The reasoning gives servicers a handy map on billing fights and debt-collector status
A New York appeals court sided with HSBC on every point, rejecting a homeowner's claims that it breached her mortgage and broke lending law.
On August 5, 2026, the Appellate Division, Second Department, upheld a lower court decision that dismissed every claim a Suffolk County homeowner had brought against HSBC Bank USA, N.A. The homeowner represented herself. She left with nothing and an order to pay costs.
The story goes back two decades. In July 2005, the borrower signed a note with HSBC Mortgage Corporation (USA), secured by a first mortgage on her home in East Farmingdale. In May 2007, she opened a home equity line of credit - a HELOC - backed by a second mortgage on the same property. Both loans were assigned to HSBC Bank USA, N.A., in 2013.
The foreclosures followed. HSBC moved against the HELOC in 2014 and the first mortgage in 2015. The borrower pushed back, filing counterclaims and cross-claims that were later carved out into a separate case. HSBC asked the court to dismiss them on summary judgment - a ruling made without a full trial - and in November 2020 the trial court agreed. The borrower appealed.
She got no traction. The panel went claim by claim and affirmed each dismissal.
Start with the contract claim. The court found the borrower never identified a specific term of the mortgage that HSBC broke - the core of any breach of contract claim. The judges then drew a line that matters for servicers: a dispute over billing errors or the amount owed is not a breach of contract case. It is an issue for a referee to sort out inside the foreclosure.
Next, the debt collection claim. The borrower said HSBC violated the Fair Debt Collection Practices Act. The court held HSBC was not a "debt collector" under the statute.
Her Truth in Lending Act claim, an attempt to rescind the loan and recover damages, arrived too late and was dismissed as time-barred. A trespass claim met the same fate.
That left the cross-claims. The court found they only restated arguments the borrower had already lost in the earlier HELOC case. Because those issues had already been decided, she could not raise them again.
The bottom line for lenders: the ruling reinforces familiar ground - the FDCPA's "debt collector" limit, the tight window on Truth in Lending rescission, and the principle that money-owed disputes stay inside the foreclosure. The order was affirmed, with costs.
