Lennar is clearly ruthless, but this helps them make money. They have an amazing ability to do deals and rip other people off. I don’t think it’s quite so easy to say that their chance of heading into bankruptcy is “72%”, based on some theoretical model. Out of all the homebuilders, Lennar is arguably the best managed. They may manage to wheel and deal their way out of their troubles.

They have raised more equity, and have continued to make deals like picking apart Landsource’s corpse in bankruptcy court. They have also used their various political connections to land contracts with municipalities for various buildings.

While it would likely be a good thing for many people for Lennar to cease operations, it may be unlikely.

2- Regarding defective drywall (which is xenophobically dubbed Chinese drywall, as if American corporations like Lennar didn’t build a home that electrocuted a man to death), Lennar probably did not know that it was defective. They are ruthless but they are not dumb. At best, fighting off the class action lawsuits would make intentional use of defective drywall unprofitable.

Lennar is actually proactive about replacing defective drywall at their expense, though they are bullying homeowners into signing away any further liability on Lennar’s part (e.g. replacing wiring and appliances that may be damaged, unknown health side effects) according to a media report.

3- Michael Morgan (he works in the real estate business) used to run a website critical of Lennar. This site is now no longer operational (but check archive.org on defective-homes.org).

While he thinks that Lennar is evil, even he recommends possibly going long on Lennar (as long as the defective drywall issue doesn’t sink them).

More info:
http://realestateandhousing2.blogspot.com/2009/01/lennar-fraud-allegations.html

http://www.searchhutto.com/LD/defective-homes-net