HSBC Bank USA, National Association, as Trustee for ACE Securities Corp. Home Equity Loan Trust, Series 2006-OP2 v. Bell et al

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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
HSBC BANK USA, NATIONAL
ASSOCIATION, AS TRUSTEE FOR ACE
SECURITIES CORP. HOME EQUITY
LOAN TRUST, SERIES 2006-OP2,
Plaintiff,
v.
SANDA BELL, et al.,
Defendants.
ORDER
24-CV-7671 (NRM)(PCG)
NINA R. MORRISON, United States District Judge:
Plaintiff 	HSBC 	Bank 	USA, 	National 	Association, 	as 	Trustee 	for 	ACE
Securities 	Corp. 	Home 	Equity 	Loan 	Trust, 	Series 	2006-OP2 	(“HSBC 	Bank”),
commenced this action against Defendants seeking foreclosure. 	After Defendants
failed to appear, Plaintiff moved for default judgment, ECF No. 30, and this Court
referred the motion to Magistrate Judge Lois Bloom for a report and recommendation
(“R&R”), Order Referring Mot. dated May 5, 2025. 	On January 15, 2026, the case
was re-assigned to Magistrate Judge Peggy Cross-Goldenberg. On January 27, 2026,
Judge Cross-Goldenberg issued an R&R recommending that the motion for default
judgment be granted, and that Plaintiff be awarded (1) $592,010.84 in unpaid
balance, interest, and expenses; (2) $23.32 per diem interest from December 24, 2024
until judgment is entered; (3) post-judgment interest at the statutory rate; (4) $6,800
in attorneys’ fees; and (5) $400 in attorneys’ costs. ECF No. 37.
On February 11, 2026, Plaintiff filed a motion for extension of time to file an
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objection to the R&R regarding a potential typographical error, noting that the R&R’s
Conclusion used a different date to calculate the per diem interest than did the R&R’s
Damages Calculation and Interest sections. ECF Nos. 38, 39. Defendants did not file
any objection to the R&R, and the period for doing so has elapsed.
A district court “may accept, reject, or modify, in whole or in part, the findings
or recommendations made by the magistrate judge.” 	28 U.S.C. § 636(b)(1)(C). 	The
Court largely agrees with Judge Cross-Goldenberg’s thorough and well-reasoned
R&R. 	However, because Plaintiff has failed to fully comply with New York Real
Property Actions and Proceeding Law (“RPAPL”) § 1302, the Court denies the motion
for default judgment without prejudice to renew.
RPAPL § 1302 requires that a complaint in a foreclosure action “contain an
affirmative 	allegation 	that 	at 	the 	time 	the 	proceeding 	is 	commenced, 	the
plaintiff . . . complied with all of the provisions of section five hundred ninety-five-a
of the banking law and any rules and regulations promulgated thereunder.” RPAPL
§ 1302(1)(b) 	(emphasis 	added). 	Here, 	however, 	Plaintiff’s 	Complaint 	states,
“Pursuant to RPAPL Section 1302 as amended, the plaintiff has complied with the
provisions of Section 595a and Section 6-1 of the Banking Law,” with no mention of
the rules and regulations promulgated thereunder. Compl., ECF No. 1 ¶ 21. And as
numerous other courts in this Circuit have recently clarified, failure to include this
particular phrase constitutes non-compliance with the requirements of RPAPL
§ 1302. See, e.g., Wilmington Savings Fund Society, FSB as trustee of Aspen Holdings
Trust v. Fernandez, 712 F. Supp. 3d 324, 334 (E.D.N.Y. 2024); Wilmington Sav. Fund
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Soc’y, FSB as Tr. of Aspen Holdings Tr. v. Bernash, No. 23-CV-485 (AMN), 2024 WL
1285431, at *5 (N.D.N.Y. Mar. 26, 2024); Brown v. Amarante, No. 23-CV-3514
(JGLC), 2024 WL 4716364, at *10 (S.D.N.Y. Nov. 8, 2024); Deutsche Bank Nat’l Tr.
Co. as Tr. for GSAA Home Equity Tr. 2007-5, Asset-Backed Certificates, Series 2007-
5 v. Shewtahal, No. 24-CV-7892 (ERK), 2025 WL 2402824, at *4 (E.D.N.Y. Aug. 19,
2025). That failure “is a sufficient basis to deny a motion for default judgment.” Blue
Castle (Cayman) Ltd. v. Scherer, No. 24-CV-220 (ECC), 2025 WL 625150, at *4
(N.D.N.Y. Feb. 26, 2025).
The motion for default judgment is thus denied. However, the Court finds no
error in all other findings in the R&R, including the findings with respect to the
calculation of awards and damages. 	To the extent Plaintiff eventually prevails in
obtaining a judgment in its favor, the $23.32 per diem interest referenced in Plaintiff’s
objection, ECF No. 39, shall be calculated from December 24, 2024, until the date the
judgment is entered, as reflected in pages 13 and 14 of the R&R. ECF No. 37 at 13,
14. 	The R&R is therefore adopted in part, and the motion for default judgment is
denied without prejudice to renew. The Court also sua sponte grants Plaintiff leave
to 	amend 	its 	Complaint 	to 	add 	the 	phrase 	“and 	any 	rules 	and 	regulations
promulgated thereunder” to paragraph 21, to the extent that Plaintiff is able to attest
that it had, in fact, complied with the applicable rules and regulations at the time
this proceeding was commenced.
SO ORDERED.
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/s/ Nina R. Morrison
NINA R. MORRISON
United States District Judge
Dated: 	March 2, 2026
Brooklyn, New York
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