How involved is your lender in selling your home?

We're purchasing my mother's home. She just re-modified after being in default. We just got denied a mortgage loan from a great company because it looked shady-too much like a family bail out. They said they're just really picky and their investors wouldn't touch it. They didn't think we'd have a problem with a local credit union.

So my question is, what part of the purchasing and loan process does my lender contact the sellers lender? Is it just to request the payoff statement? What about the title company requesting the transfer of the title?

My mom has permission to sell, the remodification is done. I'm just curious that when and how my lender will find out it's a modification loan.
Added (1). How much contact does my lender and title agent have with the sellers lender?
Added (2). An assumption isn't allowed, and we wouldn't want to anyway as we can get a better payment.

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