Katja Heinemann

KB Home recently named Barbara Alexander the 10th member of its board of directors. Alexander, who has been an independent consultant for the past six years, has been observing the housing and home-improvement sectors for more than three decades in her capacities as a securities analyst, investment banker, managing director, or advisor with such firms as Warburg Dillon Read, Salomon Brothers, UBS, Smith Barney, and Wachovia. She has sat on the corporate boards of several other corporations, including such housing-related organizations as Centex, Habitat for Humanity, HomeAid America, CRH plc, and Freddie Mac. Since 2000, Alexander has served as an Executive Fellow with the Joint Center for Housing Studies, which she says “is one of the most important things I do.”

Q: How can another housing market meltdown be prevented?

A: If solid mortgage underwriting had remained the order of the day, the excesses would have been far more muted and the sector would already have begun to bounce back. Regulations set to flow from Dodd-Frank and related legislation appear likely to curtail “loose” mortgage lending for many years. In fact, my concern is that new regulations will err on the side of excessive restriction.

Q: What did the exposure of shoddy foreclosure practices tell you?

A: Poorly devised mortgage assistance programs did little more than “kick the can down the road.” Allowing the free market to deal with delinquent loans on a timely basis beginning several years ago would have resulted in more “normal” housing and mortgage markets today. Instead, many consumers are reluctant to buy a house, and that reluctance is likely to be exacerbated as tales of title insurance claims on homes purchased in foreclosure put housing back in the headlines.

Q: What’s the fate of the government-sponsored enterprises?

A: My hope is the dialogue will begin with the question of what America’s legislative housing objectives should be. But given their critical role in helping sort through the current mortgage quagmire, it seems improbable that the GSEs will vanish in the next couple of years.

Learn more about markets featured in this article: Los Angeles, CA.