Are Non-Competes Back? What the FTC's Reversal Means for Mortgage Employers

The Federal Trade Commission (FTC) has officially backed away from its controversial rule banning nearly all non-compete agreements in the U.S. workforce. After months of litigation and widespread industry pushback, the FTC has withdrawn its appeals and accepted a court ruling that struck the rule down.

This move signals a major shift for employers looking to maintain enforceable non-competes and other restrictive covenants.

Why Does This Matter for Mortgage Lenders, Servicers, and Fintechs?

Express non-competes are not common in mortgage employment agreements.  However, related restrictive covenants protect pipelines, pricing models, customer relationships and more.

• The federal ban on non-competes is dead and the provisions can be used if they comply with applicable state law and are narrowly tailored to protect a legitimate business interest.

• The now-defunct FTC rule also threatened other common restrictions, including non-solicitation, non-disparagement, and confidentiality clauses – tools frequently used in the mortgage industry.

• The FTC’s enforcement pivot means that individual investigations may now replace sweeping rulemaking. Mortgage employers could still land in the agency’s crosshairs for what it views as abusive restrictive covenants.

Key Developments to Know

• Appeals Dropped: The FTC voluntarily dismissed appeals in the Fifth and Eleventh Circuits.

• Rule Vacated: The Texas district court’s decision declaring the rule unlawful now stands.

• Request for Public Comments: The FTC is accepting public input on non-compete use through November 3, 2025, signaling continued interest in the issue.

What Should You Do Now?

If you are a C-suite executive in the mortgage space, take this opportunity to review your talent retention strategies and contractual safeguards:

• Reevaluate Restrictive Covenants: Make sure your non-compete, non-solicit, and confidentiality clauses are enforceable under your state’s laws and not overly broad.

• Prepare for Scrutiny: The FTC may still investigate employers it believes are using restrictive clauses in unfair or anti-competitive ways, even without a sweeping rule in place.  And “the pendulum” could swing.

• Document Your Rationale: Maintain internal records explaining how each clause protects proprietary information, client relationships, or competitive standing.

• Stay Vigilant: State-level legislation, enforcement and litigation are also on the rise. Be proactive in tracking developments across your footprint.

Need More Information for Updating Your Employment Agreements?

Our firm works closely with mortgage banking clients developing employment agreements that comply with state and federal law while protecting the business. Whether you are onboarding new talent or revisiting legacy contracts, we can help.

For more information, contact troy@garrishorn.com.