Was this your primary residence or a second home(investment)? The approval letter from the bank would have stated if the debt was forgiven. As far as the 1099 goes.....on a primary residence you may receive one but let your accountant know the situation and they will take care of that. On a second home....a 1099 will be issued and can be offset by losses you may have incurred on the property.
Did you get a 1099 or 1099c? The 1099c is to forgive the tax debt - you wouldn't pay taxes on the deficiency amount. As far as a deficiency judgement........everyone else already answered that well. Your short sale approval letter will either have verbiage stating they will NOT pursue a deficiency judgement, that they will or may not address it at all. If you don't have a copy, contact your agent or the title company.
It would behoove you to get legal advice. They are best suited to advise you on any potential exposure on your note with the lender in terms of recovery. Real Estate agents are not able to provide this type of advice as it involves review of the note and a legal interpretation. Any real estate attorney can help you. Good Luck!
I'm interested to know IF you received a 1099. As far as coming after you for the defaulted amount, it depends on the paperwork you signed with HSBC. With out seeing that paperwork, I couldn't begin to give you a better answer.
These are two separate things you are talking about here. Your short sale approval letter should have told you whether they were forgiving the remaining debt or not. They may have asked you to sign a note.
The 1099 gets issued no matter what. This needs to be taken to your accountant and let them work with you on this matter.
Call the Realtor who handled your short sale if you still have questions contact an attorney.