HELP: Current sale held up do to lot purchased via tax sale

[Craig Smith]

Question:

1) When a property goes up for tax sale in Pa., the sheriff sends out a notification to the creditors. In the case of a Mortgage does it matter if they send it to the Mortgagor or the trustee assigned to the mortgage?

Background: We (partner and I) bought a property. It was advertised as a house and lot that had been foreclosed. We quickly discovered that the lot was not in the banks name but was lost PRIOR to the foreclosure at a tax sale. We got a reduction in the cost of the house from our accepted bid once the bank realized the Lot was not owned by them. We then entered into a contract to purchase the lot also with the person who bought it at tax sale. Not wanting to spend $500 on title insurance for a $8000 we skipped the title insurance and got a written guarantee from the seller he would pay to correct any defects in the title of the lot.  In July we sold the house and lot together and were set to close the beginning of August. Well, the lot came back with 3 defects. 2 were quickly cleared. The third came back that the Mortgage was not properly cleared from the lot as 1) it was not foreclosed on 2) not properly served. Equity One Consumer Loan Company, INC was served via CT corporation. I was told the First American Title Company didn't know who CT corp was and how they are related. So they don't believe it to be properly served.  So today I looked up CT corp and found out they are a Registered Agent. I called them and found out they do serve Equity one. So I would think they were served properly. I called the titled company and they are going back tot he underwriter that had the issue for clarification. 

Also, somewhere along the line "the bank of NY Mellon F/K/A THE BANK OF NEW YORK as successor trustee for JPMORGAN Chase bank, NA, as trustee for the benefit of the certificateholders of popular abs inc mortgage pass-through certificates series 2006-c C/O ocwenn, ......address in FL" Now NY Mellon is who foreclosed and sold it to econohomes who we actually bought it from. 

Did NY Mellon need to be notified?