Financial Instruments (Tables)

6 Months Ended

May 31, 2012

Carrying Amounts And Estimated Fair Value Of Financial Instruments



		May 31, 2012			November 30, 2011
	Fair Value	Carrying		Fair	Carrying	Fair
(In thousands)	Hierarchy	Amount		Value	Amount	Value
ASSETS
Rialto Investments:
Loans receivable, net	Level 3	$	578,375	599,707	713,354	749,382
Investments held-to-maturity	Level 1	$	14,538	14,430	14,096	13,996
Lennar Financial Services:
Loans held-for-investment, net	Level 3	$	23,402	21,354	24,262	22,736
Investments held-to-maturity	Level 1	$	48,609	48,469	48,860	47,651
LIABILITIES
Lennar Homebuilding:
Senior notes and other debts payable	Level 2	$	3,469,616	4,033,054	3,362,759	3,491,212
Rialto Investments:
Notes payable	Level 2	$	594,915	575,805	765,541	729,943
Lennar Financial Services:
Notes and other debts payable	Level 2	$	263,472	263,472	410,134	410,134

Fair Value Measured On Recurring Basis

The Company’s financial instruments measured at fair value on a recurring basis are summarized below:



	Fair	Fair Value at			Fair Value at
Financial Instruments	Value Hierarchy	May 31, 2012			November 30, 2011
(In thousands)
Lennar Financial Services:
Loans held-for-sale (1)	Level 2	$	267,969		303,780
Mortgage loan commitments	Level 2	$	11,377		4,192
Forward contracts	Level 2	$	(5,434	)	(1,404	)
Lennar Homebuilding:
Investments available-for-sale	Level 3	$	24,306		42,892


(1)	The aggregate fair value of loans held-for-sale of $268.0 million at May 31, 2012 exceeds their aggregate principal balance of $254.1 million by $13.9 million. The aggregate fair value of loans held-for-sale of $303.8 million at November 30, 2011 exceeds their aggregate principal balance of $292.2 million by $11.6 million.

Schedule Of Gains And Losses Of Financial Instruments

The changes in fair values that are included in operating earnings are shown, by financial instrument and financial statement line item below:



	Three Months Ended					Six Months Ended
	May 31,					May 31,
(In thousands)	2012			2011		2012		2011
Changes in fair value included in Lennar Financial Services revenues:
Loans held-for-sale	$	3,598		2,841		2,291		2,694
Mortgage loan commitments	$	5,743		1,147		7,185		3,664
Forward contracts	$	(4,765	)	(1,705	)	(4,030	)	(6,371	)

Reconciliation Of Beginning And Ending Balance For The Company's Level 3 Recurring Fair Value Measurements

The following table represents a reconciliation of the beginning and ending balance for the Company’s Level 3 recurring fair value measurements (investments available-for-sale) included in the Lennar Homebuilding segment’s other assets:



	Three Months Ended		Six Months Ended
(In thousands)	May 31, 2012
Investments available-for-sale, beginning of period	$	18,236	42,892
Purchases and other (1)	6,070		20,998
Sales	—		(6,436	)
Settlements (2)	—		(33,148	)
Investments available-for-sale, end of period	$	24,306	24,306


(1)	Represents investments in community development district bonds that mature at various dates between 2022 and 2042.


(2)	The investments available-for-sale that were settled during both the three and six months ended May 31, 2012 related to investments in community development district bonds, which were in default by the borrower and regarding which the Company foreclosed on the underlying real estate collateral. Therefore, these investments were reclassified from other assets to land and land under development.

Fair Value Assets Measured On Nonrecurring Basis

The assets measured at fair value on a nonrecurring basis are summarized below:



		Fair Value
	Fair Value Hierarchy	Three Months Ended		Total Gains (Losses) (1)
Non-financial assets	Fair Value Hierarchy	May 31, 2012		Total Gains (Losses) (1)
(In thousands)
Lennar Homebuilding:
Finished homes and construction in progress (2)	Level 3	$	1,213	(2,404	)
Land and land under development (3)	Level 3	$	13,318	(332	)
Rialto Investments:
REO - held-for-sale (4)	Level 3	$	2,443	(1,726	)
REO - held-and-used, net (5)	Level 3	$	66,085	(1,458	)


(1)	Represents total losses due to valuation adjustments and impairments, and total gains from acquisitions of real estate through foreclosure recorded during the three months ended May 31, 2012.


(2)	Finished homes and construction in progress with an aggregate carrying value of $3.6 million were written down to their fair value of $1.2 million, resulting in valuation adjustments of $2.4 million, which were included in Lennar Homebuilding costs and expenses in the Company’s statement of operations for the three months ended May 31, 2012.


(3)	Land and land under development with an aggregate carrying value of $13.6 million were written down to their fair value of $13.3 million, resulting in valuation adjustments of $0.3 million, which were included in Lennar Homebuilding costs and expenses in the Company’s statement of operations for the three months ended May 31, 2012.

(4)

REO, held-for-sale, assets are initially recorded at fair value less estimated costs to sell at the time of acquisition through, or in lieu of, loan foreclosure. Upon acquisition, the REO, held-for-sale, had a carrying value of $1.5 million and a fair value of $0.2 million. The fair value of REO, held-for-sale, is based upon the appraised value at the time of foreclosure or management’s best estimate. The losses upon acquisition of REO, held-for-sale, were ($1.3) million. As part of management’s periodic valuations of its REO, held-for-sale, during the three months ended May 31, 2012, REO, held-for-sale, with an aggregate value of $2.6 million were written down to their fair value of $2.2 million, resulting in impairments of $0.4 million. These losses and impairments are included within Rialto Investments other income (expense), net in the Company’s statement of operations for the three months ended May 31, 2012.

(5)

REO, held-and-used, net, assets are initially recorded at fair value at the time of acquisition through, or in lieu of, loan foreclosure. Upon acquisition, the REO, held-and-used, net, had a carrying value of $64.2 million and a fair value of $63.4 million. The fair value of REO, held-and-used, net, is based upon the appraised value at the time of foreclosure or management’s best estimate. The losses upon acquisition of REO, held-and-used, net, were ($0.8) million. As part of management’s periodic valuations of its REO, held-and-used, net, during the three months ended May 31, 2012, REO, held-and-used, net, with an aggregate value of $3.3 million were written down to their fair value of $2.6 million, resulting in impairments of $0.7 million. These losses and impairments are included within Rialto Investments other income (expense), net in the Company’s statement of operations for the three months ended May 31, 2012.



	Fair Value Hierarchy	Fair Value		Total Gains (Losses) (1)
		Three Months Ended
Non-financial assets		May 31, 2011
(In thousands)
Lennar Homebuilding:
Finished homes and construction in progress (2)	Level 3	$	2,718	(3,328	)
Investments in unconsolidated entities (3)	Level 3	$	29,682	(150	)
Rialto Investments:
REO - held-for-sale (4)	Level 3	$	94,568	17,550
REO - held-and-used, net (5)	Level 3	$	1,391	381


(1)	Represents total losses due to valuation adjustments and total gains from acquisitions of real estate through foreclosure recorded during the three months ended May 31, 2011.


(2)	Finished homes and construction in progress with an aggregate carrying value of $6.0 million were written down to their fair value of $2.7 million, resulting in valuation adjustments of $3.3 million, which were included in Lennar Homebuilding costs and expenses in the Company’s statement of operations for the three months ended May 31, 2011.


(3)	Lennar Homebuilding investments in unconsolidated entities with an aggregate carrying value of $29.9 million were written down to their fair value of $29.7 million, resulting in valuation adjustments of $0.2 million, which were included in Lennar Homebuilding other income, net in the Company’s statement of operations for the three months ended May 31, 2011.

(4)

(5)



		Fair Value
	Fair Value Hierarchy	Six Months Ended		Total Gains (Losses) (1)
Non-financial assets	Fair Value Hierarchy	May 31, 2012		Total Gains (Losses) (1)
(In thousands)
Lennar Homebuilding:
Finished homes and construction in progress (2)	Level 3	$	2,761	(4,429	)
Land and land under development (3)	Level 3	$	13,318	(332	)
Rialto Investments:
REO - held-for-sale (4)	Level 3	$	13,866	(2,188	)
REO - held-and-used, net (5)	Level 3	$	120,373	955


(1)	Represents total losses due to valuation adjustments and impairments, and total gains from acquisitions of real estate through foreclosure recorded during the six months ended May 31, 2012.


(2)	Finished homes and construction in progress with an aggregate carrying value of $7.2 million were written down to their fair value of $2.8 million, resulting in valuation adjustments of $4.4 million, which were included in Lennar Homebuilding costs and expenses in the Company’s statement of operations for the six months ended May 31, 2012.


(3)	Land and land under development with an aggregate carrying value of $13.6 million were written down to their fair value of $13.3 million, resulting in valuation adjustments of ($0.3) million, which were included in Lennar Homebuilding costs and expenses in the Company’s statement of operations for the six months ended May 31, 2012.

(4)

REO, held-for-sale, assets are initially recorded at fair value less estimated costs to sell at the time of acquisition through, or in lieu of, loan foreclosure. Upon acquisition, the REO, held-for-sale, had a carrying value of $2.0 million and a fair value of $1.4 million. The fair value of REO, held-for-sale, is based upon the appraised value at the time of foreclosure or management’s best estimate. The losses upon acquisition of REO, held-for-sale, were ($0.6) million. As part of management’s periodic valuations of its REO, held-for-sale, during the six months ended May 31, 2012, REO, held-for-sale, with an aggregate value of $14.1 million were written down to their fair value of $12.5 million, resulting in impairments of $1.6 million. These losses and impairments are included within Rialto Investments other income (expense), net in the Company’s statement of operations for the six months ended May 31, 2012.

(5)

REO, held-and-used, net, assets are initially recorded at fair value at the time of acquisition through, or in lieu of, loan foreclosure. Upon acquisition, the REO, held-and-used, net, had a carrying value of $105.4 million and a fair value of $109.7 million. The fair value of REO, held-and-used, net, is based upon the appraised value at the time of foreclosure or management’s best estimate. The gains upon acquisition of REO, held-and-used, net, were $4.3 million. As part of management’s periodic valuations of its REO, held-and-used, net, during the six months ended May 31, 2012, REO, held-and-used, net, with an aggregate value of $14.0 million were written down to their fair value of $10.7 million, resulting in impairments of $3.3 million. These gains and impairments are included within Rialto Investments other income (expense), net in the Company’s statement of operations for the six months ended May 31, 2012.



	Fair Value Hierarchy	Fair Value		Total Gains (Losses) (1)
		Six Months Ended
Non-financial assets		May 31, 2011
(In thousands)
Lennar Homebuilding:
Finished homes and construction in progress (2)	Level 3	$	7,050	(8,140	)
Investments in unconsolidated entities (3)	Level 3	$	30,211	(8,412	)
Rialto Investments:
REO - held-for-sale (4)	Level 3	$	280,209	34,490
REO - held-and-used, net (5)	Level 3	$	8,734	550


(1)	Represents total losses due to valuation adjustments and total gains from acquisitions of real estate through foreclosure recorded during the six months ended May 31, 2011.


(2)	Finished homes and construction in progress with an aggregate carrying value of $15.2 million were written down to their fair value of $7.1 million, resulting in valuation adjustments of $8.1 million, which were included in Lennar Homebuilding costs and expenses in the Company’s statement of operations for the three months ended May 31, 2011.


(3)	Lennar Homebuilding investments in unconsolidated entities with an aggregate carrying value of $38.6 million were written down to their fair value of $30.2 million, resulting in valuation adjustments $8.4 million , which were included in Lennar Homebuilding other income, net in the Company’s statement of operations for the six months ended May 31, 2011.

(4)

(5)

Fair Value, Measurement Inputs, Disclosure [Table Text Block]

The table below summarizes the most significant unobservable inputs used in the Company's discounted cash flow model to determine the fair value of its communities for which the Company recorded valuation adjustments during the six months ended May 31, 2012:



Unobservable inputs	Range
Average selling price		$83,000		-	$310,000
Absorption rate per quarter (homes)	1			-	13
Discount rate	20		%	-	20%

- Definition

Tabular disclosure of the total amount of gains or losses for the period which are included in earnings or resulted in a change to net assets which gains or losses have arisen from the use of significant unobservable inputs (Level 3) to measure the fair value of assets and liabilities. Such gains or losses are attributable to the change in unrealized gains or losses relating to those assets and liabilities so valued which are still held at the reporting date and which change are also considered for disclosure; it may be expected that a description of where those unrealized gains or losses are reported in the statement of income or the statement of financial position would also be disclosed.

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Tabular disclosure of assets and liabilities by class, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, that are measured at fair value on a nonrecurring basis in periods after initial recognition (for example, impaired assets). The disclosures that may be required or desired include: (a) the fair value measurements recorded during the period and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3). Where the quoted price in an active market for the identical liability is not available, the Level 1 input is the quoted price of an identical liability when traded as an asset.

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Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income, and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issuances, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

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- Definition

Tabular disclosure of the fair value measurement of assets and liabilities which includes [financial] instruments measured at fair value that are classified in stockholders' equity. Such assets and liabilities may be measured on a recurring or nonrecurring basis. The disclosures which may be required or desired include: (1) for assets and liabilities measured on a recurring basis, disclosure may include: (a) the fair value measurements at the reporting date; (b) the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3); (c) for fair value measurements using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (ii) purchases, sales, issuances, and settlements (net); (iii) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs); (d) the amount of the total gains or losses for the period in subparagraph (c) (i) above included in earnings (or changes in net assets) that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date and a description of where those unrealized gains or losses are reported in the statement of income (or activities); (e) the valuation technique(s) used to measure fair value and a discussion of changes in valuation techniques, if any, during the period and (2) for assets and liabilities that are measured at fair value on a nonrecurring basis (for example, impaired assets) disclosure may include, in addition to (a) above: (a) the reasons for the fair value measurements recorded; (b) the same as (b) above; (c) for fair value measurements using significant unobservable inputs (Level 3), a description of the inputs and the information used to develop the inputs; and (d) the valuation technique(s) used to measure fair value and a discussion of changes, if any, in the valuation technique(s) used to measure similar assets and/or liabilities in prior periods. Where the quoted price in an active market for the identical liability is not available, the Level 1 input is the quoted price of an identical liability when traded as an asset.

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