Only the liens listed in the Foreclosure case are wiped clean.If you read the Foreclosure case's "Preliminary Judicial Report" you'll be much more educated about the home loan and can better guess what is owed to the primary lien holder. 

In the worst case, this extra money should buy me enough time to continue to pay the mortgage on time as I evict that person if they stop paying the rent and allow me to re-“rent to own” the property or rehab and sell it.

Of course, continue paying all the stuff you are supposed to in the meantime.

I called the local courts and they said as long as I am clear in writing to them, I can cancel the first action but continue with the second action (trying to reclaim monies lost in the ordeal).  

If sublet doesn't buy, you pocket difference in option money and continuing leasing it out.From the owner's standpoint, they will get the rent money they can get.

As I mentioned in my previous letter, I look forward to continuing to maintain your address with the same pride and quality that <prev owner> has taken in it over the past 19 years.We are hereby cancelling your existing month-to-month tenancy effective <date with proper notice>.

To be continued.......

@Alex Saloutos I would strongly consider getting educated on private money borrowing and eventually doing the deals yourself.

This year the market went down due to oversupply which I suspect will continue till at least 3 years, now the apartment is valued at 260k and rents are down to 22k net.

Depending on the local market, we will retain or continue to hold.