Stays and a quiet title fight were not enough to explain 11 years of silence
HSBC Bank USA lost its foreclosure claim against CitiMortgage after sitting on a default for over a decade.
New York's Appellate Division, Second Department, affirmed the dismissal on September 16, 2026. HSBC Bank USA, National Association had sued CitiMortgage, Inc. as part of a Brooklyn foreclosure action filed in October 2012. CitiMortgage was served that same month - and never responded. Not an answer, not an appearance. Nothing.
That should have been an easy win. Under New York's CPLR 3215(c), when a defendant defaults, the plaintiff has one year to move for a default judgment. Miss the window, and the court must dismiss the claim as abandoned. The word in the statute is "shall" - not "may."
HSBC missed the window by roughly 11 years.
CitiMortgage finally called the question in July 2024, moving to dismiss the complaint against it as abandoned. The Supreme Court, Kings County, granted the motion in a November 21, 2024 order. HSBC appealed.
On appeal, HSBC pointed to two reasons for the delay: certain stays in the foreclosure action and a separate quiet title action CitiMortgage had filed over the same Brooklyn property. The appellate panel did not buy either one. The court found HSBC "did not account for gaps of time where years of inactivity passed" and failed to show how the quiet title litigation "hindered its ability to seek a default judgment."
Those two findings effectively closed the only exit available. New York courts do allow one narrow exception to mandatory dismissal: a plaintiff can survive by showing both a reasonable excuse for the delay and a potentially meritorious cause of action. HSBC cleared neither bar.
Justices affirmed unanimously, with costs to CitiMortgage. The panel leaned on a familiar line of cases enforcing the abandonment rule against large lenders - including three prior HSBC cases: HSBC Bank USA, N.A. v Whaley, HSBC Bank USA, N.A. v Grella, and HSBC Bank USA, N.A. v Cross.
The pattern is hard to miss. New York appellate courts have repeatedly held large servicers to the one-year deadline, and vague references to parallel litigation or case complexity have not worked as excuses.
For servicers managing aged foreclosure portfolios, the clock runs whether or not other litigation is happening - and years of inactivity will not be forgiven by pointing to events that did not actually stop the plaintiff from acting.
