The owner/borrower could file BK and alert the lender/trustee and the automatic stay would prevent the scheduled auction sale from taking place.

However, a careful reading of the FBI "story" revels this:…After forging your signature and using the fake IDs, they file these deeds with the proper authorities, and lo and behold, your house is now THEIRS.* (please note the asterisk)* - Since the paperwork is fraudulent, (I believe it should read "forged" since a fraudulently obtained deed or mortgage may, in some circumstances, be enforced) the house doesn’t legally belong to the con artists.Based on that I think even the FBI agrees with my post that nobody can lose title to their property through a forged deed. 

check BuildZoom.com for permits filed and reverse search those GC licenses

And to be legally complaint, we can file the income in tax return.

S Corp owner thought, no problem, I have the corporate shield, had his lawyer file motion to have suit against him dismissed because after all, they should be only suing the S Corp.

Yes you get all depreciation write-offs etc as just an individual holder, and note your accountant will likely need to file a Delaware tax return each year for your rental income in Delaware, but this is usually easy and cheap. 

You really need to make sure that the GP is as honest and responsible as much as yourself.During the trial, it was revealed that the GP declared Bankruptcy not just once, but TWICE.

I just got out of a bad divorce that included a bankruptcy and I'm finding deals but struggling to get capital raised or qualify for a mortgage.

Depending on the size and scope of the damage have you looked into filing an insurance claim. 

If your state is open for evictions follow the rules and give them pay or quit notices, apply late fees, file for eviction.