What Deutsche Bank called a 'dismissal' just cost them the foreclosure – permanently
A New York court just permanently shut down Deutsche Bank's foreclosure case over compliance failures and a legal maneuver that backfired.
The Appellate Division, Second Department handed down its decision on January 28, 2026, and the message to mortgage servicers couldn't be clearer: if you can't prove you followed the rules, don't expect the court to give you a do-over.
Here's what happened. Back in 2005, Donna Starr took out a $300,000 mortgage on her home in Merrick. Four years later, she stopped making payments. Deutsche Bank, which had picked up the mortgage through an assignment in July 2009, filed its first foreclosure action that August.
Then things got messy. The bank bailed on that first case in 2010. Fast forward to November 2012, and Deutsche Bank tried again with a second foreclosure action.
This time, Starr fought back. She raised defenses and counterclaims, and the case dragged on for years. In 2016, a lower court initially sided with the bank, but the Appellate Division modified that decision three years later in 2019. The appeals court said no, Deutsche Bank hadn't proven its case.
By March 2022, a full decade after filing the second foreclosure, Deutsche Bank apparently realized it had a problem. The bank couldn't show it had complied with the state's foreclosure notice requirements. So it asked the court to let it walk away again, this time calling it a dismissal rather than what it really was: giving up.
Starr wasn't having it. She asked the court to dismiss the case with prejudice, meaning Deutsche Bank could never come back and try to foreclose on her home again.
The lower court agreed with Starr, and Deutsche Bank appealed. But the Appellate Division wasn't buying what the bank was selling.
The appeals court saw right through Deutsche Bank's strategy. The bank tried to dress up its motion as a dismissal, hoping to preserve its ability to file yet another foreclosure action down the road. But judges aren't easily fooled. They recognized it for what it actually was: a voluntary discontinuance.
And here's where the statute of limitations became Deutsche Bank's biggest headache. The six-year clock for foreclosure actions had already run out. When the bank filed its second case back in 2012, it accelerated the entire mortgage debt. That started the timer.
Normally, there's a safety net for plaintiffs who have to refile cases. New York law gives you an extra six months to start over even if the statute of limitations has expired. But that grace period doesn't apply when you voluntarily walk away from your own case.
Deutsche Bank tried to game the system by calling its exit strategy something other than a voluntary discontinuance. The court wasn't impressed. When you're the one asking to end your own case, you're voluntarily discontinuing it, regardless of what you call it.
The court affirmed the dismissal with prejudice. Starr demonstrated she would be harmed if Deutsche Bank got another bite at the apple. Any new foreclosure action would be time-barred, and the bank had no legal workaround left.
For mortgage servicers and foreclosure counsel, the takeaway is straightforward. Get your compliance ducks in a row before you file, not a decade later. Verify you can meet statutory notice requirements from the start. And if you're thinking about walking away from a case, understand exactly what that means for your ability to come back later. In foreclosure litigation, there are no mulligans.
