I do not know where you are but in FL it can take 4 years to do a foreclosure but the average is about 1,000 days. We have been told by
asset managers that in a Judicial Foreclosure State (like in FL) it can cost upwards of $50,000 to foreclose. And Yes, the Title insurance company would have to write a BIG check to the owner of the note.
IMHO, reduce the price until you get a contract and then send it to the Mortgage Services Company and see what happens. But, be aware that the PMI company will also have to approve it.
"Be who you are and say what you feel, because those who mind don't matter and those who matter don't mind."