Company: LEN
Filing Date: 2025-10-03
Form Type: 10-Q
Source: 0001628280-25-044086
Chunk: 102

Company: LENNAR CORP /NEW/
Filing Date: 2025-10-03
Form: 10-Q
Item: Item 8
Chunk 102
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 secured by up to 80% interests in the originated commercial loans financed.Borrowings and collateral under the facilities were as follows:(In thousands)At August 31, 2025At November 30, 2024Borrowings under residential facilities$1,682,918 1,776,045 Collateral under residential facilities1,743,688 1,837,833 Borrowings under LMF Commercial facilities57,313 28,747 If the facilities are not renewed or replaced, the borrowings under the lines of credit will be repaid by selling the mortgage loans held-for-sale to investors and by collecting receivables on loans sold but not yet paid for. Without the facilities, the Financial Services segment would have to use cash from operations and other funding sources to finance its lending activities. Substantially all of the residential loans the Financial Services segment originates are sold within a short period in the secondary mortgage market on a servicing released, non-recourse basis. After the loans are sold, the Company retains potential liability for possible claims by purchasers that it breached certain limited industry-standard representations and warranties in the loan sale agreements. Purchasers sometimes try to defray losses by purporting to have found inaccuracies related to sellers’ representations and warranties in particular loan sale agreements and seeking to have the Company buy back mortgage loans or compensate them for losses incurred on mortgage loans that the Company has sold. The Company’s mortgage operations have established accruals for possible losses associated with mortgage loans previously originated and sold to investors. The Company establishes accruals for such possible losses based upon, among other things, an analysis of repurchase requests received, an estimate of potential repurchase claims not yet received and actual past repurchases and losses through the disposition of affected loans, as well as previous settlements. While the Company believes that it has adequately reserved for known losses and projected repurchase requests, given the volatility in the residential mortgage market and the uncertainty regarding the ultimate resolution of these claims, if either actual repurchases or the losses incurred resolving repurchase claims exceed the Company’s expectations, additional recourse expense may be incurred. The provision for loan losses was immaterial for both the three and nine months ended August 31, 2025 and 2024. Loan origination liabilities were $17.3 million and $16.7 million as of August 31, 2025 and November 30, 2024, respectively, and included in Financial Services’ liabilities in the Company's condensed consolidated balance sheets.

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