On July 9, President Joe Biden ordered the Federal Trade Commission to fully ban or limit an employer’s use of noncompetes. If such a rule is implemented, industry veterans and labor attorneys say it could change how the mortgage industry recruits and retains talent over the next decade and beyond.
Should the Biden administration make good on its threat, some loan officers, account executives and marketing personnel bound by such agreements would be able to switch jobs without fear of potential litigation from their employer.
The general gist is that the impact of a rule banning noncompetes would be marginal, mainly felt by non-originators, who are more likely to be bound by a noncompete agreement, attorneys and lending executives said.
Noncompetes rarely target loan originators, though there are instances in which an LO signs a noncompete with compensation tied to it, said Kevin Peranio, chief lending officer at PRMG.