This is just a company implementing somewhat of a “turn key” ADU deal for homeowners, anybody could simply hire their own architect, GC, and agent to rent out the unit and accomplish the same thing for likely less money and not be stuck with section 8 tenants.

It simply means "I've spoken with a loan professional and what I told them sounds good." 

I'm simply happen to know the best ones :) *

Then if it's a good enough deal, I'll try to find other investors to either wholesale to or simply sell them the deal.

Title companies simply execute the closing for properties As Described in your purchase agreement/contract. 

The way I see it, there is no lease in place and they aren't living there so I could have them arrested for trespassing if they show up and I can simply remove their things and proceed with renting the property to someone else.

Proceeds won't go to reduce their balance, they will simply foreclose.

Simply have the court subpoena them to appear during your hearing. 

@Emile Plas This sounds like seller financing so I'd simply offer better terms.

Unfortunately most of the crews that I have seen doing residential flips are simply not aware of what they are dealing with and don’t take the basic steps to protect themselves.