Uganda’s mortgage industry is once again under scrutiny following a landmark Commercial Court ruling against Housing Finance Bank (HFB), a decision that could redefine how lenders enforce mortgage recoveries and foreclosures in the country.
The dispute, decided on May 31, 2026, arose from a long-running legal battle between Barnabas Samuel Aliku and Christine Mutesi Aliku against Housing Finance Bank and other parties over the controversial sale of a mortgaged property in Najjera, Wakiso District.
Court records show the couple accused the bank of unlawfully and negligently selling their property after they defaulted on a mortgage facility.
The plaintiffs argued that the bank failed to properly serve mandatory statutory notices before proceeding with the sale, and further alleged that the property was sold at a gross undervalue.
The case is one of the most closely watched mortgage disputes in Uganda’s banking sector because it strikes at the heart of how financial institutions exercise their powers as mortgagees.
Housing Finance Bank, one of Uganda’s largest mortgage lenders, maintained that it acted within the law and followed all procedures required under the mortgage agreement and the Financial Institutions framework.
The bank argued that the borrowers had defaulted on their obligations and that the property was lawfully sold through a public auction process.
However, the Commercial Court reportedly found significant procedural irregularities in the manner the sale was conducted, opening the door to possible compensation and restitution claims.
Some Legal analysts say the ruling could have far-reaching implications for Uganda’s banking industry, particularly at a time when commercial banks are tightening recovery efforts amid elevated credit risk and growing household debt pressures.
The judgment has intensified scrutiny around three critical issues in Uganda’s mortgage market ; service of statutory notices, independent property valuation standards, and the duty of banks to obtain fair market value when disposing of mortgaged assets.
“This case reinforces the principle that the power of sale is not absolute,” a Kampala-based banking lawyer told Highflyer Report. “Banks must demonstrate fairness, transparency and procedural compliance throughout the recovery process.”
The dispute also raises broader concerns about the vulnerability of borrowers in Uganda’s fast-growing urban real estate market, where aggressive property appreciation often collides with rising interest rates and repayment distress.
Housing Finance Bank remains a dominant player in Uganda’s housing finance ecosystem, with a substantial share of the country’s mortgage portfolio and continued expansion into retail and SME banking.
Despite the legal setback, the bank has recently maintained strong operational momentum, opening new branches and expanding affordable housing initiatives across Uganda.
On whether Housing Finance Bank will appeal the ruling is only a matter of time, a move that could set the stage for a defining precedent on mortgage enforcement in Uganda’s financial sector.