Mr Honohan, who deals with the preparation of cases on their way to hearing in the High Court, struck out a number of repossession applications by mortgage lenders saying they had not complied with the code which was issued by the Financial Regulator last February.
“It is not an option, it is mandatory,” he said when striking out three cases involving KBC Mortgage Bank.
Any case before him which did not verify that the code had been followed will not proceed because it is “not a hollow formula”, he said.
“The message has got to get out to lenders that it is a matter of law,” he added.
Earlier, the master handed down copies of the code to most of the lawyers in his court because he said many practitioners did not seem to be aware of it.
Reading from the code, he said it stated that once there is co-operation from a borrower, a plan for clearing the mortgage arrears can be developed which is consistent with the interests of both the lender and the borrower.
If a third repayment is missed, the lender may issue a formal demand for either the full amount due or for possession of the property involved but the borrower had to be first advised in writing on a number of matters including advice as to the consequences of failing to respond to the demand, the code states.
The master also drew attention to a provision in the code where, if the circumstances warrant, the lender must refer the borrower for guidance to the local Money Advice and Budgeting Service (MABS) or appropriate alternative. If the borrower requested, the lender is also obliged to liaise with a third party nominated by the borrower, the master said.
He also read from a Guardian newspaper article which reported last month that Britain’s Financial Services Authority had imposed a £5 million (€5.54m) fine along with compensation orders on sub-prime lender GMAC-RFC for mistreating mortgage customers who fell into arrears.
Adjourning one case involving Leeds Building Society, the master said this was an example of what should be done where alternative arrangements for repayment had been made. It was important that borrowers make sure they engage with lenders once they fall into arrears in order to avail of the code of conduct.
A lawyer for KBC bank told the master his client was not in breach of the code and had put its position on affidavit.