I filed through the app, and bit my state and Fed were rejected for that same reason. Do I need to do that as well? We have been out of the home (foreclosed) since 2017.
You must amend your return for 2017 to include form 5405 and report the foreclosure. You may owe nothing, or you may owe a repayment. (For example, if you bought in 2008 for $100,000, and you refinanced in 2015 for $150,000, and then were foreclosed in 2017 and the bank sold the home for $120,000, you have a $20,000 gain and owe full repayment of the credit balance. The extra $50K you took out early means you need to pay back the credit, even if you spent the money on something else.)
If you foreclosed at a a loss, you owe nothing, and might even get the $500 back. You can also amend for 2018 to get the $500 back from that year.