Financial Instruments and Fair Value Disclosures (Tables)
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9 Months Ended |
Aug. 31, 2017 |
Fair Value Disclosures [Abstract] |
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Carrying Amounts And Estimated Fair Value Of Financial Instruments |
The table excludes cash and cash equivalents, restricted cash, receivables, net and accounts payable, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments. | | | | | | | | | | | | | | | | | | | August 31, 2017 | | November 30, 2016 | | Fair Value | | Carrying | | Fair | | Carrying | | Fair | (In thousands) | Hierarchy | | Amount | | Value | | Amount | | Value | ASSETS | | | | | | | | | | Rialto: | | | | | | | | | | Loans receivable, net | Level 3 | | $ | 52,779 |
| | 52,784 |
| | 111,608 |
| | 113,747 |
| Investments held-to-maturity | Level 3 | | $ | 142,462 |
| | 143,737 |
| | 71,260 |
| | 69,992 |
| Lennar Financial Services: | | | | | | | | | | Loans held-for-investment, net | Level 3 | | $ | 37,665 |
| | 35,378 |
| | 30,004 |
| | 31,233 |
| Investments held-to-maturity | Level 2 | | $ | 53,631 |
| | 53,658 |
| | 41,991 |
| | 42,058 |
| LIABILITIES | | | | | | | | | | Lennar Homebuilding senior notes and other debts payable | Level 2 | | $ | 5,523,765 |
| | 5,730,227 |
| | 4,575,977 |
| | 4,669,643 |
| Rialto notes and other debts payable | Level 2 | | $ | 617,152 |
| | 632,128 |
| | 622,335 |
| | 646,366 |
| Lennar Financial Services notes and other debts payable | Level 2 | | $ | 719,727 |
| | 719,727 |
| | 1,077,228 |
| | 1,077,228 |
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Fair Value Measured On Recurring Basis |
The Company’s financial instruments measured at fair value on a recurring basis are summarized below: | | | | | | | | | | (In thousands) | Fair Value Hierarchy | | Fair Value at August 31, 2017 | | Fair Value at November 30, 2016 | Rialto Financial Assets: | | | | | | RMF loans held-for-sale (1) | Level 3 | | $ | 285,747 |
| | 126,947 |
| Credit default swaps (2) | Level 2 | | $ | 1,510 |
| | 2,863 |
| Rialto Financial Liabilities: | | | | | | Interest rate swaps and swap futures (3) | Level 2 | | $ | 2,318 |
| | 6 |
| Credit default swaps (3) | Level 2 | | $ | 3,982 |
| | 377 |
| Lennar Financial Services Assets (Liabilities): | | | | | | Loans held-for-sale (4) | Level 2 | | $ | 661,649 |
| | 939,405 |
| Investments available-for-sale | Level 1 | | $ | 57,784 |
| | 53,570 |
| Mortgage loan commitments | Level 2 | | $ | 17,543 |
| | 7,437 |
| Forward contracts | Level 2 | | $ | (5,529 | ) | | 26,467 |
| Mortgage servicing rights | Level 3 | | $ | 27,721 |
| | 23,930 |
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| | (1) | The aggregate fair value of RMF loans held-for-sale of $285.7 million at August 31, 2017 exceeds their aggregate principal balance of $283.2 million by $2.5 million. The aggregate fair value of loans held-for-sale of $126.9 million at November 30, 2016 was below their aggregate principal balance of $127.8 million by $0.9 million. |
| | (2) | Rialto's credit default swaps are included within Rialto's other assets. |
| | (3) | Rialto's interest rate swaps and swap futures and credit default swaps are included within Rialto's other liabilities. |
| | (4) | The aggregate fair value of Lennar Financial Services loans held-for-sale of $661.6 million at August 31, 2017 exceeds their aggregate principal balance of $635.0 million by $26.6 million. The aggregate fair value of Lennar Financial Services loans held-for-sale of $939.4 million at November 30, 2016 exceeded their aggregate principal balance of $931.0 million by $8.4 million. |
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Schedule Of Gains And Losses Of Financial Instruments Measured on a Recurring Basis |
The changes in fair values for Level 1 and Level 2 financial instruments measured on a recurring basis are shown below by financial instrument and financial statement line item: | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | | August 31, | | August 31, | (In thousands) | 2017 | | 2016 | | 2017 | | 2016 | Changes in fair value included in Lennar Financial Services revenues: | | | | | | | | Loans held-for-sale | $ | (5,804 | ) | | (2,808 | ) | | 18,233 |
| | 826 |
| Mortgage loan commitments | $ | (829 | ) | | 1,781 |
| | 10,106 |
| | 7,603 |
| Forward contracts | $ | 1,267 |
| | (362 | ) | | (31,996 | ) | | (2,542 | ) | Investments available-for-sale | $ | — |
| | 31 |
| | (4 | ) | | 37 |
| Changes in fair value included in Rialto revenues: | | | | | | | | Financial Assets: | | | | | | | | Credit default swaps | $ | (536 | ) | | (1,570 | ) | | (1,852 | ) | | (1,547 | ) | Financial Liabilities: | | | | | | | | Interest rate swaps and swap futures | $ | (1,412 | ) | | (133 | ) | | (2,312 | ) | | 740 |
| Credit default swaps | $ | 15 |
| | 183 |
| | 124 |
| | 173 |
| Changes in fair value included in other comprehensive income (loss), net of tax: | | | | | | | | Lennar Financial Services investments available-for-sale | $ | 165 |
| | 639 |
| | 1,556 |
| | 1,121 |
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Reconciliation Of Beginning And Ending Balance For The Company's Level 3 Recurring Fair Value Measurements |
The following table represents the reconciliation of the beginning and ending balance for the Level 3 recurring fair value measurements: | | | | | | | | | | | | | | | Three Months Ended August 31, | | 2017 | | 2016 | | Lennar Financial Services | | Rialto | | Lennar Financial Services | | Rialto | (In thousands) | Mortgage servicing rights | | RMF loans held-for-sale | | Mortgage servicing rights | | RMF loans held-for-sale | Beginning balance | $ | 27,370 |
| | 82,803 |
| | 18,241 |
| | 199,415 |
| Purchases/loan originations | 2,447 |
| | 439,266 |
| | 2,275 |
| | 520,510 |
| Sales/loan originations sold, including those not settled | — |
| | (235,922 | ) | | — |
| | (491,428 | ) | Disposals/settlements | (1,092 | ) | | — |
| | (1,311 | ) | | — |
| Changes in fair value (1) | (1,004 | ) | | 707 |
| | (836 | ) | | 522 |
| Interest and principal paydowns | — |
| | (1,107 | ) | | — |
| | (88 | ) | Ending balance | $ | 27,721 |
| | 285,747 |
| | 18,369 |
| | 228,931 |
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| | | | | | | | | | | | | | | Nine Months Ended August 31, | | 2017 | | 2016 | | Lennar Financial Services | | Rialto | | Lennar Financial Services | | Rialto | (In thousands) | Mortgage servicing rights | | RMF loans held-for-sale | | Mortgage servicing rights | | RMF loans held-for-sale | Beginning balance | $ | 23,930 |
| | 126,947 |
| | 16,770 |
| | 316,275 |
| Purchases/loan originations | 8,159 |
| | 1,262,926 |
| | 6,269 |
| | 1,174,483 |
| Sales/loan originations sold, including those not settled | — |
| | (1,106,316 | ) | | — |
| | (1,259,320 | ) | Disposals/settlements | (2,887 | ) | | — |
| | (2,881 | ) | | — |
| Changes in fair value (1) | (1,481 | ) | | 3,205 |
| | (1,789 | ) | | (687 | ) | Interest and principal paydowns | — |
| | (1,015 | ) | | — |
| | (1,820 | ) | Ending balance | $ | 27,721 |
| | 285,747 |
| | 18,369 |
| | 228,931 |
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| | (1) | Changes in fair value for Rialto loans held-for-sale and Lennar Financial Services mortgage servicing rights are included in Rialto's and Lennar Financial Services' revenues, respectively. |
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Fair Value Measurements, Nonrecurring |
The assets measured at fair value on a nonrecurring basis are summarized below: | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended August 31, | | | | 2017 | | 2016 | (In thousands) | Fair Value Hierarchy | | Carrying Value | | Fair Value | | Total Gains (Losses), Net (1) | | Carrying Value | | Fair Value | | Total Losses, Net (1) | Financial assets | | | | | | | | | | | | | | Rialto: | | | | | | | | | | | | | | Impaired loans receivable | Level 3 | | $ | — |
| | — |
| | — |
| | 52,460 |
| | 48,130 |
| | (4,330 | ) | FDIC Portfolios loans held-for-sale | Level 3 | | $ | 20,863 |
| | 19,237 |
| | (1,626 | ) | | — |
| | — |
| | — |
| Non-financial assets | | | | | | | | | | | | | | Lennar Homebuilding: | | | | | | | | | | | | | | Land and land under development (2) | Level 3 | | $ | — |
| | — |
| | — |
| | 23,736 |
| | 18,000 |
| | (5,736 | ) | Rialto: | | | | | | | | | | | | | | REO, net (3): | | | | | | | | | | | | | | Upon acquisition/transfer | Level 3 | | $ | 1,200 |
| | 1,376 |
| | 176 |
| | 9,220 |
| | 8,799 |
| | (421 | ) | Upon management periodic valuations | Level 3 | | $ | 35,507 |
| | 22,765 |
| | (12,742 | ) | | 28,910 |
| | 22,715 |
| | (6,195 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | Nine Months Ended August 31, | | | | 2017 | | 2016 | (In thousands) | Fair Value Hierarchy | | Carrying Value | | Fair Value | | Total Losses, Net (1) | | Carrying Value | | Fair Value | | Total Gains (Losses), Net (1) | Financial assets | | | | | | | | | | | | | | Rialto: | | | | | | | | | | | | | | Impaired loans receivable | Level 3 | | $ | 31,554 |
| | 18,885 |
| | (12,669 | ) | | 72,375 |
| | 61,324 |
| | (11,051 | ) | FDIC Portfolios loans held-for-sale | Level 3 | | $ | 26,081 |
| | 19,237 |
| | (6,844 | ) | | — |
| | — |
| | — |
| Non-financial assets | | | | | | | | | | | | | | Lennar Homebuilding: | | | | | | | | | | | | | | Finished homes and construction in progress (2) | Level 3 | | $ | 6,659 |
| | 2,745 |
| | (3,914 | ) | | — |
| | — |
| | — |
| Land and land under development (2) | Level 3 | | $ | 6,771 |
| | 3,094 |
| | (3,677 | ) | | 29,418 |
| | 22,925 |
| | (6,493 | ) | Rialto: | | | | | | | | | | | | | | REO, net (3): | | | | | | | | | | | | | | Upon acquisition/transfer | Level 3 | | $ | 31,503 |
| | 30,066 |
| | (1,437 | ) | | 42,657 |
| | 44,292 |
| | 1,635 |
| Upon management periodic valuations | Level 3 | | $ | 118,497 |
| | 79,601 |
| | (38,896 | ) | | 68,148 |
| | 54,347 |
| | (13,801 | ) |
| | (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 and nine months ended August 31, 2017 and 2016. |
| | (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, 2017 and the three and nine months ended August 31, 2016. |
| | (3) | The fair value of REO, net is based upon appraised value at the time of foreclosure or management's best estimate. In addition, management periodically performs valuations of its REO. The gains (losses), net upon the transfer or acquisition of REO and impairments were included in Rialto other expense, net, in the Company’s condensed consolidated statement of operations for the three and nine months ended August 31, 2017 and 2016. |
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Schedule of Unobservable Inputs Used in Discounted Cash Flow Model to Determine the Fair Value of Communities |
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 nine months ended August 31, 2017: | | | | | | | | Nine Months Ended | | August 31, 2017 | Unobservable inputs | Range | Average selling price | $ | 125,000 |
| - | $567,000 | Absorption rate per quarter (homes) | 4 |
| - | 10 | Discount rate | 20% |
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