With insights from Thomas Bohlmann, REOX Advisory Council – Technology and Innovation Advisor Bohlmann & Bohlmann, LLC

As traditional REO pipelines shrink and more distressed loans are diverted upstream through sales, another significant change in the foreclosure landscape is the rise of CWCOT—a little-known HUD program that offers an alternative disposition strategy after foreclosure.

CWCOT, or Claims Without Conveyance of Title, allows servicers to sell foreclosed properties directly to the market—often through online auction platforms—without transferring the asset to HUD. This bypasses the red tape of conveyance and accelerates the return of homes to private ownership.

How It Works

Once a foreclosure is complete, if the home doesn't sell at the initial courthouse auction, servicers can list the property through a CWCOT auction. These homes are typically sold:

• As-Is – No warranties or repairs
• Cash-Only – No financing, fast close required
• Without Contingencies – No inspections or appraisals
• At Discounted Prices – HUD may apply further markdowns to stimulate bids

Auctions are typically hosted online, opening access to a broad pool of investors. For buyers, this creates opportunities to acquire properties at below-market rates—provided they are prepared to act quickly and manage repairs or title issues.

Why It Matters

CWCOT benefits multiple parties:

• Investors get faster access to properties at reduced prices
• Servicers avoid HUD’s conveyance process, which can be time-consuming and costly
• Communities benefit from quicker property turnover and reduced vacancy
• Homeowners in some cases may even recover surplus funds after liens are paid

In a low-inventory REO environment, CWCOT auctions represent one of the few remaining channels for sourcing distressed properties directly—and efficiently.

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