What Are Second Chance Foreclosure (CWCOT) Properties? 

Important terms to know:

Claims Without Conveyance of Title (CWCOT)    

The Claims Without Conveyance of Title (CWCOT) program, also sometimes referred to as second chance foreclosure, gives buyers a chance to purchase HUD-backed, cash-only foreclosure propertiesthrough online auctions.These cash-only properties usually close quickly and are offered below the appraised value. While they can be a great deal, they are sold in“as is”condition, as occupied, and without warranties.

How do second chance
foreclosure properties work?

Second chance foreclosure properties, or Claims Without Conveyance of Title (CWCOT) second chance properties, have had a bit of a journey by the time they reach an online auction event, having originally been offered but not sold at an in-person foreclosure auction on the steps of a county courthouse.  

HUD, through the properties’ loan servicers, then gives the properties a “second chance” by allowing them to be put up for auction online. If they are not sold during an online auction event, they are then conveyed by the loan servicer to HUD to go into the traditional real estate market for purchase.   

Pro tip: Second chance foreclosure properties can be a great value for investors because they are frequently being sold at greater discount and buyers do not have to pay a buyer’s premium (which is often the greater of 5% of the purchase price or $2,500). 


Although they can be a fantastic deal because HUD usually allows for a deep discount on the price, these properties are sold for cash only without any contingencies, inspections, or appraisals—you can’t even visit them without specific approval from the loan servicer before an auction. So, we highly recommend that you conduct due diligence on properties of this type before deciding whether to place a bid.  

Also, be sure to conduct your financial assessment ahead of time because buyers are financially responsible for many things, including all closing costs, title insurance, and any costs associated with issues such as eviction or back property taxes. This may sound complicated, but it’s important to be fully informed before moving forward on a CWCOT second chance foreclosure property. 


Quick info on CWCOT second chance: 

Financing or cash-only: Cash only
Inspection or sight unseen: Sight unseen
Property types: Residential (single family, multi family, modular, mobile) 


Ready to jump into searching, bidding, and buying auction properties with Xome?

Find out how the lifecycle of an auction works and tips to help guide you every step of the way.








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