Their mistake was showing up to court. They should have let it defaulted and then sued in unlawful detainer. There could have been defects, etc, on the pleadings that are waived by appearance, so why waive it it's a loser anyway? People are so fucking impatient. They think they're going to run in and tell the judge they're story, and he's just going to agree. It's a game, and a long one at that. Going to court is not always the answer.
If I was this lady I'd look into suing the city, state, and the squatter for violating her civil rights. Surely this is a flawed law that can result in an outcome like this.
ultimately it should be illegal to deceive someone in a business deal (the bank)...seems like this here is an effective lien that should PREVENT the sale of the property until this cunt was removed. I mean come on.
A seller in foreclosure may not know your condition of your property. It's actually largely up to the buyer to protect themselves. This is also true in probate sales. In both cases, the price is often discounted. Caveat emptor. I wouldn't buy a distress property if you don't know what you're getting into. They probably thought they were getting a steal by acting as the banks proxy, which is really that they were — they thought they were assisting the bank in unloading the property, and getting a deal for helping the jew. So I don't feel too bad for them.