Hard to prevent or pinpoint who brought them to building, but any suggestions on minimizing that from happening again?  

He will be shortly leaving a high pay stable job (military pilot) for a low paying (40k/yr) job and it looks like this transition might be preventing him from qualifying for a cash out refi.

I would refinish them with stain to match the rest of the house for a uniform look. 

REOs are sold free and clear... or at least that is the bank's intention when putting the property on the market.If a title issue appears that prevents a transfer (these things do happen) the bank either remedies the problem before closing or, if the bank cannot perform, the buyer rightfully receives a refund of earnest money. 

She has called the town about two small repairs a stain in the ceiling and replacing a light.

Yes they have in-house handyman which seems like a bit of a conflict in interest.They have no incentive to prevent turnovers.The utilities- it’s not just water/sewer that is $437.  

Any strategy to prevent this kind of thing? 

I remember a time when we had a nice condo in the suburbs with very nice berber carpet that had a stain near the entryway.

I am not a fear monger but what happens if there is a cyber attack, or EMP that prevents us from accessing that money. 

What if the toilet isn’t tightened enough... you’ll know when stains and mold start growing on the ceiling below.