"The deed to be conveyed is a "special or limited warranty deed". I don't understand the property rights conveyed with this type of deed, but it must be something less than with a regular deed, which would be the normal, preferred kind.

Does a financial institution routinely degrade the deed when they foreclose and sell? "

It is only degraded in terms of how far back the conveying entity is taking responsibility for the chain of title.

A general warranty deed conveys title and warrants against ALL claims against the title as far back as title has existed.

A special warranty deed is used by executors of estates and lenders who foreclose and only warrants against defects for the time the entity had possession of the property.

Get an owner's title insurance policy, with inflation clauses for future increase in value of the property.