goto http://www.in.gov/pla/3171.htm at the bottom is a link to file a complaint with the state. I see this quite often, i filed a complaint about a broker not too long ago and with Fannie Mae about a broker that wouldnt give me acces to a house, low priced houses pay around $1,200 to each the selling broker and listing broker, the listing brokers try to avoid splitting the commission since it is low. That is WRONG they should not be doing that.
The truth is that you have no idea was is going on.
Particularly with REOs, some agents are simply trying to work both sides of the transaction, representing both buyer and seller.
Multiple offers are common in REO listings, particularly when inventory levels are low. However, this does not seem to be the case in your area. (See link below).
I would recommend that your agent CALL the Listing Agent and discuss the situation. Emailing is great for documenting time and date, but not suitable for probing questions. If you really want that property, then your agent needs to establish some kind of relationship with the listing agent, otherwise you are just a piece of paper.