There are two main types of distressed home sales in the market-those that are short sales and those that are foreclosures. When an FHA insured loans is foreclosed and given back to HUD, it becomes a HUD home. Otherwise, banks selling homes in their inventory are known as REO's or ORE's. This report explains the differences between all three. For a home owner facing a housing crisis decision, they should always contact their attorney and accountant and double check with the IRS. Many decisions you make in this area will have profound tax and credit implication. Understand what you are doing before you do it.