Commitments and Contingencies

3 Months Ended

Jan. 31, 2012

Legal Proceedings, Commitments and Contingencies [Abstract]

Commitments and Contingencies

17. Commitments and Contingencies

Land Purchase Commitments

Generally, the Company’s option and purchase agreements to acquire land parcels do not require the Company to purchase those land parcels, although the Company may, in some cases, forfeit any deposit balance outstanding if and when it terminates an option and purchase agreement. If market conditions are weak, approvals needed to develop the land are uncertain or other factors exist that make the purchase undesirable, the Company may not expect to acquire the land. Whether an option and purchase agreement is legally terminated or not, the Company reviews the amount recorded for the land parcel subject to the option and purchase agreement to determine if the amount is recoverable. While the Company may not have formally terminated the option and purchase agreements for those land parcels that it does not expect to acquire, it has written off any non-refundable deposits and costs previously capitalized to such land parcels in the periods that it determined such costs were not recoverable.

Information regarding the Company’s purchase commitments, as of the date indicated, is provided in the table below (amounts in thousands).

		September 30,		September 30,
	January 31, 2012		October 31, 2011
Aggregate purchase commitments:
Unrelated parties	$	539,636	$	551,905
Unconsolidated entities that the Company has investments in		124,387		12,471
Total	$	664,023	$	564,376
Deposits against aggregate purchase commitments	$	32,199	$	37,987
Credit to be received from amounts previously contributed to unconsolidated entities		75,600
Additional cash required to acquire land		556,224		526,389
Total	$	664,023	$	564,376

The Company has additional land parcels under option that have been excluded from the aforementioned aggregate purchase amounts since it does not believe that it will complete the purchase of these land parcels and no additional funds will be required from the Company to terminate these contracts.

Investments in and Advances to Unconsolidated Entities

See Note 4, “Investments in and Advances to Unconsolidated Entities,” for more information regarding the Company’s commitments to these entities.

Surety Bonds and Letters of Credit

At January 31, 2012, the Company had outstanding surety bonds amounting to $367.1 million, primarily related to its obligations to various governmental entities to construct improvements in the Company’s various communities. The Company estimates that $206.6 million of work remains on these improvements. The Company has an additional $65.7 million of surety bonds outstanding that guarantee other obligations of the Company. The Company does not believe it is probable that any outstanding bonds will be drawn upon.

At January 31, 2012, the Company had outstanding letters of credit of $83.5 million, including $70.2 million under its credit facility and $13.3 million collateralized by restricted cash. These letters of credit were issued to secure various financial obligations of the Company including insurance policy deductibles and other claims, land deposits and security to complete improvements in communities which it is operating. The Company believes it is not probable that any outstanding letters of credit will be drawn upon.

Backlog

At January 31, 2012, the Company had agreements of sale outstanding to deliver 1,784 homes with an aggregate sales value of $1.1 billion.

Mortgage Commitments

The Company’s mortgage subsidiary provides mortgage financing for a portion of the Company’s home closings. For those home buyers to whom the Company’s mortgage subsidiary provides mortgages, it determines whether the home buyer qualifies for the mortgage he or she is seeking based upon information provided by the home buyer and other sources. For those home buyers that qualify, the Company’s mortgage subsidiary provides the home buyer with a mortgage commitment that specifies the terms and conditions of a proposed mortgage loan based upon then-current market conditions. Prior to the actual closing of the home and funding of the mortgage, the home buyer will lock in an interest rate based upon the terms of the commitment. At the time of rate lock, the Company’s mortgage subsidiary agrees to sell the proposed mortgage loan to one of several outside recognized mortgage financing institutions (“investors”), which is willing to honor the terms and conditions, including interest rate, committed to the home buyer. The Company believes that these investors have adequate financial resources to honor their commitments to its mortgage subsidiary.

Information regarding the Company’s mortgage commitments, as of the date indicated, is provided in the table below (amounts in thousands).

		September 30,		September 30,
	January 31, 2012		October 31, 2011
Aggregate mortgage loan commitments:
IRLCs	$	92,623	$	129,553
Non-IRLCs		342,633		306,722
Total	$	435,256	$	436,275
Investor commitments to purchase:
IRLCs	$	92,623	$	129,553
Mortgage loans receivable		34,385		60,680
Total	$	127,008	$	190,233