If it were me I would talk to an attorney. The listing agent is supposed to do due diligence to make sure that they know what they are selling. Your buyers agent should have caught this as well.
Any foreclosure will not even look at an offer without a pre-approval letter. With foreclosures sometimes there is a time crunch because there may be multiple offers. I have seen people miss out on a great deal because they did not have a pre-approval before they looked at the house.
It is possible that while doing the title search on the property they found an issue and have taken it off the market while it is resolved. Also HUD changed their system around earlier in the year and I believe they removed all of their listings before re-listing.
If you want to get me your address I can get you a rough estimate based on not seein your house. I am a Realtor here in Winston-Salem. I will send you an e-mail with the houses that I compared it to. Thanks
Make sure you know your numbers. USDA is a great program but there are stipulations. The value of the land can only be a certain % of the value etc. Make sure you keep that in mind. It does sound like you need to get another loan officer. You can also get most sellers to pay your closing costs with a decent offer. Not your down payment though.
If you list your home for sale with an agent from Keller Williams your home will automatically be listed on Zillow as well. If you need a good agent in your area let me know. Hope this helps.