It's just not common industry practice to get a survey endorsement regardless of this being a REO situation.  Slade is correct in that a tract home built in a subdivision like this is typically not suspect of being outside of setback lines.

In fact, unless the homeowner personally took hammer and nail to wood and built the extension, it was probably done by a licensed contractor who should have been under contract to ensure that all aspects of zoning and building codes were met, including the proper permits prior to the start of construction. 

The building department, in issuing their zoning violation, appears to have been aware of the violation for some time before this situation occurred, but appears also to have done nothing to constitute constructive notice of the  matters by recording a NOTICE OF ZONING VIOLATION onto the Grantor-Grantee Indices of Official Records of that county.  The building department had the right, duty and option to exercise such notice in California, but failed to do so in a timely  manner. 

It smells like a construction firm, a prior owner and a building department may all have been negligent, but not the new home owners.  Just sayin'.