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Financial Instruments (Tables)
9 Months Ended
Aug. 31, 2014
Fair Value Disclosures [Abstract]  
Carrying Amounts And Estimated Fair Value Of Financial Instruments
 
 
 
August 31, 2014
 
November 30, 2013
 
Fair Value
 
Carrying
 
Fair
 
Carrying
 
Fair
(In thousands)
Hierarchy
 
Amount
 
Value
 
Amount
 
Value
ASSETS
 
 
 
 
 
 
 
 
 
Rialto Investments:
 
 
 
 
 
 
 
 
 
Loans receivable, net
Level 3
 
$
174,286

 
182,004

 
278,392

 
305,810

Investments held-to-maturity
Level 3
 
$
16,968

 
16,839

 
16,070

 
15,952

Lennar Financial Services:
 
 
 
 
 
 
 
 
 
Loans held-for-investment, net
Level 3
 
$
26,821

 
27,066

 
26,356

 
26,095

Investments held-to-maturity
Level 2
 
$
57,023

 
57,163

 
62,344

 
62,580

LIABILITIES
 
 
 
 
 
 
 
 
 
Lennar Homebuilding senior notes and other debts
   payable
Level 2
 
$
4,692,880

 
5,510,800

 
4,194,432

 
4,971,500

Rialto Investments notes and other debts payable
Level 2
 
$
582,659

 
581,420

 
441,883

 
438,373

Lennar Financial Services notes and other debts payable
Level 2
 
$
522,047

 
522,047

 
374,166

 
374,166

Lennar Multifamily notes payable
Level 2
 
$

 

 
13,858

 
13,858

Fair Value Measured On Recurring Basis
The Company’s financial instruments measured at fair value on a recurring basis are summarized below:
Financial Instruments
Fair Value
Hierarchy
 
Fair Value at
August 31,
2014
 
Fair Value at
November 30,
2013
(In thousands)
 
 
 
 
 
Lennar Financial Services:
 
 
 
 
 
Loans held-for-sale (1)
Level 2
 
$
539,988

 
414,231

Mortgage loan commitments
Level 2
 
$
14,276

 
7,335

Forward contracts
Level 2
 
$
(4,052
)
 
1,444

Mortgage servicing rights
Level 3
 
$
19,387

 
11,455

Lennar Homebuilding:
 
 
 
 
 
Investments available-for-sale
Level 3
 
$
16,865

 
40,032

Rialto Investments Financial Assets:
 
 
 
 
 
Loans held-for-sale (2)
Level 3
 
$
164,923

 
44,228

Credit default swaps
Level 2
 
$
1,331

 
788

Rialto Investments Financial Liabilities:
 
 
 
 
 
Interest rate swaps and swap futures
Level 1
 
$
1,393

 
31

Credit default swaps
Level 2
 
$
1,561

 
318

(1)
The aggregate fair value of Lennar Financial Services loans held-for-sale of $540.0 million at August 31, 2014 exceeds their aggregate principal balance of $517.0 million by $23.0 million. The aggregate fair value of loans held-for-sale of $414.2 million at November 30, 2013 exceeds their aggregate principal balance of $399.0 million by $15.3 million.
(2)
The aggregate fair value of Rialto Investments loans held-for-sale of $164.9 million at August 31, 2014 exceeds their aggregate principal balance of $163.4 million by $1.6 million. The aggregate fair value of loans held-for-sale of $44.2 million at November 30, 2013 exceeds their aggregate principal balance of $44.0 million by $0.2 million
Schedule Of Gains And Losses Of Financial Instruments
The changes in fair values for Level 1 and Level 2 financial instruments measured on a recurring basis that are included in operating earnings are shown, by financial instrument and financial statement line item below:
 
Three Months Ended
 
Nine Months Ended
 
August 31,
 
August 31,
(In thousands)
2014
 
2013
 
2014
 
2013
Changes in fair value included in Lennar Financial Services revenues:
 
 
 
 
 
 
 
Loans held-for-sale
$
588

 
3,982

 
7,740

 
(13,422
)
Mortgage loan commitments
$
(756
)
 
4,944

 
6,942

 
(1,950
)
Forward contracts
$
2,262

 
(13,600
)
 
(5,497
)
 
4,391

Changes in fair value included in Rialto Investments revenues:
 
 
 
 
 
 
 
Financial Assets:
 
 
 
 
 
 
 
Interest rate swap futures
$

 
607

 

 
607

Credit default swaps
$
(431
)
 
1,343

 

 
1,343

Financial Liabilities:
 
 
 
 
 
 
 
Interest rate swaps and swap futures
$
(969
)
 
(701
)
 
(1,363
)
 
(701
)
Credit default swaps
$
390

 

 
62

 

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 Lennar Financial Services Level 3 recurring fair value measurements (mortgage servicing rights) included in the Lennar Financial Services segment’s other assets:
 
Three Months Ended
 
Nine Months Ended
 
August 31,
 
August 31,
 
2014
 
2013
 
2014
 
2013
Mortgage servicing rights, beginning of period
$
18,242

 
7,307

 
11,455

 
4,749

Purchases and retention of mortgage servicing rights (1)
441

 
1,838

 
8,977

 
3,560

Disposals
(622
)
 
(122
)
 
(1,190
)
 
(571
)
Changes in fair value (2)
1,326

 
835

 
145

 
2,120

Mortgage servicing rights, end of period
$
19,387

 
9,858

 
19,387

 
9,858

(1)
For the nine months ended August 31, 2014, purchases and retention of mortgage servicing rights include the $5.9 million acquisition of a portfolio of mortgage servicing rights.
(2)
Amount represents changes in fair value included in Lennar Financial Services revenues.
The following table represents a reconciliation of the beginning and ending balance for the Lennar Homebuilding Level 3 recurring fair value measurements (investments available-for-sale) included in the Lennar Homebuilding segment’s other assets:
 
Three Months Ended
 
Nine Months Ended
 
August 31,
 
August 31,
(In thousands)
2014
 
2013
 
2014
 
2013
Investments available-for-sale, beginning of period
$
20,416

 
33,338

 
40,032

 
19,591

Purchases and other (1)

 
13,291

 
21,274

 
25,518

Sales
(1,655
)
 
(2,486
)
 
(46,234
)
 
(2,486
)
Changes in fair value (2)
2,229

 
(772
)
 
7,379

 
748

Settlements (3)
(4,125
)
 

 
(5,586
)
 

Investments available-for-sale, end of period
$
16,865

 
43,371

 
16,865

 
43,371

(1)
Represents investments in community development district bonds that mature at various dates between 2037 and 2039.
(2)
The changes in fair value were not included in other comprehensive income because the changes in fair value were deferred as a result of the Company's continuing involvement in the underlying real estate collateral.
(3)
The investments available-for-sale that were settled during the three and nine months ended August 31, 2014 related to investments in community development district bonds, which were in default by the borrower and regarding which the Company redeemed the bonds.
The following table represents a reconciliation of the beginning and ending balance for Rialto Investments Level 3 recurring fair value measurements (loans held-for-sale):
 
Three Months Ended
 
Nine Months Ended
 
August 31,
 
August 31,
(In thousands)
2014
 
2013
 
2014
 
2013
Rialto Investments loans held-for-sale, beginning of period
$
45,065

 

 
44,228

 

Loan originations
411,683

 
245,223

 
1,103,839

 
245,223

Origination loans sold, including those not settled
(292,099
)
 

 
(983,635
)
 

Interest and principal paydowns
(811
)
 
529

 
(835
)
 
529

Changes in fair value (1)
1,085

 
(1,086
)
 
1,326

 
(1,086
)
Rialto Investments loans held-for-sale, end of period
$
164,923

 
244,666

 
164,923

 
244,666


(1)
Amount represents changes in fair value included in Rialto Investments revenues.
Fair Value Measurements, Nonrecurring
The Company’s assets measured at fair value on a nonrecurring basis are those assets for which the Company has recorded valuation adjustments and write-offs. The fair values included in the tables below represent only those assets whose carrying value were adjusted to fair value during the respective periods disclosed. The assets measured at fair value on a nonrecurring basis are summarized below:
 
 
 
Three Months Ended
August 31,
2014
 
Three Months Ended
August 31,
2013
(In thousands)
Fair Value
Hierarchy
 
Carrying Value
 
Fair Value
 
Total Gains (Losses) (1)
 
Carrying Value
 
Fair Value
 
Total Gains (Losses) (1)
Financial assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Rialto Investments:
 
 
 
 
 
 
 
 
 
 
 
 
 
Impaired loans receivable
Level 3
 
$
103,732

 
99,574

 
(4,158
)
 
161,432

 
157,955

 
(3,477
)
Non-financial assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Lennar Homebuilding:
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in unconsolidated entities (2)
Level 3
 
$

 

 

 
20,885

 
20,024

 
(861
)
Rialto Investments:
 
 
 
 
 
 
 
 
 
 
 
 
 
REO - held-for-sale (3):
 
 
 
 
 
 
 
 
 
 
 
 
 
Upon acquisition/transfer
Level 3
 
$
7,133

 
6,705

 
(428
)
 
12,200

 
14,833

 
2,633

Upon management periodic valuations
Level 3
 
$
15,453

 
9,794

 
(5,659
)
 
169

 

 
(169
)
REO - held-and-used, net (4):
 
 
 
 
 
 
 
 
 
 
 
 
 
Upon acquisition/transfer
Level 3
 
$
14,275

 
14,530

 
255

 
13,864

 
14,154

 
290

Upon management periodic valuations
Level 3
 
$
8,056

 
6,723

 
(1,333
)
 
7,176

 
2,050

 
(5,126
)
(1)
Represents losses due to valuation adjustments, write-offs, gains (losses) from transfers or acquisitions of real estate through foreclosure and REO impairments recorded during the three months ended August 31, 2014 and 2013.
(2)
Valuation adjustments were included in Lennar Homebuilding other income, net in the Company's condensed consolidated statement of operations for the three months ended August 31, 2013.
(3)
REO held-for-sale assets are initially recorded at fair value less estimated costs to sell at the time of the transfer or acquisition through, or in lieu of, loan foreclosure. The fair value of REO held-for-sale is based upon appraised value at the time of foreclosure or management's best estimate. In addition, management periodically performs valuations of its REO held-for-sale. The gains (losses) upon the transfer or acquisition of REO and impairments were included in Rialto Investments other income (expense), net, in the Company’s condensed consolidated statement of operations for the three months ended August 31, 2014 and 2013.
(4)
REO held-and-used, net, assets are initially recorded at fair value at the time of acquisition through, or in lieu of, loan foreclosure. 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. In addition, management periodically performs valuations of its REO held-and-used, net. The gains (losses) upon acquisition of REO held-and-used, net and impairments were included in Rialto Investments other income (expense), net, in the Company’s condensed consolidated statement of operations for the three months ended August 31, 2014 and 2013.
 
 
 
Nine Months Ended
August 31,
2014
 
Nine Months Ended
August 31,
2013
(In thousands)
Fair Value
Hierarchy
 
Carrying Value
 
Fair Value
 
Total Gains (Losses) (1)
 
Carrying Value
 
Fair Value
 
Total Gains (Losses) (1)
Financial assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Rialto Investments:
 
 
 
 
 
 
 
 
 
 
 
 
 
Impaired loans receivable
Level 3
 
$
191,471

 
146,731

 
(44,740
)
 
200,856

 
186,768

 
(14,088
)
Non-financial assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Lennar Homebuilding:
 
 
 
 
 
 
 
 
 
 
 
 
 
Finished homes and construction in progress (2)
Level 3
 
$

 

 

 
16,454

 
12,247

 
(4,207
)
Land and land under development (2)
Level 3
 
$
7,013

 
6,143

 
(870
)
 

 

 

Investments in unconsolidated entities (3)
Level 3
 
$

 

 

 
20,921

 
20,024

 
(897
)
Rialto Investments:
 
 
 
 
 
 
 
 
 
 
 
 
 
REO - held-for-sale (4):
 
 
 
 
 
 
 
 
 
 
 
 
 
Upon acquisition/transfer
Level 3
 
$
20,183

 
18,972

 
(1,211
)
 
14,193

 
16,166

 
1,973

Upon management periodic valuations
Level 3
 
$
39,193

 
31,494

 
(7,699
)
 
23,040

 
18,687

 
(4,353
)
REO - held-and-used, net (5):
 
 
 
 
 
 
 
 
 
 
 
 
 
Upon acquisition/transfer
Level 3
 
$
54,727

 
48,657

 
(6,070
)
 
39,655

 
38,882

 
(773
)
Upon management periodic valuations
Level 3
 
$
20,489

 
17,653

 
(2,836
)
 
10,011

 
4,482

 
(5,529
)

(1)
Represents losses due to valuation adjustments, write-offs, gains (losses) from transfers or acquisitions of real estate through foreclosure and REO impairments recorded during the nine months ended August 31, 2014 and 2013.
(2)
Valuation adjustments were included in Lennar Homebuilding costs and expenses in the Company's condensed consolidated statement of operations for the nine months ended August 31, 2014 and 2013.
(3)
Valuation adjustments were included in Lennar Homebuilding other income, net in the Company's condensed consolidated statement of operations for the nine months ended August 31, 2013.
(4)
REO held-for-sale assets are initially recorded at fair value less estimated costs to sell at the time of the transfer or acquisition through, or in lieu of, loan foreclosure. The fair value of REO held-for-sale is based upon appraised value at the time of foreclosure or management's best estimate. In addition, management periodically performs valuations of its REO held-for-sale. The gains (losses) upon the transfer or acquisition of REO and impairments were included in Rialto Investments other income (expense), net, in the Company’s condensed consolidated statement of operations for the nine months ended August 31, 2014 and 2013.
(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. 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. In addition, management periodically performs valuations of its REO held-and-used, net. The gains (losses) upon acquisition of REO held-and-used, net and impairments were included in Rialto Investments other income (expense), net, in the Company’s condensed consolidated statement of operations for the nine months ended August 31, 2014 and 2013.