An investor's bid to stop a foreclosure years after judgment was denied—here's why the court sided with HSBC and what it means for mortgage professionals managing distressed property deals
A New York appeals court has ruled in favor of HSBC Bank USA in a long-running foreclosure dispute, rejecting an attempt by a third-party property owner to derail a scheduled foreclosure sale years after a final judgment had already been issued.
The decision, handed down by the Appellate Division, First Department on June 12, 2025, centered around a Bronx property that HSBC had been trying to foreclose on. The bank secured a judgment of foreclosure and sale on December 20, 2017, and initially scheduled the foreclosure sale for February 26, 2018. That sale was cancelled after the defendants filed for bankruptcy.
In the time that followed, the deed to the property was assigned to 3340 Paulding Corp., a nonparty to the original action. Despite having notice of the foreclosure judgment, 3340 Paulding waited more than five years after acquiring the property—and seven years after the judgment—before seeking to get involved in the case.
HSBC filed a motion in Bronx Supreme Court seeking an extension of time to conduct the foreclosure sale under New York’s Real Property Actions and Proceedings Law. 3340 Paulding filed a cross-motion to intervene in the case, arguing that the judgment should be thrown out and the foreclosure sale halted. Among other things, the company claimed the foreclosure judgment was flawed because it did not contain language stating that the property must be sold within 90 days.
But the appellate court sided with HSBC, finding that the trial judge had acted properly in granting more time to complete the foreclosure sale. Although the judgment did not include the 90-day language, the court noted that the foreclosure sale had in fact been scheduled within that time frame before being cancelled due to the bankruptcy filing. The court also pointed out that 3340 Paulding had not claimed any prejudice from the missing language.
The panel said the Supreme Court had good reason to grant HSBC’s extension request, especially considering the delays caused by the COVID-19 pandemic and repeated bankruptcy filings. In denying the intervention request, the court said 3340 Paulding had been on notice that its interest in the property could be impacted by the foreclosure and had waited too long to act.
The court also rejected arguments that the case should be dismissed as abandoned or that HSBC lacked standing to bring the foreclosure. It emphasized that the defendants had never challenged HSBC’s standing, and that 3340 Paulding, having purchased the property after both the notice of pendency and the judgment, was bound by all prior proceedings and could not now raise standing as a defense.
Finally, the court found no merit in 3340 Paulding’s claim that HSBC had failed to properly serve defendant Kofi Amponsah with its motion for a default judgment. The court ruled that 3340 Paulding had no standing to raise that issue, and that Amponsah had not denied receiving the motion or raised that argument himself when previously seeking to vacate the judgment.
For mortgage professionals, particularly those dealing with distressed properties, foreclosure litigation, or investor purchases, the ruling serves as a reminder of the importance of acting promptly when acquiring assets tied up in court proceedings. The decision also reinforces that courts are prepared to grant foreclosure extensions when delays stem from factors like bankruptcy filings or pandemic disruptions—provided the lender moved reasonably and the buyer was on notice.
