Return of foreclosed upon owner bars sale of home?

We completed an agreement to purchase a home in foreclosure. Settlement/closing was scheduled for next month. We just learned from our realtor that the man who had been foreclosed upon has approached the bank about regaining the property. The realtor told us that there is nothing we can do; since the previous property owner has the funds to repurchase the house, our agreement of sale with the bank is void. Is this true?! (We live in PA.)

[HomeGuru]

It depends who the Seller was on your purchase contract. If the Seller was the mortgagee lender who foreclosed, there may be a contingency in the contract and/or the right of redemption allowing the homeowner to reaffirm the loan and get back the property.
If your contract was with the homeowner that got foreclosed on, then this Seller must sell based on specific performance.

If you offered to buy the property through foreclosure from the foreclosure Trustee or Commissioner, you have little chance of prevailing as the Buyer since the main job of the Courts would be to sell the property to pay off the mortgage lender. If the mortgage lender will get paid whole by the homeowner, the foreclosure process is stopped as the objective has been met.