The Federal Trade Commission has publicly warned Mortgage Connect, a mortgage services provider, about its use of noncompete agreements, calling for a review of restrictive covenants that could run afoul of federal antitrust law.
According to the FTC's notice, the company's noncompete clauses may unlawfully restrict worker mobility and stifle competition in the mortgage servicing sector. The agency did not specify which specific agreements or employee categories are under scrutiny.
Mortgage Connect now faces pressure to voluntarily discontinue or revise its noncompete provisions. The FTC's action follows a broader federal push against such contracts, which have been a focus of the Biden administration's antitrust enforcement.
The warning does not immediately impose penalties but signals potential legal escalation if the company fails to comply. Mortgage Connect has not publicly responded to the notice as of publication.
Industry observers note that the FTC's stance could set a precedent for similar enforcement against other mortgage and real estate firms using noncompetes, though the agency's authority to ban them outright faces ongoing legal challenges.