What happens after foreclosure depends on your state, but three things usually follow: you lose the home, your credit takes a hit for years, and a tax bill or lender lawsuit can still arrive. Completed foreclosures rose 42% in August 2026, according to ATTOM, so more homeowners are asking this question.
How Many Foreclosures Are Being Completed in 2026?
ATTOM’s August 2026 U.S. Foreclosure Market Report shows 5,794 completed foreclosures in August 2026. That is up 22% from July and up 42% from August 2025. A completed foreclosure is also called an REO, short for “real estate owned,” which means the lender or investor ends up owning the home.
Filings and new starts are rising more slowly. Foreclosure starts, the first formal step, were up 7% from a year ago. That gap suggests loans that entered the process earlier are now reaching the finish line.
| August 2026 measure | Count | Change vs. August 2025 |
|---|---|---|
| Properties with a foreclosure filing | 40,277 | +13% |
| Foreclosure starts | 25,894 | +7% |
| Completed foreclosures (REOs) | 5,794 | +42% |
Source: ATTOM. The national rate was 1 in every 3,569 housing units. ATTOM CEO Rob Barber noted that “overall foreclosure volumes remain well below historical norms,” so the rise is coming from a low base.
The highest state rates that month were South Carolina (1 in 1,547), Nevada (1 in 1,920), Florida (1 in 2,397), Texas (1 in 2,445) and Maryland (1 in 2,530). Among metro areas, Phoenix had 186 REOs and Baltimore had 167. Read our deep dive on Maryland foreclosures or visit our Arizona and Maryland pages.
What Happens After Foreclosure: Who Owns the House?
The sale ends your ownership. After that, the rules depend on your state. Here is the general order of events:
- The sale is held. The home goes to the highest bidder. If nobody buys it, the lender or investor takes it and it becomes an REO.
- Title changes hands. The new owner, whether an investor or the lender, can start the process to have you leave if you are still living there.
- Your redemption rights depend on the state. Redemption means paying off the debt to get the home back.
- A deficiency claim may follow. If the sale brings in less than you owe, some states let the lender sue for the difference.
Two states we cover show how different the rules can be, based on Nolo’s guides:
| Colorado | New Jersey | |
|---|---|---|
| Redemption after the sale | Generally none for homeowners | Possible until the court confirms the sale, if objections are filed |
| Deficiency deadline | Within six years | Within three months of the sale |
Our state guides explain each timeline in detail: Colorado’s 110-day clock and New Jersey’s 30-day notice. Your own state may differ, so confirm with a housing counselor or attorney. This is general education, not legal advice.
Will You Owe Taxes After a Foreclosure?
Possibly. The IRS treats forgiven debt as income in many cases. According to IRS Topic 431, cancellation of debt can happen through foreclosure, and the lender may send you a Form 1099-C showing the canceled amount.
- Recourse loans: the taxable amount is generally the debt discharged minus the home’s fair market value.
- Nonrecourse loans: the IRS says there is no ordinary cancellation income.
- Insolvency: if your debts exceeded your assets, part of the amount may be excluded. You report it on Form 982.
One change matters in 2026. The IRS page says the exclusion for qualified principal residence debt covers debt discharged before January 1, 2026. Debt discharged this year may not qualify unless Congress acts, so ask a tax professional before you file.
How Long Does a Foreclosure Hurt Your Credit?
Experian says a foreclosure stays on your credit report for seven years, counted from the first missed payment that led to it. Its effect on your scores usually fades before the seven years are up.
Mortgage waiting periods are a separate clock. Under the Fannie Mae Selling Guide, the standard wait for a new conventional loan is seven years from the completion date. It can drop to three years with documented extenuating circumstances, with extra limits such as a 90% maximum loan-to-value. Other loan types follow their own rules, so ask your lender.
Can You Avoid a Completed Foreclosure by Selling First?
Yes. You can sell a home that is in foreclosure, and the sale proceeds pay off the loan. Selling before the auction is the main way to avoid the outcomes above. Our guide on selling a house in foreclosure walks through it.
| Let the foreclosure finish | Sell before the sale date | |
|---|---|---|
| Foreclosure on your record | Yes | No completed foreclosure |
| Deficiency risk | Possible, depending on state | None if the sale pays off the loan |
| Canceled-debt tax risk | Possible | Not triggered by a full payoff |
| Control over timing | Lender sets the date | You choose the buyer and closing date |
With Byrd and Co, a cash sale typically works like this: you contact us, we review the home as-is, you get a no-obligation cash offer, and we can close in as little as one to two weeks. There are no repairs and no showings. See our foreclosure prevention resources or our earlier look at rising 2026 filings.
Know a neighbor, coworker or family member who just got a foreclosure notice? Our Refer and Earn program pays you $500 once their sale closes, no fees and no limit. Send them our way.
Worried about what happens after foreclosure on your home? Talk to the Byrd and Co team, no pressure, just real answers. Get your no-obligation cash offer and see your numbers before the sale date.
Frequently Asked Questions About What Happens After Foreclosure
What happens after a foreclosure sale?
You lose ownership and the lender or a new buyer takes title. Your state then decides your redemption rights, how long you have to leave and whether the lender can pursue a deficiency.
Will I still owe money after foreclosure?
It depends on your state and loan. Some states let the lender sue for the shortfall. In Colorado that window is six years, and in New Jersey it is three months, according to Nolo.
Is forgiven mortgage debt taxable?
Often yes. The IRS treats canceled debt as income unless an exclusion applies, such as insolvency. The principal residence exclusion covers debt discharged before January 1, 2026, per IRS Topic 431.
How long does a foreclosure stay on your credit report?
Seven years, counted from the first missed payment, according to Experian. Fannie Mae generally requires a seven-year wait after completion for a conventional loan, or three years with extenuating circumstances.
Can I sell my house if it is in foreclosure?
Yes. You can sell before the sale date, and the proceeds pay off the loan. A cash sale is often the fastest route when time is short.
