Legal Question in Real Estate Law in California

First, bank ownership is "private" in the usual sense, i.e., not public (government) ownership. (This notwithstanding that post-bailout, a lot of banks and other lenders have a high proportion of government stock ownership).

I do not know of any law or policy that would require a bank to market its REO through listing with a broker, or that the listing be carried on the local multiple listing service. Even if the bank did employ a broker, the broker would be under no obligation to put up a sign or advertise. So, maybe it was an inside job. That's no more wrong than you selling your townhouse to your brother-in-law in a private, un-advertised transaction because he offered you a good price and you both wanted to avoid paying a commission.

I suggest you contact the new owner and inquire whether it bought the townhouse as a long-term investment, for personal occupancy, or with the intent to re-sell. You may still have an opportunity to acquire the unit.

There are no requirements that a lender list property that it has acquired through foreclosure. Only the foreclosure sale itself had to be made public. If there is inside dealing, that is the bank's problem.