Lennar subsidiary Rialto Capital Advisors will conductday-to-day management and workout of the portfolios and contributedup to $5 million toward the loan purchase. Lennar indirectlyacquired 40% managing member interests in the limited liabilitycompanies created to hold these loans.

The FDIC will retain the other 60% equity interest and provide$627 million of non-recourse financing at zero interest for sevenyears. The transactions include approximately 5,500 distressedresidential and commercial real estate loans from 22 failed bankreceiverships.

"Acquiring and working out distressed real estate loans was alarge and extremely profitable part of our business during the lastmajor real estate down cycle in the early 1990s," Stuart Miller,Lennar president and CEO, stated in a release. He noted that themajor homebuilder, founded in 1954, understands market cycles andpoint-of-entry opportunities, and has been preparing for such aninvestment over the past two years.