HF loses appeal challenging Sh52 million interest fee refund

Housing Finance Group
Housing Finance Group offices in Nairobi. FILE PHOTO | NMG 

Mortgage lender Housing Finance Group #ticker:HFC will now pay a woman Sh52.7 million compensation after selling her house upon levying irregular charges and penalties on a loan she took 22 years ago.

HF had appealed against a judgment of the High Court, which faulted the bank for failing to keep proper records of Scholastica Nyaguthii Muturi’s loan account.

A bench of three appellate judges agreed with the High Court decision and dismissed the lender’s appeal stating that it acted contrary to the law.

The judges noted that by the time the house in Muthithi Gardens in Kiambu was sold in 2011, the bank had recovered Sh18 million from the original amount of Sh3 million borrowed.

“The appellant (HF) was not entitled to do that. Once the loan became non-performing, if indeed, it did, the appellant should have followed and complied with the provisions of the Banking Act,” Justices Asike Makhandia, Patrick Kiage and Sankale ole Kantai ruled.


“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. It can never be justified in any society that one borrows Sh3m and pays Sh18 million.”

High Court Judge Eric Ogola had ordered HF to refund Ms Muturi the Sh16 million it made from sale of her land with 26 percent interest.

Evidence in court showed that Ms Muturi borrowed Sh3 million in 1998 and charged her two properties.

She told the court that by the time of default in 2010 she had paid Sh8.4 million, but the mortgage lender was demanding an additional Sh7.3 million.