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It depends on the job. For processors and execs, it could be a big change. For LOs, probably not so much.
Noncompetes rarely target loan originators, though there are instances in which an LO signs a noncompete with compensation tied to it, Kevin Peranio, chief lending officer at PRMG, told HousingWire Mortgage Reporter Maria Volkova in this HW+ piece.
"Any company that pays big money upfront to induce an originator to come over, is going to make it up with less competitive pricing down the road," Peranio said. "Typically, lenders do employ this tactic to pay up for higher performers."
Audrey Boissonou, a loan officer with Guarantee Mortgage in California, said that LOs are usually careful to make sure there are no golden handcuffs before signing.
"It's not just what the company offers you but what is the experience when you're leaving … if they're going to not pay you out your loans or you're not supposed to take your database, that's not ok," she said.
Scott Crutcher, president of mortgage-focused executive recruitment firm Maverick Financial Group, noted that the noncompetes he sees typically target executive level managers. They generally prevent these employees from working in a similar role for a specified period of time, sometimes for up to two years.
What seems to be more prevalent in the mortgage industry are non-solicitation clauses, according to Jim Clapp, president at Certainty Home Loans. Clapp remarked that these clauses "state that an LO or employee cannot solicit employees from the departing company for a set period like six months or one year."
LOs – have you come across non-solicitation clauses? If so, what has your experience been? Let me know anonymously at jkleimann@housingwire.com.
James Kleimann
Managing Editor, HousingWire
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