They can and often do. There is a common misconception about foreclosure home sales--that the bank will let the property go for the outstanding loan amount. Sometimes that is true. However, most of the time, the bank does their homework with an appraisal before ever releasing the home to the open market--it's becoming an occurence with increasing frequency that a short sale was attempted before the home actually forecloses, so it is likely that the bank has even more information on how the home is positioned in the market. With knowledge of the home's fair market worth in hand, the bank is more likely to compete for the sale instead of letting it go for "pennies on the dollar" as most real estate motivational speakers want to tell you. As with EVERY transaction, proper research is key to knowing whether it's worth pursuing if the bank wants to keep it.