Heights Finance, formerly known as Southern Management Corporation, is a subprime lender that offers small-dollar loans to borrowers with poor credit. The company has been accused of engaging in illegal loan-churning practices, wherein it aggressively pushes borrowers to refinance their loans multiple times, resulting in substantial costs and fees.

The CFPB Lawsuit

In August 2023, the Consumer Financial Protection Bureau (CFPB) filed a lawsuit against Heights Finance, alleging that the company had violated the Consumer Financial Protection Act. The CFPB alleged that Heights Finance targets struggling borrowers and pushes them into refinancing their loans multiple times, resulting in a cycle of debt that is difficult for borrowers to escape.

The CFPB also alleged that Heights Finance uses deceptive and misleading tactics to convince borrowers to refinance, and that it fails to adequately disclose the risks and costs of refinancing. The agency is seeking injunctive relief, restitution for borrowers, and civil money penalties.

The Impact on Borrowers

The CFPB’s lawsuit alleges that Heights Finance’s loan-churning practices have had a devastating impact on borrowers. The agency claims that borrowers have lost hundreds of millions of dollars in loan costs and fees, and that many have been forced into bankruptcy.

What Borrowers Can Do

If you have borrowed a loan from Heights Finance, you may be eligible for relief. You can contact the CFPB to learn more about your rights and options. You can also contact a consumer protection attorney to discuss your legal remedies.

Conclusion

The CFPB’s lawsuit against Heights Finance is a significant development in the fight against predatory lending practices. If the agency is successful, it could send a strong message to other lenders who are engaged in similar practices.

Frequently Asked Questions

Q: What is loan churning?

A: Loan churning is a practice in which a lender aggressively pushes borrowers to refinance their loans multiple times, resulting in substantial costs and fees. This can trap borrowers in a cycle of debt that is difficult to escape.

Q: What are the signs of loan churning?

A: Some of the signs of loan churning include:

  • Being repeatedly contacted by the lender about refinancing your loan
  • Being offered refinancing deals that have higher interest rates or fees than your current loan
  • Being pressured to refinance even if you are struggling to make payments on your current loan

Q: What should I do if I am being churned by a lender?

A: If you are being churned by a lender, you should contact the CFPB to learn more about your rights and options. You can also contact a consumer protection attorney to discuss your legal remedies.

Q: What is the outcome of the CFPB’s lawsuit against Heights Finance?

A: The CFPB’s lawsuit against Heights Finance is still ongoing. The agency is seeking injunctive relief, restitution for borrowers, and civil money penalties.

Q: What can I do to protect myself from loan churning?

A: To protect yourself from loan churning, you should be aware of the signs and symptoms of this practice. You should also be careful about refinancing your loan, and you should only refinance if it is in your best interests.

Q: How can I contact the CFPB?

A: You can contact the CFPB at 1-855-411-CFPB (2372) or online at https://www.consumerfinance.gov/.

References

  • Consumer Financial Protection Bureau: Heights Finance Holding Co. f/k/a Southern Management Corporation, et al.: https://www.consumerfinance.gov/enforcement/actions/
  • PYMNTS: CFPB Targets Heights Finance for Alleged Illegal Loan Churning: https://www.pymnts.com/
  • Yahoo Finance: Loan Lender Sued for ‘Trapping’ Borrowers: https://finance.yahoo.com/
  • Better Business Bureau: Heights Finance: https://www.bbb.org/us/sc/greenville/profile/consumer-finance-companies/heights-finance-0673-12002497/complaints

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