I'm not sure I would agree that the title is marketable.  It would be very difficult to sell if the buyer cannot get title insurance.  Who will loan money on it if they can't get a title policy?

It is usually the other way around.  The title is insurable, but not marketable.  I had a client who was going to buy a home but, due to a self-dealing transaction that was not authorized by the power-of-attorney, the seller's title was void.  One title company, who had insured the prior transaction, had agreed to issue title insurance.  I advised my client to walk away unless the problem was corrected.  I didn't want my client to have to deal with this if they refinanced or tried to sell the property.  The title company paid for a quiet title action to clear the title, and the deal went through - marketable and insurable.

In your case, I would suspect that something was not handled properly in the foreclosure, at least not to the title company's satisfaction.   If you have attorneys who think that the title is fine, try another title company.  if you can't find a title company that will insure it, find another attorney.  ;-)  Or ask the title company what needs done in order to insure it.  They may ask that case be reopened to correct something. 

Best,
Robert A. Franco
SOURCE OF TITLE