I would think it applies to REO companies as well. The buyer must be able to shop their mortgage.
Best of Luck!
No, a REO company, in your case, the lender who owns the property, can not require a buyer to use their preferred lender.
I do see REO companies require buyers to get pre-approved by their own company's mortgage broker before they will look at the offer. The reason provided is mostly because they trust their own mortgage brokers and the pre-approval from their mortgage brokers.
However, they can not force somebody to use their preferred lenders.
When I think about real estate from legal side (not business side), I always ask myself how many drivers fully stop under every STOP sign and how many of them have been caught and ticketed, also how many drivers are yelled or hit just because they fully stop under the signs.