Good morning and thank you for joining us today for Hovnanian Enterprises fiscal 2010 third quarter earnings conference call. An archive of the webcast will be available after the completion of the call and run for 12 months. This conference is being recorded for rebroadcast and all participants are currently in a listen-only mode. Management will make some opening remarks about the third quarter results and then open up the line for questions. The company will also be webcasting a slide presentation along with the opening comments from management. The slides are available on the Investors page at the company's website at www.khov.com. Those listeners who would like to follow along should log onto the website at this time. Before we begin, I would like to remind everyone that the cautionary language about forward-looking statements contained in the press release also applies to any comments made during this conference call and to the information in the slide presentation. I would now like to turn over the conference over to Ara Hovnanian, Chairman, President, and Chief Executive Officer of Hovnanian Enterprises. Ara, please go ahead.

Good morning and thank you for participating in today's call to review the results of our third quarter ended July 31, 2010. Joining me today from the company are Larry Sorsby, Executive Vice President and CFO; Paul Buchanan, Senior Vice President and Chief Accounting Officer; Brad O'Connor, Vice President and Corporate Controller; David Valiaveedan, Vice President, Finance and Treasurer; and Jeff O'Keefe, Director of Investor Relations. On Slide 3, you can see a brief summary of our third quarter results. Our third quarter was generally in line with our expectations; deliveries were strong, and net contracts were weak, both of which were impacted by the expiration of the federal homebuyers' tax credit. Due to the expiration of the homebuyers' tax credit in April, we expected our third quarter net contracts to be weak. However, the weakness was longer and more pronounced than we thought it would be and resulted in our net contracts for the quarter declining 37% on an absolute basis and down 33% on a per community basis compared to last year. We believe that the recent slowdown in housing was caused not only by the expiration of the tax credit, but also by consumers being concerned about the health of the economy, the lack of job creation, sovereign debt crisis, the volatile stock market prices, and the Gulf oil spill, just to name a few of the concerns on consumers' minds. These factors led to a downturn in consumer confidence. The bottom line is that a barrage of bad news set the U.S. consumer on their heels. On Slide 4, you can see a month-by-month analysis of sales over the last six months. Sales picked up in the last few months of the tax credit and then dropped dramatically in May and June, partly due to the…

Thanks, Ara. Let me start with a discussion of our current inventory from a couple of different perspectives. If you turn to Slide 12, you will see that our owned and optioned land position broken out by our publicly reported segments. Based on trailing 12-month deliveries, we own 3.6 years worth of land. 13% of the lots that we currently own are newly identified lots that have been purchased since January 2009. Over time, we are working through our older legacy land and replacing that with newly identified land parcels. This should lead the sustainable gross margins back in the 20% range, assuming no changes in home prices. We do not need to have home price appreciation to see further improvements in our gross margin, just a shift in the mix of lots that we own and deliver homes on to be more heavily weighted to our newly acquired land parcels. While this will not happen overnight, we have started down the road to achieving this objective. As seen on Slide 13, our owned lots position has increased during the third quarter of 2010 as we replenished our land supply with newly identified lots. As a matter of fact, it's increased by about 1,200 lots during the first nine months of 2010, which is a step in the right direction. And even more impressive gain comes from the optioned side of the equation. We saw sequential increases of about 3,300 lots optioned during the third quarter. We walked away from about 550 legacy lots, we took down 1,100 lots that were previously optioned, and we signed new option contracts for an additional 5,000 lots. At the end of the third quarter, 48% of our optioned lots are newly identified lots. When you combine our optioned and owned land, 29% of…

Thanks, Larry. A couple of quick points before we turn it over to questions. First, clearly the market remains challenging, but late July and most of August have been encouraging versus June and early July as we have seen an improvement in net contracts. It does appear that we are bouncing along the bottom. With this year's industry starts on pace with last year's at about 550,000 starts, we are significantly below the average for the past five decades. The average over the last five decades is about 1.5 million starts per year, with a post-war low of 1 million starts. Harvard just released its new State of the Housing Report. The low-end estimate from the Joint Center for Housing Studies of Harvard is 1.7 million new homes being built and needed on average each year over the next 10 years, while at least one homebuilding analyst is on the other side calling for a much more modest 1.2 million starts on average each and every year over the same 10 years. Even the most conservative estimate would represent a very significant increase over the current state and rate of housing production. Who will be building these homes? Most of the private builders are either out of business or working through their last parcels of land. A vast majority of them do not have the equity to invest in new – in buying new lots for future communities and there is virtually no money being lent to these small builders by banks. The better capitalized private builders and the public builders who either have capital or still have access to capital will make – will be able to make disproportionate market share gains over this time period. Additionally, keep in mind that existing communities are finishing and closing more quickly than new communities are being opened. The number of new home communities continues to shrink and the increase in demand should translate to significant increases in absorptions per community, further assisting operating efficiency and profitability. We have been very active in the land market and we plan to remain active in the land market, both with wholly owned land and with land that we purchased with joint venture partners. We expect to get our fair share of these market share gains and prosper in the inevitable housing rebound. Thanks, and we will be glad to open it up now for questions.

Thank you. The company would now answer questions. (Operator Instructions). At this time, we will open the call to questions. (Operator Instructions). Your first question comes from the line of Nishu Sood with Deutsche Bank. You may proceed.

Hi, this is Rob Hansen on for Nishu actually. In terms of your forecast for 40% of closings in new communities, what type of community count growth does this imply from here for next year?

Yes, we have not made a projection on community count growth beyond what we have told you, the approximate 195 at year-end. So we are just not publishing a community count, specific number. But suffice it to say, I think we are getting enough hints that we expect it to continue to grow.

Okay. And then in terms of the improvement in sales on a month-over-month basis this summer, was this simply better conversion ratios or was traffic also up?

I think it's a combination of traffic and a slight improvement in conversion rates. And again, as the data shows and Ara explained, we are very pleased to see the monthly sequentially improvements, but we are not yet back to normalized levels and not back even to the levels we achieved a year ago for the same lots.

And your next question comes from the line of Dan Oppenheim with Credit Suisse. Please proceed.

Thanks very much. I was wondering if you could talk a little bit about – on land. If you look at the owned land, less the mothballed communities, it's just a couple of years. So how do you think about that in terms of cash flow usage for 2011?

Overall, we are obviously quite comfortable enough with the cash flow usage. I mean, we are not only buying land, I mean, we were out last quarter buying $26 million of our debt back and some of that debt was in maturities over the next several years. So we are obviously comfortable that we have the necessary cash flow on the horizon to not just buy land, but to even accelerate early retirement of our debt through purchases.

Okay, thanks. And then secondly, I'm wondering in terms of – you talked about the sales doing better as it relates (inaudible) were a year ago. Where do you – what's the target for that, how do you look at that in terms of absorption and in terms of getting back there? What would you be willing to do in terms of incentives and pricing?

I don't think we have done very much. I mean, we survey our competitors and nearby communities each and every week to see what kind of selling pace they have and what they are doing in terms of incentives. And if they are selling and we are not – and sometimes it's difficult to ascertain what they are doing with incentives and concessions. We will blind shop them to try to get the best data that we possibly can get. And for the most part – not in every situation, but for the most part, builders have not been increasing incentives or lowering sales prices on any kind of widespread basis. They may be repackaging how they market a particular incentive, but the dollars that they are offering end up being close to the same. So we have not seen our competitors offering on any kind of widespread basis extra incentives or lowering sales prices. And therefore, we haven’t done much of that ourselves. Now, having said that, there is always a community here or there that you need to do something for and we have done that and we have seen some of our competitors do that as well.

Yes. And obviously, by the way, as we mentioned earlier, some of that – the couple of isolated instances where we did make some price decreases and adjustments did result in the impairments this quarter, which we haven’t seen much of over the last few quarters. But they were isolated.

And your next question comes from the line of Megan McGrath with Barclays Capital. Please proceed.

Hi, thanks. I just wanted to follow up on that a little bit in terms of pace and pricing. Your comments about the communities that you impaired, you stated that the pace did get slower, so you decided to get a little bit more aggressive on the pricing side. And I guess I'm wondering I realize there is no magic number for the whole company, but sort of how much cushion do we have in the current pace before you think that you or other builders would start to get more aggressive? Do you feel pretty comfortably at these levels or if we continue at this kind of pace, do you think in a couple of months the pricing could get more aggressive?

Well, I would say, if June had continued that kind of absorption levels or we fall back to that kind of absorption levels, I guess that builders might get more aggressive. But as we pointed out, our sales pace improved in July, it improved yet again a little more significantly in August. So I think if that kind of environment holds, pricing may hold. The other thing to keep in mind and I mentioned it in my closing comments, generally speaking, in most of our markets, we are seeing a decreasing community count. The number of store fronts from buyers to choose from is reducing. So to some extent, that helps mitigate the overall environment and preserves some – both, a little of sales pace and preserve a little bit of pricing. If someone is interested in a new home just – over the last few years, there are just fewer and fewer choices out there. Builders have not been taking new – or developers have not been taking any new land parcels through the entitlement process. So we have been using up what's out there and that will help.

Thanks, that's helpful. And for my follow-up, somewhere on the same topic. I guess I have been a little bit surprised that you and other builders frankly haven’t pulled back much in terms of the pace of land purchases in the most recent quarter, given the pullback in the overall market. So I am wondering if you could sort of talk us through that. Is it because land prices have adjusted quickly, which we haven't really heard or that – this is just a longer-term land purchase that you are not really worried about, the temporary pullback in pace?

Well, first of all, we worry about everything, that's our job. But I would say both – many factors are really keeping that going. First and foremost, we are only buying parcels where we can make economic sense in the current selling environment. So – now, that's getting tougher because sales pace has been off. But we are still finding parcels even in the last quarter that meet our return hurdles of about 25% unleveraged IRR plus, even in this selling environment. Now, if it dips back much slower or prices retreat, then you will need even further lot price reductions to make economic sense. The other thing is, it is important to maintain a certain amount of volume and we are finishing some of our legacy communities. So it's critical to be out there at a minimum replacing communities and hopefully, on the net – showing the net increase in communities. So we are monitoring it regularly. At the moment, we are comfortable. If sales drop back to June levels for a couple of months, I am certain we would hesitate a little bit more.

And your next question comes from the line of Ivy Zelman with Zelman & Associates. Please proceed.

Good morning, guys. First, I just wanted to compliment you on your disclosure. I think your slide deck and the detail that you provide on the monthly turns and detail on the mortgage company, there is not another company I have seen to provide that much transparency. So we greatly appreciate it. Secondly, with respect to margins, you indicated on Slide 9 on the SG&A that you would expect in the fourth calendar quarter, my guess – I'm sorry, your fiscal – the next fiscal quarter that we could see margins in the October quarter, your year-end, see SG&A a percent of sales move higher, slightly due to the timing of closing that you benefited from this quarter. Can you comment just near term on gross margin recognizing that, Ara, your comments whether gross margins will continue to improve with 40% of the closings coming from the newer communities next year, but near term as the backlog might be seeing some of the incentives or moving through legacy products that you had to reduce price? Are we going to see gross margins in the near term decline or should we see it relatively stable? And I would like a follow-up, please.

Yes, I think you can assume stable, Ivy, in terms of the next quarter.

Great. Thanks, Larry. And then just secondly on the impairments, you guys had – we were a little surprised with the size of the impairments given what you had been seeing in impairments. And I think with the sensitivity – I think Megan was trying to get at this and maybe Dan and all of us are trying to understand if pricing from here was to decline a few percent, 3% to 5%, what kind of sensitivity, Larry, should we expect see on the impairment side? You mentioned you had five communities that were generally the cause of those impairments and you mentioned they were on the fringe. I would have anticipated that you would have already hit those projects as they were on the fringe, and why now? Would we see it if they previously should have been impaired? So I'm just trying to understand where the sensitivity is and what we should be expecting in future impairments.

Absolutely. I think several of those, if not all of those –

100% had been previously impaired.

– had been previously impaired. But given that the absorption slowed a bit as we pointed out last quarter, we felt it was most prudent to drop prices a little bit more. We don't have a lot of very large communities. The ones that impaired were larger or more expensive communities. And since they had a longer runway, we felt it would be more prudent to maintain the absorption in those communities. But for all of them then, it was the second dose of impairment, bringing the amounts down quite a bit. Obviously – we don't maintain a tally of how we would trigger with another round, but I don't think off the top of my head we have a lot that are right on the verge. But I can't say that with certainty. There is still a couple of other large ones out there that we will just have to monitor closely.

And your next question comes from the line of Jon Ellis with Merrill Lynch. Please proceed.

Thank you. First question, with respect to your community count, I believe last quarter you had given a year-end target of 200, now 195. Can you just help us understand was there any difference in terms of perhaps the number of communities that you are planning to add versus the rate of close-outs? And sort of the related question there would be, do you have any expectation you can share with us in terms of community close-outs over the next few quarters?

Let me just say that correct, we said there was going to be approximately 200 last time and we are just refining it to a little more specificity this time and it's a combination of in certain instances, getting through a few communities a little quicker than we have anticipated and in other instances, not getting open as fast as we anticipated, which is probably more the case, the communities might be lagging a month or two, so they are not going to be open by the end of this fiscal year. You shouldn't read anything of substance into that minor change.

But to give you an idea on how difficult it is – and these are very approximate numbers and I think – I believe on the quarter – Brad, do you recall how many we actually – how many we closed out and how many new ones opened?

Yes, 54 new were opened during the quarter, 49 closed. So it's a lot of churn.

And that's what makes it very difficult to be – very, very precise on the numbers, that's a lot coming in and out each quarter and it's hard to be exact on the projection.

Understood. Thank you, that's helpful. Second question, the stated unsold homes figure of 837, do you have a number for how many of those are finished? And then the related question is, typically as you move past Labor Day, can you give us a sense on – during normalized times, not obviously the past few years but during more normalized times, what if any seasonal pickup do you tend to see in terms of traffic patterns post Labor Day?

Ara, I will take the finished question. Less than 10% of that 837 is finished. It might even be less than 5%, I just don't have it right in front of me, but it's a small percentage.

And regarding the secondary questions, I don't have the precise number, but as you might imagine, September is a better selling month than August. So normally, the seasonal factors would pick up right now and we certainly hope that's the case.

And your next question comes from the line of David Goldberg with UBS. Please proceed.

Thanks. Good morning, everybody.

Good morning.

First question is on – I was hoping to get some more color on Newco and the decision to not move forward with that transaction. A little bit surprising, just wondering if you could give some idea of what changed. Was it an ability to raise capital within the transaction? Was it just an absence of deals that you found appealing to go out and purchase? Just trying to get some more color around it.

So basically, the deals terms in the end just didn't seem attractive enough compared to our traditional joint ventures. And we felt it just wasn't going to be worth the effort and we could secure a better return on our capital with the traditional route and the part of it is some of the smaller communities, we were just keeping those on a wholly owned basis without a land banking effort on the small ones or without a joint venture, and we've got sufficient capital to do that. So we decided to change strategies just a bit and focus more on working with our joint venture partners on some of the larger parcels only.

Got it. And then the follow-up question is just a little bit more theoretical. In the prepared remarks and I know you have done this I think every quarter for a while now, talking about kind of the normalized start pace and historical start pace and I'm wondering if you could give us some perspective. If you think the buyers' psychology around homeownership has changed? In other words, maybe you were going to create 1.5 million starts on a normalized basis. But the homeownership rate fundamentally is going to be slower, because people have been scared by the period that we have gone through over the last couple of years. I'm just kind of wondering about your perspective on that thought and what that might mean for the mix of kind of homeownership and new development as we move forward in this country.

It was interesting, but today on Page 35 of the New York Times is a great op-ed piece by Karl Case and he is certainly a significant author of these op-eds. And his whole op-ed really revolved around the idea that a home is a dream after all, and that while some are suggesting that dream of homeownership is fading, given the recent history, he argues just the opposite and goes on to show a lot of reasons why that's the case. Interestingly, among other things, we surveys a couple of thousand recent homebuyers every year from around the country and what was interesting, if you go to '05, among the many questions, he asks them what they anticipate is going to happen with home prices. And back in '05, that anticipation was that they would go up 9.5%. Well, that was obviously not reasonable. When you go to '08, they anticipated a small drop, the recent buyers, and they still bought interestingly. But showing how things change. Last year, they anticipated a gain of 2.2%. In the spring – the homebuyers are getting more optimistic. I guess the public over the long term, they are anticipating a 5.2% increase in home prices. So I think the notion that what has happened – and this is certainly his point, will forever bias homebuyers or the American consumers' attitude about home buying. I think that notion has been overplayed and that's certainly the case he makes. The second point – and I think this is a critical one as well, is that homeownership is not just a dollar and cents issue. I mean, there is something intangible, but very important to American homeowners and interestingly, I might add, to immigrants that are now U.S. citizens. There is a very strong intangible…

I would like to clarify something. I answered a question or two ago on how many communities we had opened and closed out this year. Rather than 54 opened and 49 closed during the quarter, that's actually the number for the nine months ended July. So 54 were opened so far this year and 49 closed.

And your next question comes from the line of Michael Rehaut with J.P. Morgan. Please proceed.

Hi, this is actually Jason Marcus on for Mike. I was just wondering if regionally you could comment on some of the trends throughout the quarter and kind of what you have been seeing recently.

Well, I would say overall – I will comment on August. First of all, almost everywhere slowed down in June. Can't say there were any markets that showed particular strength.

Maybe even stronger weakness in June in Houston.

I think that's probably true, which is funny, because for us, Houston has been decent. I think the tax credit seemed to have more – expiration seemed to have more of an effect on Houston in slowing things down. I would say in August – in most of August and the last couple of weeks in July, it also was fairly widespread in terms of the stronger markets. Maybe a little bit more weakness in Phoenix, but generally speaking, I would say it was recently uniform, most of the areas picked up over that period.

Okay, thanks. And then you mentioned in the past that you expect to raise equity at some point. And I was just wondering if you could comment at all on the timing.

Well, I think as I mentioned the last call, our expectation to do that would be back when we are solidly profitable and get a multiple of earnings, rather than some kind of option valuation on our equity. So we haven’t returned to profitability yet. So it's some ways off in the future.

Yes. Unfortunately, with our debt maturity schedule being fairly accommodating, we don't feel a lot of pressure to do so. In the long run, we think it's likely it will just improve our debt-to-equity ratios that much more quickly and we think it will be the prudent thing. But it's not in our immediate horizon.

And your next question comes from the line of Michael Kim with CRT Capital Group. Please proceed.

Thanks for taking my question. Just curious about Newco. Without the investment into Newco, thinking about the allocation of capital into more joint venture activity, do you expect to invest in these vehicles on similar terms to existing JV agreements and I guess in terms of a 20% equity investment on an unlevered basis and just thinking about the capital requirement or projections of investments into these JV vehicles over the next year or so and will they be with the existing strategic financial partners or you are going to be opening this up to others? And just thinking about the leverage here, is there a point in time near term or longer term where you might elect to start entering into joint venture agreements on a levered basis?

Well, okay, there are a few different questions. I'll try to tackle the different ones. First, generally speaking, in terms of our total capital commitment, a joint venture where we – even where we contribute 20% of the equity unlevered takes up less capital than a land banking relationship, which was part of the land stock or Newco – the Newco model. So with the switch to a joint venture, we would actually have the capital to do even more ventures going forward. I've lost my –

The other is leverage. And I think on – the answer on leverage is there is none available today for the most part. Banks just aren’t lending to do acquisition development, even home construction is difficult to find bank debt. Having said that, initially we would set the joint ventures up to do, based on a 100% equity and if that became available at some future date while the joint venture was still in place, we would look at potentially putting leverage on, probably limiting the leverage to something around 30%. And as we have done in the past, it would be on a pure non-recourse basis. Some of our peers did some recourse debt in the last cycle. We didn't do any recourse debt on any of our joint ventures in the last cycle and we would continue to implement a philosophy of not doing recourse debt if we were putting debt on joint ventures in the future.

Yes. The – one thing I will add is in the short – well, our long-term target is very low leverage in joint ventures. Given the fact that we are fairly highly leveraged right now by mistakes, it's possible if our partners were wanting a little higher leverage than our long-term goal. For the short term, we might accommodate that if it becomes available on good enough terms. But generally speaking, our immediate plans are 100% equity.

I see. And that will be existing strategic financial partners or will you be –?

Yes, that was the other question. Yes, we are definitely having discussions with some of our past partners and I think hopefully, that will absolutely happen. Everyone has their preferences of course; one may like Florida more and other one maybe bullish on Northern California, et cetera. So we have to look at each particular opportunity. Having said that, though, I would say it's highly likely we would be also doing transactions with additional partners. Fortunately, there are many potential partners out there. We continue to get called regularly and have conversations with many. So at this point, while we certainly want to be loyal to our partners – our recent partners and the experience has been exceptional with them, we are very pleased, I think it's logical and prudent to continue to build relationships that we can count on for the future too.

And your next question comes from the line of Joel Locker with FBN Securities. Please proceed.

Hello?

Yes, we are here.

Yes. Just – yes, just one question on the customer deposits. They historically ran around 4% of backlog. And I noticed this quarter, they dipped down around 2.7%. I was wondering was there any change in policy or was that just a regional mix?

Got to be regional mix.

Yes. The regional mix can be significant. In Houston, the deposits and California tend to be very low, in New Jersey they tend to be very high. So it just depends on the mix at any particular point in time.

All right, thanks. And just a follow-up on the debt-to-equity on your joint ventures currently?

Well, when we put them in place initially, they were 50% or less and because we have written off some of the land values, that – it's increased – hold on a second, we will tell you what the number is.

Thanks.

62% debt-to-cap and that's actually disclosed in our financial statements, 10-Qs every quarter as well if you want to look back at it historically.

Right. All right, thanks a lot, guys.

Yes.

And your next question comes from the line of Alex Barron with Housing Research Center. Please proceed.

Yes, thanks. Good morning, guys. I wanted to ask you about your – any plans that you have as far as reducing SG&A that you could elaborate on, like are you guys planning on potentially exiting any markets to kind of shrink your footprint a little bit?

Frankly, I – we are not at the moment. We think while we are obviously doing all the things you might imagine and we have already spoken in the past at length about the reductions in headcount and other measures we have taken. We think ultimately reaching our target levels of SG&A will take growth, both growth in the number of deliveries and growth in absorption per community per month. The latter a little bit more difficult for us to control. The former is more within our abilities and we are working to do that. So I suspect that that will be more of our path to SG&A reductions and reducing our footprint. We need the growth to happen and reducing our footprint only makes it more difficult to do that. I will add that in certain geographies where we have small current activity, like in Southeast Florida or in Orlando, I mean, we are – our division is down to a literally about three or four people in the office. So we can manage that particular geography with fairly small local staff and doing more on a regional or a corporate-wide level.

Okay. And then I was wondering if you could also elaborate on your 25% IRR target. What does that mean in terms of like sales pace? What are kind of the ranges that sales pace and gross margins that makes up the 25%?

We assume current sales pace and current home prices and we are calculating that unlevered IRR out the next couple of years. I mean, if it's really a long-lived community, we still assume today's sales price, but we might very modestly pick up pace in year three and beyond. But we are not doing too many communities that are that large to even have that phenomenon come in. Our margins are different in different geographies, but average close to the normalized margins that we are talking about migrating back toward, which is 20% to 21%.

Just to put perspective, sales pace at typical communities probably ranges between one and three-quarters a month and three per month. It just depends on the geography, the product type, the price range, et cetera. But that's the general range of absorption pace.

And it's based on what competitors are selling in nearby similar communities or what we are selling in nearby similar communities, combination thereof. But it's based on what the market is doing today in terms of pace and what sales prices are net of all incentives, concessions today. So no improvement is assumed.

(Operator Instructions). Your next question comes from the line of Carl Reichardt with Wells Fargo Securities. Please proceed.

Hey, guys. Just on the impairments, Larry, I'm curious, what was the total number of lots in the five communities that were responsible for 75% of the impairment?

We don't have it right here, but we can call you back with it.

Okay.

If you are curious.

I am. And then on the – the remainder of the impairments, the $12 million to $13 million, do you know how many communities were impaired in that $12 million to $13 million leftover?

Hold on just a second. We will get back to you with that too. No one – we will get back to you on both questions. We just don't have it in our fingertips.

Your next question comes from the line of Susan Berliner with J.P. Morgan. Please proceed.

Thank you. Larry, I guess a question for you. With regards to land spending, is there any set amount of minimum cash from unrestricted cash that would make you kind of pause and reduce the kind of $70 million clip of land purchases you have been doing?

Well, I mean, what we do is we have one eye very focused on what our current cash balance is and another eye very focused on what our debt maturities are. So to the extent I was investing cash today that was going to be returned to me before I have any debt maturities and not only that cash is going to be returned, but I'm going to get an annual 30% return on that capital, I'm comfortable making that investment. But where we – we want to make sure that in light of all the cash that we are investing, that we have sufficient cash remaining at the time that debt is coming due to pay off the near-term debt maturities. So that's how we kind of look at it, there is no magic number that I'm going to disclose on this call. Obviously, more is better in terms of having a cushion. But that's how we look at it.

Great. And then my second question is, I guess if you were to look to raise additional capital, I know we have talked about the equity market. Can you just talk about the bank lending market? Has that kind of reopened at all?

Not really in my opinion. I mean, they might – you might find a regional bank or a small bank here or there that might do something on home construction only. But I don't think it's anything widespread that's happening and certainly not in mass quantities at this stage. I think at some point the banks may start to lend again. I think some of our peers maybe talking to the banks right now about redoing their lines. And other than I guess M/I Homes – M/I Schottenstein I think is the only one who has made any announcements to date. And I think they got theirs done, but it wasn't a large facility. So I think all the banks are still trying to work through their existing loan portfolio in residential real estate rather than make new loans today.

And with no further questions in queue, I would now like to turn the call over to Ara Hovnanian for closing remarks.

Well, thanks. I appreciate the questions, there were some good ones. We are all obviously as anxious as you are to see what September and October sales brings and we are hopeful that we will continue to see some positive momentum in our sales trends. With that, we look forward to giving you an update in another quarter. Thank you.

This concludes our conference call for today. Thank you all for participating and have a nice day. All parties may now disconnect.