Looking for confirmation here so I don't blindly trust.

The moment you apply for a mortgage, that fact is sold by our trusted credit reporting agencies (TransUnion, Equifax, and Experian) to the entire world, so they can start spamming you with junk (one of our lobbying groups, AIME, is trying to make it illegal unless you explicitly give consent to TU, EF, and EP).

I am probably too trusting - but I am confident the above mantra has helped us - more than hurt us. 

As stated above, flipping is best done in your local area which you know and can have boots on the ground unless you can build a full and trusted team elsewhere which would require a partner with boots on the ground. 

The most important step toward OOS investing is developing a reliable local team you can trust!

Are these non-realtors/agents or are owners actually trusting a lockbox / set of keys to a complete stranger sight-unseen?

We trust him with our money, which is to say, we trust him with our business.

I see many people slam-dunk would not purchase these properties, and yes, I was not sure what I should do.Now, these are my thoughts and why I decided to proceed: 1.Having just gone through my own personal home refi this month - an appraiser stated: " Your home is more expensive than I can show it here, since I can give you only 15K for my 35K deck, but in real world, if you are to sell it to a buyer, you can probably sell higher than my appraisal".I trust my provider and know that my provider did a ton of work and rehabbed property very well, I feel this is still OK in my investment book to be off by 5-10K.

Long story, short can I foreclose on both properties after 1.5-2 years after they were sold with a pre-existing unpaid lien (with a recorded deed of trust) when there's already new owners living in them???

There will always be good deals - the skill is in not only having the confidence to know and to trust that, but also to recognise the deal that is good for you and then to be able to go after it not have someone else's great deal go after you.I hope that helps, sorry to quote Epictetus at you I got a bit carried away but those Greeks knew a thing or two :)