Mergers and acquisitions are about to pick up as the housing market sees the beginning of its down cycle, according to Ted Krus, Flagstar Bank director of executive projects and 2017 HousingWire Rising Star.

The Rising Stars represent the best young leaders in the mortgage industry – in lending, servicing, investing and real estate. Know someone who would qualify for this? Nominate them here! Nominations for 2019 are open now and will close on February 22, 2019.

HousingWire’s Rising Stars program recognizes industry professionals under 40 who have become leaders in their respective fields. Those who are helping move the market forward, and making a strong impact on the housing economy.

The winners will be announced in HW Magazine’s June issue.

“Build a network of mentors across the industry,” Krus said to those just beginning their career. “Not only with senior-level people but across all different roles and experiences.”

“This has helped me tremendously in my career—having that network of trusted advisors I can rely on,” he said. “Also, if possible, take a role in capital or secondary markets. It’s really a crash course on the end-to-end mortgage cycle.”

HousingWire sat down with our previous Rising Star winner to get some insight on the housing industry today.

HousingWire: What role do you think M&A will play in the housing finance market in 2019?

Krus: M&A activity in the industry will be even busier this year. We’re still at the start of the down cycle, and there are just not enough borrowers in the market to compete for. I think you’ll also continue to see service provider M&A as lenders’ demand for digital and technology services is rapidly growing.   

HW: What should lenders/banks do in order to come out on top of the competition?

Krus: Lenders/banks should focus on the customer experience and operational efficiencies. These two go hand in hand. To compete, you have to differentiate the experience for borrowers whether that’s through digital or traditional channels. While digital capabilities are important to deliver the front-end customer experience, there has to be an integrated back-end operational component too. We are still a very inefficient industry and those lender/banks that improve the manufacturing of the loan and automating the process will come out on top.

HW: If a lender does decide to merge or acquire another, what's some advice you can give them as someone who has previously evaluated this process?

Krus: Obviously, the financials are important as well as the origination/channel mix and fit. But one of the most important aspects of evaluating acquisition opportunities is cultural fit. It’s often an overlooked component, but a very critical one. Take care of the due diligence up front on cultural alignment and make it a focus of the integration with consistent and clear communication across all parts of both organizations. In many cases this will help drive the financial performance of the deal more than expected.

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