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Financial Instruments and Fair Value Disclosures (Tables)
9 Months Ended
Aug. 31, 2017
Fair Value Disclosures [Abstract]  
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

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


(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.
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

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

 
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


(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.
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.
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%