I would answer your question one of several ways. The most important criteria is how your contract was structured. While it is true that bank owned are as is sales, assuming you purchased a bank owned, you should have placed a contigency in the contract relating to a satisfactory home and termite inspection and if those inspections were not satisfactory, you could void the contract within the specified time frame and receive your deposit back. Secondly, regarding a failed termite inspection, did it fail due to the home having termites and/or termite damage or did it fail due to some basic wood rot? Wood rot frequently is a fairly simple and not overly expensive fix. If it is termites etc and you had the proper inspection contingency, I would recommend you request in writing that the bank rectify the problem in order for you to go forward. Keep in mind, that if your deal falls through, the seller(bank) must disclose to future purchasers the existence of the termite issue.
Best of luck.
I hope this works out for you and that you have gotten a great deal.
Myke Triebold, GRI, CNAS