Nairobi News


Housing Finance ordered to refund client Sh40m in ‘guesswork’ loan saga

A bank which sold a borrower’s property when the secured loan had been fully repaid has been ordered by the High Court to refund over Sh40 million plus interest to the loanee.

Besides returning the money, Housing Finance Company of Kenya Limited was directed by Justice Eric Ogola to pay the purchaser of the property costs of the case.

In directing compensation for Ms Scholastica Nyaguthii Muturi for the irregular sale of her property in Kiambu County, the judge said HFCK had turned her “ into a cash cow”.

The court agreed with her lawyer Titus Koceyo that the lender did not keep a proper account for its customer and relied on guesswork to calculate the amount due.

The land was sold at Sh16 million to Mr Evanson Kamau Waitiki through a private treaty when no notice of public auction had been given as required by law.


Mr Koceyo had asked the court to make a finding that the bank had irregularly sold the property of Ms Muturi when she completed repaying the loan.

The borrower was not informed how much she owed the bank as required under the banking laws and so “ HFCK relied on guesswork to calculate amount due.”

Justice Ogola declined to cancel the sale of  the land valued over Sh32 million.

He had been asked to revert it to Ms Muturi as urged by her lawyer Mr Koceyo.

In his 50 page judgement, Justice Ogola ruled that HFCK had violated Section 44 of the Banking Act which  “protects borrowers whose loans have become non-performing from excessive interests being charged by the banks.”

He noted that Ms Muturi borrowed Sh3 million and by the time her land was sold she had paid HFCK Sh18 million. She was initially required to pay Sh7,373,704 within a period of 15 years from January 1998.


“It is clear that HFCK had treated Ms Muturi as a cash cow, which it milked to the extent of even denying the calf milk.” Justice Ogola stated, adding, “It can never be justified in any society that one borrows Sh3m and pays Sh18 million.”

The court also said the bank failed to keep a proper record of the plaintiffs account and  “therefore it is true the loan amount alleged to be due by HFCK is as a result of guesswork.”