Flagstar — refused short sale offer even though was the fair market value & instead bought our house in bergen county, nj for $100.00

After almost 2 yrs. trying to do a short sale with Flagstar because our mortgage was under water (fair market value less than what was owned) & with Flagstar constantly losing paperwork, hundreds of resending & turned down for a loan modification Flagstar was unwilling to accept a cash offer for what they determined to be the fair market value. Instead, Flagstar bought our house for $100.00 at the foreclosure auction & turned down the $309, 000 cash offer. The investor was willing to buy the house in the "as is" condition because it was literally falling apart (which Flagstar was aware of the poor condition with all the numerous hardship letters that they requested & received, including the poor health of the owner-cancer, brain tumor, etc.) I do not understand how Flagstar can get away with these tactics. I believe Flagstar wants people to foreclose in order for them to get the full loan through HUD. Why does a government organization like HUD let this Bank take advantage of a government organization. Is this common for a government organization to be blindsided by banks such as Flagstar? Is this the way HUD gets their housing-from honest hardworking people who face unexpected hardship such as illness & loss of a job? Then they sell these REO properties to real estate & meanwhile people are thrown out of their homes with their credit destroyed. A short sale has less of a negative impact than a foreclosure. I filed a complaint with the CFPB, although it is probably too late for them to help.