920760--1/29/2010--LENNAR_CORP

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{cost, contract, operation}

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{investment, property, distribution}

{regulation, change, law}

{debt, indebtedness, cash}

{acquisition, growth, future}

{customer, product, revenue}

{cost, operation, labor}

{financial, litigation, operation}

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The homebuilding industry has experienced a significant downturn. A continuing decline in demand for new homes coupled with an increase in the inventory of available new homes and alternatives to new homes could adversely affect our sales volume and pricing even more than has occurred to date. Demand for new homes is sensitive to economic conditions over which we have no control, such as the availability of mortgage financing and the level of employment. Mortgage defaults by homebuyers who financed homes using non-traditional financing products are increasing the number of homes available for resale. We have had to take significant write-downs of the carrying values of the land we own and of our investments in unconsolidated entities, and a continuing decline in land values could result in additional write-downs. Inflation can adversely affect us, particularly in a period of declining home sale prices. We face significant competition in our efforts to sell new homes. Homebuilding is subject to warranty and liability claims in the ordinary course of business that can be significant. Performance of subcontractors and quality and suitability of building materials. Natural disasters and severe weather conditions could delay deliveries, increase costs and decrease demand for new homes in affected areas. Supply shortages and other risks related to the demand for skilled labor and building materials could increase costs and delay deliveries. Reduced numbers of home sales could lead us to absorb additional costs. If our financial performance further declines, we may not be able to maintain compliance with the covenants in our credit facilities and senior debt securities. We may be unable to obtain suitable financing and bonding for the development of our communities. Our ability to continue to grow our business and operations in a profitable manner depends to a significant extent upon our ability to access capital on favorable terms. Increased debt costs will make it more difficult for us to have positive net income. The repurchase warehouse credit facilities of our Financial Services segment will expire in 2010. We conduct some of our operations through unconsolidated joint ventures with independent third parties in which we do not have a controlling interest and we can be adversely impacted by joint venture partners failure to fulfill their obligations. The unconsolidated entities in which we have investments may not be able to modify the terms of their debt arrangements. We could be adversely impacted by the loss of key management personnel. If our ability to resell mortgages to investors is impaired, we may be required to broker loans or fund them ourselves. Our Financial Services segment is adversely affected by reduced demand for our homes. If housing markets improve, we may not be able to acquire land suitable for residential homebuilding at reasonable prices, which could increase our costs and reduce our revenues, earnings and margins. Federal laws and regulations that adversely affect liquidity in the secondary mortgage market could hurt our business. Our homebuyers ability to qualify for and obtain affordable mortgages could be impacted by changes in government sponsored entities and private mortgage insurance companies supporting the mortgage market. Government entities in regions where we operate have adopted or may adopt, slow or no growth initiatives, which could adversely affect our ability to build or timely build in these areas. Compliance with federal, state and local regulations related to our business could create substantial costs both in time and money, and some regulations could prohibit or restrict some homebuilding ventures. We can be injured by failures of persons who act on our behalf to comply with applicable regulations and guidelines. Tax law changes could make home ownership more expensive or less attractive. We have a stockholder who can exercise significant influence over matters that are brought to a vote of our stockholders. We may not be able to benefit from net operating loss ( NOL ) carryforwards. Trading in our shares could substantially reduce our ability to use tax loss carryforwards.

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920760--1/29/2010--LENNAR_CORP_/NEW/