Lennar (NYSE: LEN) is the second largest homebuilder in the United States. In 2009, Lennar delivered 11,478 new homes.^[1] Lennar is heavily exposed to fluctuations in the housing and credit markets. Due to this exposure, Lennar has been hit particularly hard by the rapid decline of prices in the U.S. housing market and the subsequent subprime lending crisis in 2007 and early 2008.

Like most homebuilders, it finances most of its operations through large lines of credit with major financial institutions. The volatility in the housing market has made assessing risk very difficult and consequently, financial institutions are unwilling to lend as freely. However, Lennar has set itself apart from other homebuilders by selling assets, paying off debts, and increasing its cash reserves, all of which help protect its long-term outlook from short-term drops in demand for residential housing.^[2]

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