Courts Order Banks to Detail Mortgage Loan Math Amid Rising Disputes

Kenyan courts are requiring banks to explain how they calculate disputed mortgage and loan balances. Judges are ordering reconstructions of accounts, independent audits and formal taking of accounts when genuine disputes arise over interest, penalties, fees and payments.

The pattern appears in at least ten cases involving Housing Finance, CFC Stanbic, African Banking Corporation, Consolidated Bank, National Bank, Kenya Commercial Bank and others. Courts demand detailed, verifiable evidence from both lenders and borrowers.

In November 2025 the High Court ordered Housing Finance to reconstruct two mortgage accounts belonging to Wilson Kirungie and Josephine Wanjiru. The bank had advanced Sh12 million and Sh9.1 million in 2010 and 2011.

Borrowers challenged interest variations, payment allocation and account accuracy after the lender issued notices claiming rising arrears. The court found that raising arrears interest to 26 percent without notice was unlawful and invalidated balances computed using that rate.

It stopped threatened sales pending accounting, ordered refund of recovery, legal, auctioneer and valuation fees, and directed interest to be calculated on daily cleared balances using a 365-day year with monthly rests. An independent auditor would be appointed if disagreements remained.

In the estate of Benson Ndindi against HFCB Kenya, the court ordered a fresh independent audit of a 1991 Runda mortgage. The High Court later overturned an Sh8.4 million refund award after finding the Interest Rates Advisory Centre report flawed, but upheld findings that the bank breached the agreement by raising interest without the required notice and levying unauthorised penalties.

At CFC Stanbic, borrowers with a Sh10.5 million facility challenged unilateral interest changes. The High Court fixed the rate at 13 percent from drawdown to September 2008 and 15.25 percent thereafter, then ordered a taking of accounts to determine any overpayment.

The court ruled that newspaper advertisements are not an acceptable method of notifying individual customers of rate changes unless the contract explicitly allows it. Lenders enter individual contracts and therefore carry individual obligations, it said.

In a case involving Kenya Commercial Bank and John Gatu, the High Court found the bank unlawfully increased interest above the agreed 18 percent without the approval then required under the Banking Act. It barred recovery of excess interest and penalties, ordered accounts at the contractual rate and restrained the power of sale.

African Banking Corporation faced similar scrutiny when a court rejected claimed rates of 20 percent commercial interest and 36 percent default interest. It found the borrower had not been notified and sent the matter for taking of accounts after removing disputed charges.

National Bank of Kenya was also ordered to produce accounts in a dispute with Oye Ashioya after the borrower sought protection from foreclosure. The High Court upheld the need for a full audit and restraining orders, noting that where the dispute is framed as one of accounts both sides should focus on the figures.

Other cases involving Consolidated Bank and further Kenya Commercial Bank facilities followed the same approach, with courts directing accounting while sometimes declining interim injunctions depending on the evidence presented.

The rulings show courts treating detailed reconstruction of mortgage accounts as the primary means of resolving conflicts over what is actually owed.