If the OC sold the bad debt, they were required to report $0 balance, so that alone does not indicate satisfaction of the debt.
However, update of the status to paid if the debt was not paid is confusing.
When reviewing your CR, it would tell the reader that the debt was paid to the OC, so I am not surprised that your mortgage lendor did not question the account.
Whether you can secure title depends upon the answer to the question... why did the creditor report as paid if you did not satisfy the debt?
The lien is probably still showing on the title, and to get it released would require contact with the creditor.
Perhaps they simplly cancelled the remaining debt, but if they had done so, and the excused amount was $600 or more, you should have received an IRS form 1099c, reporting that cancelled debt to the IRS, and thus informing them of your tax liability.
You will most likely need to ask the creditor to remove the lien, and see how they respond. Something happened that is not evident from their credit reporting alone.