

“Debt” means (a) all indebtedness or other obligations of a Person (and, if applicable, that Person’s Subsidiaries, on a consolidated basis) that, in accordance with GAAP, would be included in determining total liabilities as shown on the liabilities side of a balance sheet of that

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Person on the date of determination, plus (b) all indebtedness or other obligations of that Person (and, if applicable, that Person’s Subsidiaries, on a consolidated basis) for borrowed money or for the deferred purchase price of property or services. For purposes of calculating a Person’s Debt, Subordinated Debt due more than 1 year after the Warehousing Maturity Date may be excluded from that Person’s indebtedness.

“Default” means the occurrence of any event or existence of any condition that, but for the giving of Notice, the lapse of time or both, would constitute an Event of Default.

“Default Rate” means, for any Advance, the Interest Rate applicable to that Advance plus 2% per annum. If no Interest Rate is applicable to an Advance, “Default Rate” means, for that Advance, the highest Interest Rate then applicable to any outstanding Advance plus 2% per annum.

“Depository Benefit” means the compensation received by any Lender, directly or indirectly, as a result of Borrowers’ maintenance of Eligible Balances with a Designated Bank.

“Designated Bank” means any bank designated by any Lender as a Designated Bank, but only for as long as such Lender has an agreement under which that Lender receives Depository Benefits from that bank.

“Designated Bank Charges” means any fees, interest or other charges that would otherwise be payable to a Designated Bank in connection with Eligible Balances maintained at the Designated Bank, including deposit insurance premiums, service charges and any other charges that may be imposed by governmental authorities from time to time.

“Discontinued Loan” has the meaning set forth in the GMAC-RFC Client Guide.

“Eagle Prime Mortgage Loan” has the meaning set forth in Exhibit H.

“Eagle Subprime Mortgage Loan” has the meaning set forth in Exhibit H.

“Electronic Advance Request” means an electronic transmission through RFConnects Delivery containing the same information as Exhibit A to this Agreement.

“Electronic Tracking Agreement” means an Electronic Tracking Agreement, on the form prescribed by Credit Agent, among a Borrower, Credit Agent, MERS and MERSCORP, Inc.

“Eligible Asset” means a Mortgage Loan, Agreement for Deed or Foreclosure Claim Receivable that satisfies the conditions and requirements set forth in Exhibit H.

“Eligible Balances” means all funds of or maintained by Borrowers (and, if applicable, Borrowers’ Subsidiaries) in demand deposit or time deposit accounts at a Designated Bank, minus balances to support float, reserve requirements and any other reductions that may be imposed by governmental authorities from time to time.

“Eligible Loan” means a Single Family Mortgage Loan that satisfies the conditions and requirements set forth in Exhibit H.

“Eligible Mortgage Pool” means a Mortgage Pool for which (a) an Approved Custodian has issued its initial certification, (b) there exists a Purchase Commitment covering the Agency Security to be issued on the basis of that certification and (c) the Agency Security will be delivered to Credit Agent.

“Equity Interests” means all shares, interests, participations or other equivalents, however, designated, of or in a Person (other than a natural person), whether or not voting, including

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common stock, membership interests, warrants, preferred stock, convertible debentures and all agreements, instruments and documents convertible, in whole or in part, into any one or more of the foregoing.

“ERISA” means the Employee Retirement Income Security Act of 1974 and all rules and regulations promulgated under that statute, as amended, and any successor statute, rules and regulations.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that is a member of a group of which any Borrower is a member and that is treated as a single employer under Section 414 of the Internal Revenue Code.

“Event of Default” means any of the conditions or events set forth in Section 10.1.

“Excess Buydown” has the meaning set forth in Section 3.4.

“Exchange Act” means the Securities Exchange Act of 1934 and all rules and regulations promulgated under that statute, as amended, and any successor statute, rules, and regulations.

“Exclusionary List” means the list by that name published and updated periodically by Credit Agent on the www.gmacresidentialfunding.com website.

“Exhibit A” means Exhibit A-SF, Exhibit A-Construction, Exhibit A-Other Investments and Exhibit A-UNI, as applicable to the type of Eligible Asset being financed.

“Exhibit B” means Exhibit B-SF, Exhibit B-Construction, Exhibit B-Foreclosure Claim Receivable and Exhibit B-Investment Mortgage Loans, as applicable to the type of Eligible Asset being financed.

“Existing Agreement” means the Second Amended and Restated Warehousing Credit and Security Agreement dated as of April 21, 2005, as amended, between Borrowers, Credit Agent and Lenders.

“Fair Market Value” means, at any time for an Eligible Loan or a related Pledged Security (if the Eligible Loan is to be used to back a Pledged Security) as of any date of determination, the market price for such Eligible Loan or Pledged Security, determined by Credit Agent based on market data for similar Mortgage Loans or Pledged Securities and such other criteria as Credit Agent deems appropriate in its sole discretion.

“Fannie Mae” means Fannie Mae, a corporation created under the laws of the United States, and any successor corporation or other entity.

“Federal Funds Rate” means, for each week, the effective Federal Funds Rate (per annum) of interest in effect on the first Business Day of that week, as published by Bloomberg L.P. If the Federal Funds Rate is not published by Bloomberg L.P. on the first Business Day of any week, then the term “Federal Funds Rate” means the highest Federal Funds Rate published in the The Wall Street Journal in its regular column entitled “Money Rates” on the first Business Day of that week.

“FHA” means the Federal Housing Administration and any successor agency or other entity.

“FHA Mortgage Loan” means an FHA-insured Mortgage Loan included in the Pledged Loans.

“FICA” means the Federal Insurance Contributions Act and all rules and regulations promulgated under that statute, as amended, and any successor statute, rules and regulations.

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“FIRREA” means the Financial Institutions Reform, Recovery and Enforcement Act of 1989 and all rules and regulations promulgated under that statute, as amended, and any successor statute, rules and regulations.

“First Mortgage” means a Mortgage that constitutes a first Lien on the real property and improvements described in or covered by that Mortgage.

“First Mortgage Loan” means a Mortgage Loan secured by a First Mortgage.

“Foreclosure Claim Receivable” means a valid, readily enforceable and liquidated claim of UAMC Asset for the payment of money against FHA or VA under an FHA mortgage insurance policy insuring payment of, or VA guaranty of, all or a part of a defaulted Single Family Mortgage Loan foreclosed by one of the Borrowers.

“Foreclosure Mortgage Loan” means a Mortgage Loan that has been repurchased by a Borrower from an Investor or out of a Mortgage Pool and assigned to UAMC Asset, and is in the process of foreclosure.

“Freddie Mac” means the Federal Home Loan Mortgage Corporation, a corporation created under the laws of the United States, and any successor corporation or other entity.

“Funding Bank” means JPMorgan Chase or any other bank designated by Credit Agent as a Funding Bank.

“Funding Bank Agreement” means a letter agreement on the form prescribed by Credit Agent between the Funding Bank and Borrowers authorizing Credit Agent’s access to the Operating Account.

“GAAP” means generally accepted accounting principles set forth in opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and in statements and pronouncements of the Financial Accounting Standards Board, or in opinions, statements or pronouncements of any other entity approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination.

“Ginnie Mae” means the Government National Mortgage Association, an agency of the United States government, and any successor agency or other entity.

“GMAC-RFC Client Guide” means the applicable loan purchase guide issued by RFC, as the same may be amended or replaced.

“Government Mortgage Loan” means a closed-end First Mortgage Loan that is either HUD/FHA insured (other than a HUD 203(K) Mortgage Loan or a Title I Mortgage Loan) or VA guaranteed.

“Hedging Arrangements” means, with respect to any Person, any agreements or other arrangements (including interest rate swap agreements, interest rate cap agreements and forward sale agreements) entered into to protect that Person against changes in interest rates or the market value of assets.

“HUD” means the Department of Housing and Urban Development, and any successor agency or other entity.

“HUD 203(K) Mortgage Loan” means an FHA-insured closed-end First Mortgage Loan to an individual obligor the proceeds of which will be used for the purpose of rehabilitating and repairing the related single family property, and which satisfies the definition of “rehabilitation loan” in 24 C.F.R. 203.50(a).

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“Indemnified Liabilities” has the meaning set forth in Section 12.2.

“Indemnitees” has the meaning set forth in Section 12.2.

“Interest Rate” means, for any Advance, the floating rate of interest specified for that Advance in Exhibit H.

“Interim Statement Date” means the date of the most recent unaudited financial statements of each Borrower (and, if applicable, each Borrower’s Subsidiaries, on a consolidated basis) delivered to Credit Agent and Lender under the Existing Agreement or this Agreement.

“Internal Revenue Code” means the Internal Revenue Code of 1986, Title 26 of the United States Code, and all rules, regulations and interpretations issued under those statutory provisions, as amended, and any subsequent or successor federal income tax law or laws, rules, regulations and interpretations.

“Investment” means any direct or indirect purchase or other acquisition by any Person of, or a beneficial interest in, stock or other securities of any other Person, or any direct or indirect loan, advance (other than advances to employees for moving and travel expenses, drawing accounts and similar expenditures in the ordinary course of business) or capital contribution by that Person to any other Person, including all Debt and accounts receivable from that Person which are not current assets or did not arise from sales to that other Person in the ordinary course of business.

“Investment Company Act” means the Investment Company Act of 1940 and all rules and regulations promulgated under that statute, as amended, and any successor statute, rules, and regulations.

“Investment Mortgage Loan” means a Prime First Mortgage Loan or a Subprime Mortgage Loan held by a Borrower for investment rather than sale.

“Investor” means Fannie Mae, Freddie Mac or a financially responsible private institution that Lender deems acceptable, in its sole discretion, to issue Purchase Commitments with respect to a particular category of Eligible Loans.

“JPMorgan Chase” means JPMorgan Chase Bank, N.A., Chicago, Illinois, or any successor bank.

“JPMorgan Chase Prime Rate” means, as of any date of determination, the highest prime rate quoted by JPMorgan Chase and most recently published by Bloomberg L.P. If the prime rate for JPMorgan Chase is not quoted or published for any period, then during that period the term “JPMorgan Chase Prime Rate” means the highest prime rate published in the most recent edition of The Wall Street Journal in its regular column entitled “Money Rates.”

“Lenders” has the meaning set forth in the first paragraph of this Agreement.

“Lennar” means LENNAR CORPORATION, a Delaware corporation.

“Lennar Undertaking” means a guaranty of certain of Borrowers’ Obligations by Lennar.

“Leverage Ratio” means the ratio of a Person’s Debt to Modified Tangible Net Worth.

“LIBOR” means, for each week, the rate of interest per annum that is equal to the arithmetic mean of the U.S. Dollar London Interbank Offered Rates for 1 month periods of certain U.S.

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banks as of 11:00 a.m. (London time) on the first Business Day of each week on which the London Interbank market is open, as published by Bloomberg L.P. If those interest rates are not offered or published for any period, then during that period LIBOR means the London Interbank Offered Rate for 1 month periods as published in The Wall Street Journal in its regular column entitled “Money Rates” on the first Business Day of each week on which the London Interbank market is open.

“Lien” means any lien, mortgage, deed of trust, pledge, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature of such an agreement and any agreement to give any security interest).

“Loan Documents” means this Agreement, the Notes, the Lennar Undertaking, any agreement of Borrowers relating to Subordinated Debt, and each other document, instrument or agreement executed by Borrowers in connection with any of those documents, instruments and agreements, as originally executed or as any of the same may be amended, restated, renewed or replaced.

“Loan Package Fee” has the meaning set forth in Section 3.7.

“Loan-to-Value Ratio” means, for any Mortgage Loan, the ratio of (a) the maximum amount that may be borrowed under the Mortgage Loan (whether or not borrowed) at the time of origination, plus the Mortgage Note Amounts of all other Mortgage Loans secured by senior or pari passu Liens on the related real property and improvements, to (b) the Appraised Property Value of the related real property and improvements.

“Majority Lenders” means at any date Lenders holding not less than 66-2/3% of the aggregate Warehousing Credit Limit. Notwithstanding the foregoing, if there are only 2 Lenders the term “Majority Lenders” shall, except for purposes of Section 11.2(c), include both Lenders.

“Manufactured Home” means a structure that is built on a permanent chassis (steel frame) with the wheel assembly necessary for transportation in one or more sections to a permanent site or semi-permanent site.

“Margin Stock” has the meaning assigned to that term in Regulation U of the Board of Governors of the Federal Reserve System, as amended.

“MERS” means Mortgage Electronic Registrations Systems, Inc. and any successor entity.

“Miscellaneous Fees and Charges” means the Collateral Operations Fees set forth on Lender’s fee schedule attached as Exhibit I and all miscellaneous disbursements, charges and expenses incurred by or on behalf of Lender for the handling and administration of Advances and Collateral, including costs for Uniform Commercial Code, tax lien and judgment searches conducted by Lender, filing fees, charges for wire transfers and check processing charges, charges for security delivery fees, charges for overnight delivery of Collateral to Investors, recording fees, Funding Bank service fees and overdraft charges and Designated Bank Charges. Upon not less than 3 Business Days’ prior Notice to Borrower, Lender may modify the Collateral Operations Fees set forth in Exhibit I to conform to current Lender practices and, as so modified, the revised Exhibit I will become part of this Agreement.

“Modified Tangible Net Worth” means Tangible Net Worth, but including as assets, advances and loans to Lennar and Lennar Financial Services, LLC.

“Mortgage” means a mortgage or deed of trust on real property that is improved and substantially completed (including real property to which a Manufactured Home has been affixed in a manner such that the Lien of a mortgage or deed of trust would attach to the Manufactured Home under applicable real property law).

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“Mortgage-backed Securities” means securities that are secured or otherwise backed by Mortgage Loans.

“Mortgage Loan” means any loan evidenced by a Mortgage Note and secured by a Mortgage and, if applicable, a Security Agreement.

“Mortgage Note” means a promissory note secured by one or more Mortgages and, if applicable, one or more Security Agreements.

“Mortgage Note Amount” means, as of any date of determination, the then outstanding and unpaid principal amount of a Mortgage Note (whether or not an additional amount is available to be drawn under that Mortgage Note).

“Mortgage Pool” means a pool of one or more Pledged Loans on the basis of which a Mortgage-backed Security is to be issued.

“Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA, to which either Borrower or any ERISA Affiliate of Borrower has any obligation with respect to its employees.

“Notes” means the Warehousing Notes, the Sublimit Notes and the Swingline Note.

“Notices” has the meaning set forth in Section 12.1.

“Obligations” means all indebtedness, obligations and liabilities of each Borrower to any and all of Credit Agent and Lenders under this Agreement, any Note, any fee letter in favor of the Credit Agent relating to the Agreement, or under any of the other Loan Documents (whether now existing or arising after the date of this Agreement, voluntary or involuntary, joint or several, direct or indirect, absolute or contingent, liquidated or unliquidated, or decreased or extinguished and later increased and however created or incurred), including, without limitation, interest and other amounts that would accrue but for the filing of a petition under any law relating to bankruptcy, insolvency, moratorium, reorganization, winding-up or dissolution.

“Operating Account” means the demand deposit account number 1078657 maintained at the Funding Bank in Borrowers’ name and designated for funding that portion of each Eligible Asset not funded by an Advance made against that Eligible Asset and for returning any excess payment from an Investor for a Pledged Asset.

“Other Investments” has the meaning set forth on Exhibit H.

“Participant” has the meaning set forth in Section 12.7.

“Percentage Share” means, for any Lender at any date, the percentage which such Lender’s Warehousing Commitment Amount bears to the Warehousing Credit Limit as of such date.

“Person” means and includes natural persons, corporations, limited liability companies, limited liability partnerships, limited partnerships, general partnerships, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and governments and agencies and political subdivisions of those governments.

“Plan” means each employee benefit plan (whether in existence on the date of this Agreement or established after that date), as that term is defined in Section 3 of ERISA, maintained for the benefit of directors, officers or employees of Borrower or any ERISA Affiliate.

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“Pledged Agreements for Deed” has the meaning set forth in Section 4.1(c).

“Pledged Assets” means, collectively, Pledged Loans, Pledged Agreements for Deed, Foreclosure Claim Receivables and Pledged Securities.

“Pledged Hedging Accounts” has the meaning set forth in Section 4.1 (i).

“Pledged Hedging Arrangements” has the meaning set forth in Section 4.1 (i).

“Pledged Loans” has the meaning set forth in Section 4.1(b).

“Pledged Securities” has the meaning set forth in Section 4.1(d).

“Pledged Shares” has the meaning set forth in Section 4.1(j).

“Prime Mortgage Loan” has the meaning set forth in Exhibit H.

“Prohibited Transaction” has the meanings set forth for such term in Section 4975 of the Internal Revenue Code and Section 406 of ERISA.

“Purchase Commitment” means a written commitment, in form and substance satisfactory to Lender, issued in favor of Borrower by an Investor under which that Investor commits to purchase Mortgage Loans or Mortgage-backed Securities.

“Quarterly Accordion Period” means, for each fiscal year of UAMCLLC, the three 30-day periods beginning approximately each of May 25, August 25, and November 25, and ending approximately each of June 23, September 23, and December 24, respectively.

“Quarterly Unimproved Land Loan Accordion Period” means, for each fiscal year of UAMCLLC, the three 10-day periods beginning approximately each of May 25, August 25, and November 25.

“Rating Agency” means any nationally recognized statistical rating organization that in the ordinary course of its business rates Mortgage-backed Securities.

“Rehab Escrow” means an escrow established as part of the initial Advance of a Construction/Perm Mortgage Loan for rehabilitation or renovation of existing improvements in an amount equal to the difference between the amount funded for the financing or refinancing of existing improvements on the real property encumbered by the Pledged Mortgage Loans and the amount funded for the renovation or rehabilitation of the existing improvements.

“Receivables” has the meaning set forth in Section 4.1(f).

“Release Amount” has the meaning set forth in Section 4.3(f).

“Restriction List” and “Restriction Lists” means each and every list of Persons to whom the Government of the United States prohibits or otherwise restricts the provision of financial services. For the purposes of this Agreement, Restriction Lists include the list of Specifically Designated Nationals and Blocked Persons established pursuant to Executive Order 13224 (September 23, 2001) and maintained by the U.S. Department of the Treasury’s Office of Foreign Assets Control or any successor agency or other entity, current as of the day the Restriction List is used for purposes of comparison in accordance with the requirements of this Agreement.

“RFConnects Delivery” means Credit Agent’s proprietary service to support the electronic exchange of information between Credit Agent and Borrowers, including Warehousing Advance Requests, shipping requests, payoff requests, wire transfer instructions, security delivery instructions, activity reports and exception reports.

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“Second Mortgage” means a Mortgage that constitutes a second Lien on the real property and improvements described in or covered by that Mortgage.

“Second Mortgage Loan” means a Mortgage Loan secured by a Second Mortgage.

“Security Agreement” means a security agreement or other agreement that creates a Lien on personal property, including furniture, fixtures and equipment, to secure repayment of a Mortgage Loan.

“Servicing Contract” means, with respect to any Person, the arrangement, whether or not in writing, under which that Person has the right to service Mortgage Loans.

“Servicing Portfolio” means, as to any Person, the unpaid principal balance of Mortgage Loans serviced by that Person under Servicing Contracts, minus the principal balance of all Mortgage Loans that are serviced by that Person for others under subservicing arrangements.

“Servicing Portfolio Report” has the meaning set forth in Section 7.3(a).

“Single Family Mortgage Loan” means a Mortgage Loan secured by a Mortgage on improved real property on which is located a 1-to-4 family residence.

“Single Family Property” means improved real property containing one to four family residences.

“Standard Warehouse Period” means, for any Mortgage Loan, the maximum number of days a Warehousing Advance against that type of Mortgage Loan, other than against an Aged Mortgage Loan, may remain outstanding, as set forth in Exhibit H.

“Statement Date” means the Audited Statement Date or the Interim Statement Date, as applicable.

“Sublimit” means the aggregate amount of Advances (expressed as a dollar amount of the Warehousing Credit Amount) that is permitted to be outstanding at any one time against a specific type of Eligible Loan.

“Subordinated Debt” means all indebtedness of Borrowers for borrowed money that is effectively subordinated in right of payment to all present and future Obligations either (1) under a Subordination of Debt Agreement on the form prescribed by Credit agent or (2) otherwise on terms acceptable to Credit Agent.

“Subprime Mortgage Loan” has the meaning set forth in Exhibit H.

“Subsidiary” means any corporation, partnership, association or other business entity in which more than 50% of the shares of stock or other ownership interests having voting power for the election of directors, managers, trustees or other Persons performing similar functions is at the time owned or controlled by any Person either directly or indirectly through one or more Subsidiaries of that Person.

“Super Jumbo Mortgage Loan” has the meaning set forth in Exhibit H.

“Swingline Advance” means an Advance made by RFC under Section 1.3.

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“Swingline Facility Amount” means the maximum amount of Swingline Advances to be made by RFC from time to time, but not to exceed $75,000,000.

“Swingline Note” has the meaning set forth in Section 1.4.

“Tangible Net Worth” means the excess of a Person’s (and, if applicable, the Person’s Subsidiaries, on a consolidated basis) total assets over total liabilities as of the date of determination, each determined in accordance with GAAP, plus that portion of Subordinated Debt not due within 1 year of that date. For purposes of calculating a Person’s Tangible Net Worth, advances or loans to shareholders, directors, officers, employees or Affiliates, investments in Affiliates, assets pledged to secure any liabilities not included in the Debt of the Person, intangible assets, Servicing Contracts of the type described in Section 8.11 (to the extent capitalized as an asset), those other assets that would be deemed by HUD to be non-acceptable in calculating adjusted net worth in accordance with its requirements in effect as of that date, as those requirements appear “Consolidated Audit Guide for Audits of HUD Programs,” and other assets Credit Agent deems unacceptable, in its sole discretion, must be excluded from a Person’s total assets.

“Taxes” has the meaning set forth in Section 3.13(a)(1).

“Third Party Builder Construction Mortgage Loan” has the meaning set forth on Exhibit H.

“Third Party Originated Loan” means a Mortgage Loan originated and funded by a third party (other than with funds provided by a Borrower at closing to purchase the Mortgage Loan) and subsequently purchased by a Borrower.

“Title I Mortgage Loan” means an FHA co-insured closed-end First Mortgage Loan or Second Mortgage Loan that is underwritten in accordance with HUD underwriting standards for the Title I Property Improvement Program set forth in, and that is reported for insurance under, the Mortgage Insurance Program authorized and administered under Title I of the National Housing Act of 1934, as amended, and the regulations related to that statute.

“Trust Receipt” means a trust receipt in a form approved by and under which Credit Agent may deliver any document relating to the Collateral to Borrowers for correction or completion.

“UAMC Capital” means UAMC Capital, LLC, a Delaware limited liability company.

“UAMC Capital Warehousing Facility” means the warehousing facility created pursuant to the Loan Agreement dated as of May 23, 2003, by and among UAMC Capital (the “Issuers”) party thereto, Calyon New York Branch, as administrative agent (the “Managing Agent”) party thereto and UAMC, as Servicer, either as originally executed or as it may be amended, restated, renewed or replaced.

“Unimproved Land Loan” has the meaning set forth in Exhibit H.

“VA” means the Veterans Administration and any successor agency or other entity.

“Warehouse Period” means, for any Eligible Loan, the maximum number of days a Warehousing Advance against that type of Eligible Loan may remain outstanding as set forth in Exhibit H.

“Warehousing Advance” means a disbursement by a Lender under its Warehousing Commitment.

“Warehousing Advance Request” has the meaning set forth in Section 2.1.

Page 13-12

“Warehousing Collateral Value” means, as of any date of determination, (a) with respect to any Eligible Loan, the lesser of (1) the amount of any Warehousing Advance made, or that could be made, against such Eligible Loan under Exhibit H or (2) an amount equal to the Advance Rate for the applicable type of Eligible Loan multiplied by the Fair Market Value of such Eligible Loan; (b) if Eligible Loans have been exchanged for Agency Securities, the lesser of (1) the amount of any Warehousing Advances outstanding against the Eligible Loans backing the Agency Securities or (2) an amount equal to the Advance Rates for the applicable types of Eligible Loans backing the Agency Securities multiplied by the Fair Market Value of the Agency Securities; and (c) with respect to cash, the amount of the cash.

“Warehousing Commitment” means the obligation of each Lender to make Warehousing Advances to Borrowers under Section 1.1.

“Warehousing Commitment Amount” means, for any Lender at any date, that dollar amount designated as such opposite such Lender’s name on Exhibit J as its Warehousing Commitment Amount on such date, as the same may be amended from time to time in accordance with this Agreement.

“Warehousing Commitment Fee” has the meaning set forth in Section 3.5.

“Warehousing Credit Limit” means at any date the sum of the Warehousing Commitment Amounts of all of the Lenders on such date.

“Warehousing Fee” has the meaning set forth in Section 3.6.

“Warehousing Maturity Date” has the meaning set forth in Section 1.2.

“Warehousing Note” has the meaning set forth in Section 1.4.

“Weighted Average Committed Purchase Price” means the weighted average of the Committed Purchase Prices of the unfilled Purchase Commitments (expressed as a percentage) for Mortgage Loans or Mortgage-backed Securities of the same type, interest rate and term.

“Wet Settlement Advance” means an Advance prior to the end of the Wet Settlement Period.

“Wet Settlement Period” means the period of time from the date a Wet Settlement Advance is made against a Pledged Asset until the earlier of (a) the date the Collateral Documents for the Pledged Asset have been delivered to and examined by Credit Agent, or (b) the date the Wet Settlement Advance made against the Pledged Asset is paid in full.

“Wire Disbursement Account” means a demand deposit account maintained at the Funding Bank in Credit Agent’s name for clearing wire transfers requested by Borrowers to fund Warehousing Advances.

“Wire Fee” has the meaning set forth in Section 3.7.

13.2. Other Definitional Provisions; Terms of Construction

13.2 (a) Accounting terms not otherwise defined in this Agreement have the meanings given to those terms under GAAP.

13.2 (b) Defined terms may be used in the singular or the plural, as the context requires.

Page 13-13

13.2 (c) All references to time of day mean the then applicable time in Chicago, Illinois, unless otherwise expressly provided.

13.2 (d) References to Sections, Exhibits, Schedules and like references are to Sections, Exhibits, Schedules and the like of this Agreement unless otherwise expressly provided.

13.2 (e) The words “include,” “includes” and “including” are deemed to be followed by the phrase “without limitation.”

13.2 (f) Unless the context in which it is used otherwise clearly requires, the word “or” has the inclusive meaning represented by the phrase “and/or.”

13.2 (g) All incorporations by reference of provisions from other agreements are incorporated as if such provisions were fully set forth into this Agreement, and include all necessary definitions and related provisions from those other agreements. All provisions from other agreements incorporated into this Agreement by reference survive any termination of those other agreements until the Obligations of Borrower under this Agreement and the Notes are irrevocably paid in full and the Warehousing Commitment is terminated.

13.2 (h) All references to the Uniform Commercial Code are deemed to be references to the Uniform Commercial Code in effect on the date of this Agreement in the applicable jurisdiction.

13.2 (i) Unless the context in which it is used otherwise clearly requires, all references to days, weeks and months mean calendar days, weeks and months.

End of Article 13

Page 13-14

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first above written.

UNIVERSAL AMERICAN MORTGAGE COMPANY, LLC, a Florida limited liability company
By:	/s/    Janice Munoz
Its:	Vice President/Treasurer
EAGLE HOME MORTGAGE, INC., a Washington corporation
By:	/s/    Janice Munoz
Its:	Vice President
EAGLE HOME MORTGAGE OF CALIFORNIA, INC. a California corporation
By:	/s/    Janice Munoz
Its:	Vice President
UNIVERSAL AMERICAN MORTGAGE COMPANY OF CALIFORNIA, a California corporation
By:	/s/    Janice Munoz
Its:	Vice President/Treasurer
UAMC ASSET CORP. II, a Nevada corporation
By:	/s/    Janice Munoz
Its:	Vice President/Treasurer
UNIVERSAL AMERICAN MORTGAGE COMPANY OF PENNSYLVANIA, INC., a Florida corporation
By:	/s/    Janice Munoz
Its:	Vice President/Treasurer
EAGLE HOME MORTGAGE, LLC, a Delaware limited liability company
By:	/s/    Janice Munoz
Its:	Vice President

Page 13-15

CREDIT AGENT:	RESIDENTIAL FUNDING CORPORATION,
	a Delaware Corporation
	By:	/s/    Jim Clapp
	Its:	Director

CLOSING DATE: 5/04/06

Page 13-16

LENDERS:	RESIDENTIAL FUNDING CORPORATION,
	a Delaware corporation
	By	/s/    Jim Clapp
	Its:	Director

Page 13-17

JPMORGAN CHASE BANK, N.A.,
a national banking association
By:	/s/    R. Britt Langford
Its:	Senior Vice President

NOTICE ADDRESS:
707 Travis Street, 6th Floor North
Houston, TX 77002
Attention:	R. Britt Langford
Facsimile:	713-216-1567

U.S. BANK NATIONAL ASSOCIATION,
a national banking association
By:	/s/    Edwin D. Jenkins
Its:	Senior Vice President

NOTICE ADDRESS:
800 Nicollet Mall
#BC-MN-H03B
Minneapolis, MN 55402
Attention:	Edwin D. Jenkins
Facsimile:	612-303-2253

SUNTRUST BANK, a state bank organized
under the laws of Georgia
By:	/s/    Robert E. Hummel
Its:	Senior Vice President

NOTICE ADDRESS:
777 Brickell Avenue
Miami, FL 33131
Attention:	Robert E. Hummel,
	Senior Vice President
Facsimile:	305-579-7311

NATIONAL CITY BANK OF KENTUCKY,
a national banking association
By:	/s/    Mary Jo Reiss
Its:	Vice President

NOTICE ADDRESS:
101 South Fifth Street, 6th Floor
Louisville, KY 40202
Attention:	Mary Jo Reiss, Vice President
Facsimile:	502-581-4154

Page 13-18

COMERICA BANK
By:	/s/    Robert W. Marr
Its:	Vice President

NOTICE ADDRESS:
500 Woodward Avenue
MC 3256
Detroit, MI 48226
Attention:	Rob Marr
Facsimile:	313-222-9295

CALYON NEW YORK BRANCH
By:	/s/    David Cagle
Its:	Managing Director
By:	/s/    Robert Smith
Its:	Managing Director

NOTICE ADDRESS:
2200 Ross Avenue, Suite 4400W
Dallas, TX 75201
Attention:	Robert Smith
Facsimile:	214-220-2323

WASHINGTON MUTUAL BANK, FA
By:	/s/    Brad Johnson
Its:	Vice President

NOTICE ADDRESS:
3929 W. John Carpenter Freeway
Irving, TX 75063
Attention:	Brad Johnson
Facsimile:	972-870-3603

Page 13-19

EX-21

Exhibit 21

List of Subsidiaries

Company Name	State of Organization	DBAs
5800 Third Street Partners, LLC	Delaware
Acme Water Supply & Management Company	Florida
Alabama Property Ventures, LLC	Alabama
Aquaterra Utilities, Inc.	Florida
Asbury Woods, LLC	Illinois
Avalon Sienna III, LLC	Illinois
Avalon Sienna, LLC	Illinois
Bayhome USH, Inc.	Florida
Bella Oaks, LLC	Illinois
Blackstone CC, LLC	Colorado
Boca Greens, Inc.	Florida
Boggy Creek USH, Inc.	Florida
Bramalea California Properties, Inc.	California
Bramalea California Realty, Inc.	California
Bramalea California, Inc.	California
Brazoria County LP, Inc.	Nevada
Builders Acquisition Corp.	Delaware
Builders LP, Inc.	Delaware
Cambria, LLC	Illinois
Capevest, LLC	Florida
Cary Woods, LLC	Illinois
CBM Management, Inc.	New Jersey
Central Florida Executive Title, LLC	Florida
Cherrytree II LLC	Maryland
City View Lennar Highland Delongpre, LLC	Delaware
Claremont Ridge, LLC	Illinois
Claridge Estates, LLC	Illinois
Clodine-Bellaire LP, Inc.	Nevada
Colonial Heritage, LLC	Virginia
Colony Escrow	Washington
Columbia Station, LLC	Illinois
Concord at Bridlewood, LLC	Illinois
Concord at Cornerstone Lakes, LLC	Illinois
Concord at Interlaken, LLC	Illinois
Concord at Meadowbrook, LLC	Illinois
Concord at Pheasant Run Trails, LLC	Illinois
Concord at Ravenna, LLC	Illinois
Concord at the Glen, LLC	Illinois
Concord City Centre, LLC	Illinois
Concord Pointe, Inc.	Illinois
Coto de Caza, Ltd.	California
Coventry, LLC	Illinois
Craft Farm Venture, LLC	Delaware
Darcy-Joliet, LLC	Illinois
DCA Financial Corp.	Florida
DCA of Lake Worth, Inc.	Florida
E.M.J.V. Corp.	Florida
Eagle Home Mortgage Holdings, LLC	Delaware
Eagle Home Mortgage, LLC	Delaware
Eagle Home Mortgage of California, Inc.	Delaware
Eagle Home Mortgage, Inc.	Washington
Edgewater Reinsurance, Ltd.	Turks & Caicos Islands
Enclave Land, LLC	Illinois

ERMLOE, LLC	Florida
F&R QVI Home Investments USA, LLC	Delaware
F.P. Construction Corp.	Delaware
Fidelity Guaranty and Acceptance Corp.	Delaware
Florida Title Consultants	Florida
Fortress Holding—Virginia, LLC	Delaware
Fortress Illinois, LLC	Delaware
Fortress Management, Inc.	Texas
Fortress Missouri, LLC	Delaware
Fortress Mortgage, Inc.	Delaware
Fortress Pennsylvania Realty, Inc.	Pennsylvania
Fortress Pennsylvania, LLC	Delaware
Fortress-Florida, Inc.	Delaware
Fox-Maple Associates, LLC	New Jersey
Foxwood, LLC	Illinois
Gateway Commons, LLC	Maryland
Genesee Communities I, Inc.	Colorado
Genesee Communities II, LLC	Colorado
Genesee Communities III, Inc.	Colorado
Genesee Communities IV, LLC	Colorado
Genesee Communities IX, LLC	Colorado
Genesee Communities V, LLC	Colorado
Genesee Communities VI, LLC	Colorado
Genesee Communities VII, LLC	Colorado
Genesee Communities VIII, LLC	Colorado
Genesee Venture, LLC	Colorado
Golf Associates, LLC	New Jersey
Greystone Construction, Inc.	Arizona
Greystone Homes of Nevada, Inc.	Delaware	GHI Lennar Homes
Greystone Homes, Inc.	Delaware	GHI, Inc.
Greystone Nevada, LLC	Delaware
Greywall Club, LLC	Illinois
Harris County LP, Inc.	Nevada
Haverton, LLC	Illinois
Heathcote Commons LLC	Virginia
Heritage Harbour Realty, Inc.	Florida
Heritage Housing Group, Inc.	Maryland
Heritage USH, Inc.	Florida
Highland Dunes Developers, LLLP	Florida
Home Buyer’s Advantage Realty, Inc.	Texas
Home Integrity Insurance Company	Arizona
Homecraft Corporation	Texas
Homeward Development Corporation	Florida
Imperial Desert Holdings, Inc.	California
Imperial Desert Homes, LLC	California
Impressions, LLC	Illinois
Independence Legal Services, LLC	New Jersey
Independence Land Title Company, LLC	Texas
J. Lyons Enterprises, Inc.	New Jersey	Independence Abstract & Title
Kings Ridge Golf Corporation	Florida
Kings Ridge Recreation Corporation	Florida
Kings Wood Development Corporation	Florida
Landmark Homes, Inc.	North Carolina
Laureate Homes of Arizona, Inc.	Arizona
Legacy Homes, Inc.	North Carolina
Legends Club, Inc.	Florida
Legends Golf Club, Inc.	Florida
LENH I, LLC	Florida
LENH II, LLC	Florida

LENH III, LLC	Florida
LENH IV, LLC	Florida
Lennar 139 Polk, LLC	Illinois
Lennar Acquisition Corp. II	California
Lennar Aircraft I, LLC	Delaware
Lennar Americanos Douglas, LLC	California
Lennar Arizona Construction, Inc.	Arizona
Lennar Arizona, Inc.	Arizona
Lennar Associates Management Holding Company	Florida
Lennar Associates Management, LLC	Delaware
Lennar Aviation, Inc.	Delaware
Lennar Carolinas, LLC	Delaware
Lennar CDE, LLC	Delaware
Lennar Central Region Sweep, Inc.	Nevada
Lennar Charitable Housing Foundation	California
Lennar Chicago, Inc.	Illinois
Lennar Coastal Development Group II, LLC	Florida
Lennar Colorado, LLC	Colorado
Lennar Colorado Real Estate, Inc.	Colorado
Lennar Communities Development, Inc.	Delaware
Lennar Communities Nevada, LLC	Nevada
Lennar Communities of Chicago, LLC	Illinois
Lennar Communities of Florida, Inc.	Florida
Lennar Communities, Inc.	California
Lennar Construction, Inc.	Arizona
Lennar Coto Holdings, LLC	California
Lennar Developers, Inc.	Florida
Lennar Developers, Inc. II	Florida
Lennar Developers, Inc. III	Florida
Lennar Family of Builders—Alabama Limited Partnership	Delaware
Lennar Family of Builders GP, Inc.	Delaware
Lennar Family of Builders Limited Partnership	Delaware
Lennar Financial Services, LLC	Florida
Lennar Fresno, Inc.	California
Lennar Funding, LLC	Delaware
Lennar Gulf Coast, LLC	Delaware
Lennar Hingham Holdings, LLC	Delaware
Lennar Hingham JV, LLC	Delaware
Lennar Homes Holding LLC	Delaware
Lennar Homes of Arizona, Inc.	Arizona
Lennar Homes of California, Inc.	California
Lennar Homes of Colorado, LLLP	Colorado
Lennar Homes of Texas Land and Construction, Ltd.	Texas

Lennar Homes of Texas Sales and Marketing, Ltd.	Texas	Bay Oaks Sales Associates Friendswood Development Company Friendswood Land Development Company Houston Village Builders, Inc. Kingswood Sales Associates Lennar Homes Lennar Homes of Texas Lennar Homes of Texas, Inc. NuHome Designs NuHome Designs, Inc. NuHome of Texas NuHome of Texas, Inc. U.S. Home U.S. Home of Texas U.S. Home of Texas, Inc. Village Builders Village Builders, Inc. TX
Lennar Homes, LLC	Florida	Admiral Homes Bent Creek Club, Inc Classic American Classic American Homes Classic American Homes, Inc. Club Carriage Pointe Club Tuscany Village Club Silver Palms Copper Creek Club, Inc. Lake Osborne Trailer Ranch Lennar Century 8th Street Developers Lennar-Century 8th Street Developers Lennar Communities, North Florida Division Oak Creek North Community Association, Inc. Tripson Estates Club, Inc. U.S. HOME Verona Trace Club, Inc. Your Hometown Builder
Lennar Houston Land, LLC	Texas
Lennar Illinois Trading Company, LLC	Illinois
Lennar Imperial Holdings Limited Partnership	Delaware
Lennar Insurance Services, LLC	Florida
Lennar La Paz Limited, Inc.	California
Lennar La Paz, Inc.	California
Lennar Land Partners Sub II, Inc.	Nevada
Lennar Land Partners Sub, Inc.	Delaware
Lennar Lytle, LLC	Delaware
Lennar Massachusetts Properties, Inc.	Delaware
Lennar Military Housing, Inc.	Delaware

Lennar Nevada Investments, a Nevada general partnership	Nevada
Lennar Nevada, Inc.	Nevada
Lennar New Jersey Properties, Inc.	Delaware
Lennar New York, LLC	New York
Lennar Northeast Properties LLC	New Jersey
Lennar Northeast Properties, Inc.	Nevada
Lennar Northland I, Inc.	California
Lennar Northland II, Inc.	California
Lennar Northland III, Inc.	California
Lennar Northland IV, Inc.	California
Lennar Northland V, Inc.	California
Lennar Northland VI, Inc.	California
Lennar Pacific Properties Management, Inc.	Delaware
Lennar Pacific Properties, Inc.	Delaware
Lennar Pacific, Inc.	Delaware
Lennar Pacific, L.P.	Delaware
Lennar PNW, Inc.	Washington
Lennar Port Imperial South Building 10, LLC (Roseland)	New Jersey
Lennar Port Imperial South Building 12, LLC	New Jersey
Lennar Port Imperial South, LLC	Delaware
Lennar Realty Trust	Maryland
Lennar Realty, Inc.	Florida
Lennar Reflections, LLC	Delaware
Lennar Renaissance, Inc.	California
Lennar Reno, LLC	Nevada	Barker-Coleman Communities Lennar Lennar Homes Lennar Communities
Lennar Riverside West Urban Renewal Company, L.L.C.	New Jersey
Lennar Riverside West, LLC	Delaware
Lennar Rockwell, Inc.	South Carolina
Lennar Sacramento, Inc.	California
Lennar Sales Corp.	California	Greystone Homes, Inc., A Delaware corporation Lennar Bakersfield, Inc. Lennar Homes of California, Inc., a California corporation Lennar Rennaissance, Inc., a California corporation Lennar Sacramento, a California corporation US Home Winncrest Homes II, a California corporation
Lennar San Jose Holdings, Inc.	California
Lennar Seaport Partners, LLC	Delaware
Lennar Southland I, Inc.	California
Lennar Southland II, Inc.	California
Lennar Southland III, Inc.	California
Lennar Southwest Holding Corp.	Nevada
Lennar Stockton, Inc.	California
Lennar Texas Holding Company	Texas
Lennar Trading Company, LP	Texas

Lennar Vail, LLC	Delaware
Lennar West Gateway, LLC	Delaware
Lennar-KB Figueroa Central, LLC	Delaware
Lennar-KB Home (Buena Park) LLC	Delaware
Lennar-Kings Lake, Inc.	Florida
Lennar-Lantana Boatyard, Inc.	Florida
Lennar.Com, Inc.	Florida
Lennarstone Marketing Group, LLC	Arizona
Lenwin I, LLC	California
LFB Engineered Systems, Inc.	California
LFOB Fresno, LP	Delaware
LFOB Greystone, LP	Delaware
LFOB Lennar, LP	Delaware
LFOB Renaissance, LP	Delaware
LFOB U.S. Home, LP	Delaware
LFS Holding Company, LLC	Delaware
LH Eastwind, LLC	Florida
LH Highway 27, LLC	Delaware
LHI Renaissance, LLC	Florida
LHI, L.L.C.	Florida
Library Tower, L.L.C.	Illinois
LLT, LLC	Delaware
LN, LLC	Florida
Long Point Development Corporation	Texas
Lorton Station, LLC	Virginia
Louisiana Property Ventures, LLC	Louisiana
M.A.P. Builders, Inc.	Florida
Madrona Village Mews, LLC	Illinois
Madrona Village, LLC	Illinois
Marlborough Development Corporation	California
Marlborough Financial Corporation	California
Marlborough Mortgage Corporation	California
Mid-County Utilities, Inc.	Maryland
Midland Housing Industries Corp.	California
Midland Investment Corporation	California
Mission Viejo 12S Venture, LP	California
Mission Viejo Holdings, Inc.	California
Mississippi Property Ventures, LLC	Mississippi
Montgomery Crossings, LLC	Illinois
Moreno Valley Lakes 146-Via De Ray, LLC	Delaware
New Home Brokerage, Inc.	Florida
NGMC Finance Corporation, IV	Florida
North American Advantage Insurance Services, LLC	Texas
North American Asset Development Corporation	California
North American Insurance Services, LLC	Florida
North American Real Estate Services, Inc.	California
North American Services, LLC	California
North American Title Florida Alliance, LLC	Florida
North American Title Alliance, LLC	Florida
North American Title Company	Arizona
North American Title Company	California
North American Title Company	Minnesota
North American Title Company	Florida
North American Title Company	Illinois
North American Title Company	Maryland
North American Title Company	Nevada
North American Title Company	Texas

North American Title Company of Colorado	Colorado
North American Title Group, Inc.	Florida
North American Title Insurance Company	California
North County Land Company, LLC	California
Northbridge, LLC	Illinois
Northeastern Properties LP, Inc.	Nevada
Northern Land Company, LLC	Colorado
NuHome Designs, LLC	Texas
Oceanpointe Development Corporation	Florida
Ogden Pointe at the Wheatlands IV L.L.C.	Illinois
Ogden Pointe, LLC	Illinois
Orrin Thompson Construction Company	Minnesota
Orrin Thompson Homes Corp.	Minnesota
Paparone Construction Co.	New Jersey
Parc Chestnut, LLC	Illinois
Parc Huron, LLC	Delaware
PL Roseville Schools, LLC	California
Polo Club Pointe, LLC	Illinois
Polo Club, LLC	Illinois
Prestonfield L.L.C.	Illinois
Providence Glen, LLC	Illinois
Providence L.L.C.	Illinois
Raintree Village II, LLC	Illinois
Raintree Village, LLC	Illinois
Rancho Summit, LLC	California
Renaissance Place Hyde Park, LLC	Illinois
Rivenhome Corporation	Florida
Riverwalk at Waterside Island, LLC	Florida
RRKTG Lumber, LLC	Delaware
Rutenberg Homes of Texas, Inc.	Texas
Rutenberg Homes, Inc. (Florida)	Florida
S. Florida Construction II, LLC	Florida
S. Florida Construction III, LLC	Florida
S. Florida Construction IV, LLC	Florida
S. Florida Construction, LLC	Florida
San Felipe Indemnity Co., Ltd.	Bermuda
Santa Ana Transit Village, LLC	California
Savell Gulley Development Corporation	Texas
Seminole/70th, LLC	Florida
SFHR Management, LLC	Illinois
Siena at Old Orchard, LLC	Illinois
Silver Lakes-Gateway Clubhouse, Inc.	Florida
Sky Land Title, LLC	Florida
Sonoma, LLC	Illinois
Spanish Springs Development, LLC	Nevada
State Home Acceptance Corporation	Florida
Stoney Corporation	Florida
Stoneybrook Golf Club, Inc.	Florida
Strategic Cable Technologies, L.P.	Texas
Strategic Holdings, Inc.	Nevada	Lennar Communications Ventures
Strategic Technologies Communications of California, Inc.	California
Strategic Technologies, Inc.	Florida
Summerfield Venture L.L.C.	Illinois
Summerway Investment Corp.	Florida

Summerwood, LLC	Maryland
Summit Enclave, LLC	Illinois
Summit Glen, LLC	Illinois
Summit Land, LLC	Illinois
Summit Ridge 23, LLC	Illinois
Sunstar Enterprises, LLC	Delaware
Texas-Wide General Agency	Texas
The Club at Stoneybrook, Inc.	Florida
The Courts of Indian Creek, LLC	Illinois
The Fortress Group, Inc.	Delaware
The Grande By Lennar Builders, Inc.	Florida
The Homeward Foundation	Texas
The Preserve at Coconut Creek, LLC	Florida
The Sentinel Title Corporation	Maryland
The Sexton, LLC	Illinois
Trade Services Investments, Inc.	California
U.S. Home Acceptance Corporation	Delaware
U.S. Home & Development Corporation	Delaware
U.S. Home and Development Corporation	Delaware
U.S. Home Corporation	Delaware	Barry Andrews Homes Genesee Laureate Homes Lennar Lennar Corporation Lennar Homes Orrin Thompson Orrin Thompson Homes Corp. Patriot Homes The Genesee Company
U.S. Home Corporation of New York	New York
U.S. Home of Arizona Construction Co.	Arizona
U.S. Home of Colorado Real Estate, Inc.	Colorado
U.S. Home of Colorado, Inc.	Colorado
U.S. Home of West Virginia, Inc.	West Virginia
U.S. Home Realty Corporation	Florida
U.S. Home Realty, Inc.	Texas
U.S. Home Southwest Holding Corp.	Nevada
U.S. Insurers, Inc.	Florida
U.S.H. Corporation of New York	New York
U.S.H. Los Prados, Inc.	Nevada
U.S.H. Realty, Inc.	Maryland
UAMC Asset Corp, II	Nevada
UAMC Capital, LLC	Delaware
UAMC Holding Compay, LLC	Delaware
UAMC Holdings II	Nevada
Universal American Insurance Agency, Inc.	Florida
Universal American Insurance Agency, Inc.	Texas
Universal American Mortgage Company of California	California
Universal American Mortgage Company of Pennsylvania, Inc.	Florida
Universal American Mortgage Company, LLC	Florida
University Community Partners, LLC	Delaware
USH (West Lake), Inc.	New Jersey
USH Acquisition Corp.	Delaware

USH Apartments Corporation	Delaware
USH Bickford, LLC	California
USH Equity Corporation	Nevada
USH Funding Corp.	Arizona
USH Heritage Pom, LLC	Arizona
USH Millennium Ventures Corp.	Florida
USH Woodbridge, Inc.	Texas
USHHH, Inc.	Florida
West Adams Street, LLC	Illinois
West Chocolate Bayou Development Corp.	Texas
West Van Buren, LLC	Illinois
Westbrook Homes, LLC	Delaware
Westchase, Inc.	Nevada
Weststone Corporation	Florida
Woodlands Properties Venture, LLC	Delaware

EX-23

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-117090 on Form S-3, Post-Effective Amendment No. 1 to Registration Statement No. 333-70212 on Form S-8/A, Registration Statement No. 333-105019 on Form S-8, Registration Statement No. 333-130923 on Form S-4, Registration Statement No. 333-136750 on Form S-4 and Registration Statement No. 333-136752 on Form S-4 of our reports dated February 8, 2007 relating to the financial statements and financial statement schedule of Lennar Corporation and subsidiaries, and management’s report on the effectiveness of internal control over financial reporting, appearing in this Annual Report on Form 10-K of Lennar Corporation for the year ended November 30, 2006.

/s/ DELOITTE & TOUCHE LLP

Miami, Florida

February 8, 2007

EX-31.1

Exhibit 31.1

CHIEF EXECUTIVE OFFICER’S CERTIFICATION

I, Stuart A. Miller, certify that:

1. I have reviewed this annual report on Form 10-K of Lennar Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/    STUART A. MILLER        

Name: Stuart A. Miller

Title: President and Chief Executive Officer

Date: February 8, 2007

EX-31.2

Exhibit 31.2

CHIEF FINANCIAL OFFICER’S CERTIFICATION

I, Bruce E. Gross, certify that:

1. I have reviewed this annual report on Form 10-K of Lennar Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/    BRUCE E. GROSS        

Name: Bruce E. Gross

Title: Vice President and Chief Financial Officer

Date: February 8, 2007

EX-32

Exhibit 32

Officers’ Section 1350 Certifications

Each of the undersigned officers of Lennar Corporation, a Delaware corporation (the “Company”), hereby certifies that (i) the Company’s Annual Report on Form 10-K for the year ended November 30, 2006 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Company’s Annual Report on Form 10-K for the year ended November 30, 2006 fairly presents, in all material respects, the financial condition and results of operations of the Company, at and for the periods indicated.

/s/    STUART A. MILLER        

Name: Stuart A. Miller

Title: President and Chief Executive Officer

/s/    BRUCE E. GROSS        

Name: Bruce E. Gross

Title: Vice President and Chief Financial Officer

Date: February 8, 2007