The Statute of Limitations runs from the date of the foreclosure judgment. So, based on the information you supplied, the deficiency claimant would have until December 2013. The other details you mention could provide a foundation for some interesting defense issues when the creditor proceeds on the deficiency claim.
Please note that the above is not intended as legal advice, it is for educational purposes only. No attorney-client relationship is created or is intended to be created hereby. You should contact a local attorney to discuss and to obtain legal advice.
This case presents a very unique and rarely seen issue. Does the issuance of a tax deed wipe out the existing mortgage? Also, could this homowner get the home back by paying the person who purchased the tax deed within 3 years? That way, you get your home back without a mortgage. The bank may really have messed up here. Consult an attorney in your area to get answers to these questions.