@Sri Voodi- thanks   1) if you would need  financing to purchase ....make sure you get into a  formal loan pre approval  position  so that you can be  prepared and  organized to make any offers ...good luck

In Cali I believe the foreclosure process is non judicial and pretty quick.

In almost all situation the owner will have a minimum of 3 months to raise the funds to pay off the loan before foreclosure (in non judicial foreclosure states ) to as much as 2 years (in judicial foreclosure states).  

I know that a large majority will state that deals need to be formalized and gone through loan services, however, please humor me. 

Clearly this is a non starter, however I would have him prepare a formal proposal and run it by an accountant and or attorney.

This is my guess (there's no formal research on this), I guess in some local economy, the income in household formation raise so much that the mortgage/income no longer a problem because the household has two high double income family (lets say a household making $400k/year to purchase a $1 mil property.

I haven't been to college in some time now but I know a lot has changed in and outside of any formal educational setting. 

If you choose to pursue this matter, we would like to request a formal hearing, either virtually, or in-person with a designated representative attending on our behalf.Finally, we are happy to work with you to make sure the house is not disruptive to the neighborhood.

Would the next step (after 20 days I believe) from the lender be to start formal foreclosure (file with the county, etc)?

Non judicial states are better than judicial states3.