In our Hot Topic this week, we have Christopher Brown, Software Solutions Architect @ Fiserv and share some of his thoughts on the financial institutions when you look at where the market’s heading and the bigger role that the financial institutions are going to be playing, especially HELOCs from the perspective of Fiserv.
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“Trends Impacting How Lenders Are Connecting With Partners” With Christopher Brown
It’s so good to have you with us on April 25th, 2022, Monday. It’s my brother’s birthday. Happy birthday to my brother, Dan Lykken. This show is created by mortgage professionals. It is for mortgage professionals, and we’re grateful to have you as our readers. Our commitment to you each week is to bring you timely information that you can read anytime and anywhere. No better example. We got Josh O’Leary out in Olympia, Washington area, Pacific Northwest dialing in. He dials in every single week to get an update. I’m going to give Josh O’Leary a big shout-out.
If you’re reading, please let me know. I love giving our readers a shout-out. Anyway, during the Hot Topic segment, we’ve got Christopher Brown, Software Solutions Architect at Fiserv. He’s sharing some of his thoughts on the financial institutions, where they’re at, where the markets are heading in the bigger picture, as well as what is the role of financial institutions. I’ve been in this industry for 48 years. By the time you start seeing the financial institutions start coming in, it defines the end of a cycle. The IMBs are the first in the cycle, then there are the financial institutions. They come in towards the end of the cycle, and it is what we’re going to talk about.
We have Fiserv this week. We had Finastra, one of our sponsors of the show. We’re getting some perspective on financial institutions for you IMBs, and pay attention to this. They do have clear strategies and spend a lot of money looking at what’s going on so you’ll benefit as well. Read as Christopher Brown talks about what’s going on at Fiserv, one of the true leaders in the mortgage market when it comes to automation, technology, and FinTech. Allen Pollack even dialed in. I’m glad he used to be at Fiserv as well. We’re going to have a great conversation in the Hot Topic segment, so stay tuned through to the end.
Also, I want to say shout-out to the Industry Syndicate. Check out all the shows on IndustrySyndicate.com. They do a great job. Also, I want to say thank you to our sponsors, The Mortgage Bankers Association of America. Be sure to sign up for the Mortgage Action Alliance app, which is MAA. You can get that in your Google Play Store or the Apple Store. Go pick up that, get signed up, and have your word heard on the hill. Allen is going to talk more about the Tech Show and what he learned at the Tech Show. We heard interesting feedback coming out of that. Also, Finastra is a sponsor. We’re thrilled to have them as a sponsor.
They maximize convenience with post-closing functions, including funding, collateral, tracking, shipping, ensuring, guaranteeing, and as the interim servicing and account. There’s much that they do. We had Troy Anderson of Finastra talking about this. Again, we’re going to continue that conversation with Christopher Brown this week with Fiserv. Also, a special thank you goes out to Lenders One and The Mortgage Collaborative. These two co-ops and do a great job of helping lenders and vendors get together in a smaller, more intimate setting where we talk about what’s going on in the trends of the industry.
I encourage you to be a member of both of them. Select at least one of them but that should not negate your membership with The MBA, which is numero uno always. Also, Total Expert is the leading FinTech software company that delivers purpose-built CRM technology and creates customer engagement for modern financial institutions.
I got to tell you, go back and read the interview we had with Joe Welu on March 14th, 2022. They got a great cohesive platform that brings and gather experience. If you’re looking to do some recruiting, this software also has some nice features. We’re connecting with loan officers and you identify them through either Modex or Mobility MMI.
Both of these companies are our sponsors. We appreciate both of them. I use both of them to help our clients with recruiting. Check out both these companies and then if you’re looking for training, check out Knowledge Coop. Ken Perry and the group there does a great job. They released a new platform on April 1st and they’re doing a great job with that platform. We’re broadcasting on that platform as well. Snapdocs have a great eval solution and it’ll make it simple to get started with eNotes. If you’re not in the eNote program, you can do and transact across multiple partners. A lot of people say everyone has APIs, but it’s difficult to use.
You talk to the folks at Snapdocs. They’ll make it really clear on that. Briana Ings, we had her on March 28th, 2022. Check that out as well as SuccessKit. Julian Lumpkin is doing one of the most amazing jobs at helping you tell your story. It’s an effective way to reach your audience, not through your own words.
It’s much more effective to use the words of your clients, and that’s what we do. We get a lot of client testimonials. As a result of that, we get a lot of traction with this. Check out SuccessKit.io. You can use that as a loan officer, a mortgage company, or tech company. It’s across the board. Also, Lender Toolkit. Brett Brumley, we had him as a guest on March 14th, 2022 and my good friends there, Brent Embler and Brett Brumley, great guys with great technology. FormFree does a great job. Brent Chandler was on with us recently in February, as well as SimpleNexus. We have Lori Brewer on March 21st, 2022. We also encourage you to check out the interview we had with Debbie Wemyss that we did on the show. We’ll help you with your LinkedIn profile.
That’s a lot of sponsors, and we’re grateful for all of them. There are even more sponsors on our web page. Go to LykkenOnLending.com. Check out all of our sponsors, especially a thank you goes out to Alice, Allen, Matt, Jack, Rob, and Les for their contributions each week. Welcome to the Lykken on Lending Hot Topic Segment. Again, it is April 25th, 2022. We’re excited to have Christopher Brown joining us, who is a Software Solutions Architect. What solutions they’re bringing in? He’s with Fiserv, and he’ll be talking and sharing some of his thoughts on the financial institutions, where they are at, what they’re looking at in the markets, and where the markets are heading.
The bigger role of financial institutions is going to be playing, especially when it comes to HELOCs, at least from the perspective of Fiserv. I always love getting insights into market leaders. Christopher, it is good to have you here. I enjoyed meeting you when you came by our reception hall in San Diego at the Annual Conference. When I met you, I go, “You’re going to be one of those great guests because of the energy and the wisdom you bring.” Welcome to the show.
I’m excited to be here. It’s hard to believe that it’s been six months since you and I hung out together at MBA Annual. I’m glad we finally are able to get together. I feel like so much have been changed in the market since our time sitting together. I’m excited we get to talk.
We got to give Amy Hansen a big shout-out with Seroka & Associates. I’ve been friends with Pat Seroka for many years. You’re here as a result of Amy’s tenacity. Let’s get started. There are many things. First of all, for those that do not know you, Christopher, this is your first time being on the show. Tell us about yourself and your background.
I come in with knowledge and have been in the industry. It’s hard to believe that for twenty years, I’ve been in the mortgage space. I started in 2002 as a loan officer and did that for many years before finally joining a mortgage banker here in Reno, Nevada. There, I got exposed to the opportunity to move out of being a loan officer, but being in to help find products. We talked about first-time home buyers and people that are in unique situations. Nevada is a unique territory. In fact, we’ve got a lot of manufactured housing here.
I’ve become an expert in those and then had an opportunity to move into helping with secondary and operations, which gave me a broad experience of understanding what was going on. We had some foresight in 2007 that the market was changing. That organization was exiting the retail space, so I ended up joining the mortgage technology space in 2007.
For the last fifteen years, I’ve been part of a product called PC Lenders, which was formally known as and now is referred to as Mortgage Director. It’s a Fiserv product, and I’ve got everything from product support, implementation, training, and level 2 and 3 tech support. I went back to school to get my degree in Development and going down that avenue of taking over development as a part of our organization and then moving into being the Architect for Mortgage Director.
I have a broad background, which allows me to sit down or talk that plumber-to-plumber conversation, where the market and technology are going, and how we bridge that gap to work on meaningful things at the end of the day. How do we get a loan closed? How do we retain that borrower? How do we move the platform forward as an organization and enjoy all the things to learn along the way?
You do a great job articulating well. I’m excited to get in and get new insights from this interview. Let’s start with in terms of the broader lending ecosystem and the need for lenders to make meaningful connections with partners in the mortgage lending process. What are you seeing as key trends that lenders are paying attention to?
I haven’t seen us talk about interest rates. For us, our conversation is more on the technology side. It’s a lot about the vendors that are in this space, 2007 or 2008. There are not nearly as many vendors in this space. By vendors, everything that you ever could imagine about tracking that borrower. We talked about CRM, credit, flood, AUS, and servicing. All of those have a part of it. Now, there are many vendors in that space. It does drive what our core goal is, which is bringing in a meaningful workflow.
This is the opportunity to look at the changes that have happened. How do we start to bring in that workflow? How do we start to work on discrepancy based? We see a discrepancy in the AUS, the AVM, in flood, or credit. We’re creating those workflows based on that and then starting to streamline the rest.
Allen talked about a broker that person’s 100% telling, “I got to work with technology because that’s where the industry is pushing me.” It’s more about letting him do what’s the secret sauce in that exception base, but giving him the tools and the resources to have a meaningful workflow along that process. Of course, the process always is my favorite topic, which is compliance. I always have that compliance there, and you need new tech to do it.
Christopher, we’re seeing and hearing more about open banking. What does this mean for our readers?
When you’re thinking about open banking, by default, if you’re a bank or a credit union, you’re thinking about that as account open and credit card. Maybe in the auto financing space, where it was an opportunity then to start creating this seamless API integration and be able to do a check and balances between those groups. As we now start to move into more of the broader mortgage space being adopted into that open banking, it is connecting those APIs, creating the aspect of flood and AVM.
You started to build out that hub and spoke model so that you’re able to keep the data that’s necessary for each one of those in one central spot and integrate these different integrations. Again, back to that workflow model makes it broader open architecture. At the same time, keeping that privacy as being the one key where you’re only providing the data that’s necessary. That’s the open banking model.
Christopher, I have not seen you in a while. It’s good to hear your voice. You sound the same.
Allen, it’s been a long time. The last time I saw you was we were on a cold day in Brookfield, Wisconsin together at Fiserv.
I have to say, David, Chris is one of those guys that knows how it works. There are a lot of folks that are in engineering and development. They can do the work, but then you got to understand the industry and the 360-degree. Christopher is one of those guys. He was a pleasure to work with. I’m not surprised, Chris, that you’re still doing that. My question is about open banking, which has become more of a topic nowadays. A lot of companies are innovating in that area. There’s a difference between what Fiserv does and what Mortgage Director compared to outside the rest of the industry. I’m curious. Open banking seems to be much tied to the public cloud. Are they the same, and how are they related? What is the difference there?
The public cloud definitely can be a scary word if you’re looking at it from the words public and cloud. What we’re looking at in terms of Fiserv and at the broader ecosystem, the government currently relies on certain public cloud providers to provide space for them. They’ve gone to that area because they have expertise in security, both the physical structure itself, but also the infrastructure, the encryption, being able to bring the best needs to the table and cybersecurity. It does help them get away from having that. They can start to rely on the technology of those public clouds to bring in those. They’re very heavily regulated.The public cloud definitely can be a scary word if you're looking at it from just the words “public” and “cloud.” Click To Tweet
At the same point, it allows them to broaden and focus on their business. For us, I feel like in banking, credit union, and mortgage banker space, they want to be able to feel comfortable that infrastructure has been taken care of. We can now move on to our processes of the vendors and integrations that we need to have to make our organization HUM, be competitive in the market, and get that secret sauce. At the same point, driving down the cost. Obviously, the expense that comes along with having that expertise is offset by knowing that these people, this is their specialty, and my specialty is mortgage banking.
Christopher, when we think about open banking and the public cloud, can you talk about how this is going to present advantages to the mortgage banking process?
I could probably talk about this topic in many shows. It’s about the different things that we can get for the advantage. If you think about what folks are driving every day, it’s how do I automate that workflow? How do I improve my service levels? How do I do automation for verifications? How do I know that borrower is truly who they are and find all the different characteristics? Can I get into removing the human error? There was a conversation back with Brian Montgomery. One aspect of his conversation is regarding removing potential clerical errors that were in the market, and that’s something that we had seen in 2008.
How do we remove different aspects of those different items that are going to bring scratch and dent to the loan itself? Also, how do we remain competitive? If you have to stay competitive in today’s market, you need to have the different offerings that are in there. It comes down to the benefit to the borrower by helping streamlined that process.
The pandemic did have one positive effect. You told me in 2019 that you were going to get somebody to use their phone to pull up a menu at Applebee’s and make a decision. I would’ve been like, “You’re going to have a large gap of who’s going to do that.” We’ve now completely solved that by retraining those people and what their mindset is acceptable and not acceptable. The advantages of open banking, the public cloud, and getting people to embrace this technology, the mind is starting to move. This is a good time to start adopting those new processes.
When you talk about what we anticipated, the rate of adoption, and where we’re at, the leaps we have made are significant. Let’s get over to you, Alice.
My 86-year-old mother is using QR codes and Tanner Bill from her smartphone. The world has dramatically changed in a short period of time. That’s a big impact. As we all know, going digital is a journey. What impact is this having on the lender’s journey to going digital? How are they doing in this area in general?
That’s true. Convincing someone that’s 86 to pay their bills online is difficult. If you look back, now all the tools that are in this space and that have joined this space, and let’s say the last eight years being around. We still feel like it’s partially cobbled together because everybody is coming at the secret sauce. We’ve talked about this before certain people do things well. They offer a lot of things and find the secret sauce of each one of those being the case. At the end of the day, the person who we got to remember is seeing the seamlessly in their mind, and that is the consumer.
Are they seeing that straight across by the different tools that we have out there and all the ones that people are licensed to utilize? Part of that is it breaks over at Freddie Mac. I remember sitting at one of their conferences and he was discussing the ability to run multiple AUSs against Fannie versus Freddie. In that concept, it was so foreign because 5 or 6 years ago, you didn’t do that. It was one or the other. You were a Fannie or Freddie’s shop. You ran it and looked at it. Now, the thought of running both looking and saying, “I got an appraisal waiver here. I don’t have that with this one, but I’ve got an income and assets.” There may be certain criteria. Start to help educate that consumer about what is the best deal.
The same thing goes with mortgage insurance. What is the best deal out there to keep that client happy and find the right product for them? Again, as we put together the best digital experience, we’ve seen the pandemic has changed a lot of consumers’ minds about what’s acceptable in the use of technology. Our industry has the opportunity to continue to keep driving that message of, “Technology is here to make sure that you, as a consumer, are making the best choice, and here’s all the work that we’ve done to educate you and to bring you up to knowledge about this difficult topic of you’re going to finance a home.”The best digital experience we've seen during the pandemic has changed many consumers' minds about what's acceptable for using technology. Click To Tweet
You’re dealing with the whole, “what can I afford now” versus “what I could afford a few months or a few weeks ago.” It dramatically shifted. We’re seeing some big changes this year. Interest rates are one of them. The business product mix is another. What are you hearing about what will impact our mortgage lenders reading this blog?
Typically, people have always focused on one portion of their costs, and that is streamlining what they’re doing in operations and reducing the cost at the same time. If we look at the cost to originate alone, a lot of that focus was on the LO and the compensation that’s in there. That’s been changing in the last few years as people are reducing costs, both from operations and also from the LO perspective. Things are changing. People are starting to look at other avenues. Are they looking at other channels? As we’ve seen interest rates start to change instead of doing a refinance for someone, maybe we’re moving into the home equity line of credit space, finding new lead procurements and new levels of loans.
Are they doing correspondent business or wholesale business? Are they doing some type of lead generation as a joint venture? I’m starting to feel like we’re seeing a lot of our clients in this space starting to move to other avenues. That’s to help support the technology side and also help the customer-for-life philosophy, which is where people are now going in the CRM space. I fought hard to get that person in the door.
I paid good money to get that loan originated. What do I do now to utilize technology to use each one of the pieces of that have and spoke model to continue to hold onto that client for life? How do I get engaged with them and know my client for life? Tech is here to help drive that message and drive that into people’s businesses that are willing to look at the overall ecosystem of that lead and the cost.
Any sense of what you’re seeing as far as the cost for the leads? What are you hearing? Do you have a unique perspective on that from what we’re hearing?
The MBA is the one that’s got the most finger on what the cost to originate is. As you start looking at a mortgage banker versus a credit union versus a bank, each one is going to have a different cost. If you look at something that’s in the credit union space, a market that does need the mortgage banker’s help with their balance sheet problem that they typically have, especially if they don’t have a mortgage division. That is an area that they don’t realize this isn’t one avenue that I can go into.
They’re usually very conservative in their nature. That helps with a lot of the products that we see. It’s very different than what we saw in 2008 of the Pick-a-Pay Programs or the no-income, no-asset products that we saw back in the day. That is good to start taking technology to them and showing this is an opportunity to help you with that balance sheet.
I want to get back to Alice.
Can you tell us how this might help lenders to meet the expectations of the regulators in this area where we’ve got much focus on diversity and affordable housing? Is there anything in this technology that you’re seeing that can help lenders in that space?
As you think back to 2008, give that Pick-a-Pay world, and you fast forward to 2010, Frank comes into play. We see the change in the adoption of the LE and the CD to our market space. We get rid of the TOW and the GFE. The HUD, there are no longer fees. It’s randomly showing up at the end of the table person trying to sign. Also, the fee is not different and things are much different than it was, as we discussed at the beginning of the application. All that stuff has gone away, and if you go back and look at the stuff that Brian Montgomery talked about at the beginning of the month on April 11th on his show, it is about what the regulator is looking at.
We look at fair lending as an example. That process before was always post-close. What was the fair lending activity? The expectation is more on what it is now. What is it in there? Setting up some guardrails to make sure that the lender is aware that the transaction is going through the pipeline or is entering the pipeline so that they understand what their fair lending risk is. Are they doing things within the tolerance that they’re supposed to? Now, the expectation is much different than it was fifteen years ago. You need to utilize technology to stay positive aspect. The best part about technology is inclusion. Technology doesn’t know anything about that borrower.
It can’t judge that borrower by anything more than what you feed into it. If its credit history tells us about its income, assets, and longevity, we can help show that borrower to the AUS and the fair light that it possibly can. There is no inclusion. We don’t care where the person looks, and it brings that fair access to credit across the board if you’re utilizing technology, removing that human aspect of decision-making, you’re doing it based on the credit qualifications that borrower has, the property that they’re in, and the circumstance that borrower can portray him.
I’ve got a question coming in from one of our readers. Would you agree with the statement that banks have a tendency to be laggards and are now coming in a bigger way, or have you seen bankers always involved? I got a suspicion this is coming from a banker. Your thoughts.
It’s mixed. It depends on what’s the core focus of that business. If you look at it and go into a mortgage banker shop, there are usually two typical groups you’re going to end up seeing and figure out which one is running that shop. Are they LO-driven shops? Are they an operations-driven shop? You have the same thing in a bank and credit union. Do you need to understand where their lending practices have been historically?
What is their risk for tolerance in terms of risk? At that point, the answer to that question is, is someone willing to jump in? It depends on what their experience is. You start seeing housing prices go up and the cost of materials. Brian Montgomery hit strong about California. Fifty percent of their cost is driven based off of regulation of things they need to do to build a home. It’s hard depending on the space that comes where you’re geographically in the US because that also drives some of the factors.
I got one last question then I’ll have one wrap-up question for you. An independent mortgage banker says, “I’m a nervous independent mortgage banker. I don’t need any more competitions. How seriously do we need to take banks? They have a decided advantage because their cost of funds is much lower than us IMBs.” What do you think? Does this create an opportunity for them to drive more of us IMBs out of business or take market share from us?
When you start looking at the overall cost, there are people who will always shop based on rate. That’s inevitable. When I go back twenty years of my history being a loan officer, people were always well. The guy down the street is a quarter better than me or half better than me. You start looking at what that person is. We go back to looking at the CRM. In technology, one area that’s much different is being able to cultivate that lead. Very early on, a lot of people come in saying, “I’m tired of paying rent. I’m a first-time home buyer. I feel like I’ve been pushed out of the market because the news media has told me that I can’t afford it anymore.” You sit down with them and start to create that relationship.
They’re not going to look at the bank down the street. If you have created that experience with them, help them find out what they’re buying is going to be and then put them in front of the right real estate agent to say, “We work together. This is the price point.” They’re not going to wander off to the bank down the street because you’ve taken that experience with them. That’s much different than what they’re going to find down at the bank. There potentially could be an experience where it’s like, “This is what the rates are. We’re not here to work with you. These are the guidelines that we’re trying to meet.” That’s where you have that competitive advantage as a mortgage banker.
Allen, you are spot on. He knows the business intricately well. Fiserv got a great asset in you, Christopher. Allen, go ahead.
Christopher and I had a lot of great conversations and worked on some fun projects. When I saw that he was going to be on, I was very excited. Great insights, Christopher. It’s great to hear your voice again.
Let’s get over to Alice.
I was thinking through what is next on the roadmap. We’ve talked a lot about the lenders. From the technology standpoint, is there anything you can reveal for us that’s going to be added to your roadmap?
A lot of it comes into our roadmap and is always based on client feedback. Some of it is trying to get clients to agree. We have a finite number of hours that we can allocate to work. What is the area that’s going to drive? Right now, a lot of the stuff is in things like construction to perm. There was one area that we are focusing a lot of energy and effort on streamlining that process again.
It’s an area that is under deserved in a lot of markets where you can purchase a piece of land and then find that loan product that goes along with building at home, educating and bringing in some other partners from the technology perspective to help with that. It is trying to help clients, not just with their day-to-day needs, but also ensuring help that they get that ecosystem together to create the customer for life.
It’s the customer-for-life concept. Jack, I thought you wrapped this up.
As I was thinking about one of the audience’s questions and they were talking about big banks having the advantage from a cost of funds standpoint, I began to think that years ago, big banks had the advantage from a technology standpoint because they could develop a lot of this technology in-house and they had a distinct technology advantage. Christopher, my question to you is, with the plethora of vendors and the rapid growth in technology that’s affordable to independent mortgage bankers now, do you see the gap between big bank in-house tech development? What’s available at a reasonable cost for independent mortgage bankers? Do you see that narrowing the gap?
I do see that gap narrowing because, at the end of the day, there is one advantage. Let’s say a mortgage banker and a credit union bank. A bank is going to be something that’s highly regulated and, potentially, could also have a lot of guardrails that they’ve placed internally to stay in the market segment. That goes with their technology as well. When they start to do an analysis of what their technology is, they may go through a lot more in-depth decisions for both the ability to identify what technology partners they want to bring to the table, also making that final decision, implementing it and getting folks on board to do that.
If you look at an independent mortgage banker, that person can make more nimble decisions about their technology. They can go out and kick the can with a lot of different technology partners to come up with that secret sauce. The market shares got a lot of first-time home buyers that are in it. It is starting to educate that person, getting them in there and having the right piece of technology. Independent mortgage bankers have a high advantage in being able to utilize their skillset of focusing. They know what our business is and where the direction we need to be heading as an entire industry as a whole. Being nimble, looking at the technology partners and helping identify the right one for them, their area and expertise will help them stay relevant in the market.
Good interview. I’m getting a lot of feedback on. This guy is sharp. One guy said, “I like what he comments and how he comments. He’s well thought out.” Thank you much, Christopher, for being on here. Amy Hansen, thank you much for making the introduction. I appreciate you all very much. We’re thrilled to have had you as a guest. What is the best way for people to get ahold of you?
The best way is through Fiserv. My email address is [email protected].
Great job, Christopher. Thanks much for being here and sharing your insights on where this market’s going, especially from the unique perspective of financial institutions. We appreciate that. We got a lot of financial institutions that are tuning in to us. Also, I want to give a shout-out to Josh O’Leary, who dials in every week. It’s so much fun to have him here as well as many of you other readers. Next week, we have Kristin Messerli coming on of Experience.com. If you understand Experience.com, they measure the success you experience you have with your customer. It’s a great product and program.
The reason we’re having Kristin on is she’s dear. We belong to a mastermind group together, along with a number of others. Kristin always has great content. What Kristin will be talking about is she’ll be announcing who won and who is doing the best job. If you hear the criteria that Kristin will be relaying out, it’s going to challenge you.
Come back and be sure to join us and read about the Hot Topic segment. We have Kristin Messerli of Experience.com. I want to say a special thank you to our sponsors: Finastra, Lenders One Mobility MMI, Modex, The MBA, Knowledge Coop, the Mortgage Collaborative, Snapdocs, SuccessKit, Lender Toolkit, Total Expert, FormFree, TMC, and SimpleNexus. It’s good to have you all with us, everybody. Have a great week. I look forward to having you back here next episode.
- Allen Pollack – LinkedIn
- The Mortgage Bankers Association of America
- Troy Anderson – Previous Episode
- Lenders One
- The Mortgage Collaborative
- Total Expert
- Joe Welu – Previous Episode
- Mobility MMI
- Knowledge Coop
- Briana Ings – Previous Episode
- Lender Toolkit
- Brett Brumley – Previous Episode
- Brent Chandler – Previous Episode
- Lori Brewer – Previous Episode
- Debbie Wemyss – Previous Episode
- Seroka & Associates
- [email protected]