There was a house on Ice Island Atlantic that belonged to a guild member of mine who was permabanned for some serious harassment charges and his small house was Owned by OSI from 1999 until 2018 or 2019, can't remember. It was dropped one day and the large tower next to was gone and a keep was in the place of both houses, so I'm assuming the house owner emailed about the house and Mesanna or a GM dropped it for them. It was bugged out, private but you could go on the steps and when you clicked the door it said "You cannot use that". All this to say I think if one pages/emails on a house like you described, they'll drop it. The neighbor had to notice it was Owned by OSI for months, no doubt in my mind he emailed on it. I've also heard that they will drop houses attached to free accounts (leftover seer/counselor accounts) if they find one; that is hearsay though, can't say whether or not it's true. They may just turn the free account off and let the house decay.There's only one "Owned by OSI" house I'm personally aware of that should not have lasted so long. Keys on Sonoma was a notorious PK, but I never knew him to cheat until he got a Counselor friend to teleport his red into Trammel, just after the first facet split. He killed a bunch of blues, got caught quickly, and was banned right away for such flagrancy. Maybe it was his way of going out in a blaze of glory. His old tower outside Fel Skara stayed up and "Owned by OSI" for years, and with the friends list wiped, nobody could get in. I don't know if it went IDOC or was just deleted.
As far as the OP, I'm on the side of those who say the guy should've kept his house. I agree with whoever wrote something to the effect of "with such a dwindling player base, it's important to help out those who stay/play". Best believe if the game ever approaches the red, the servers will go down, and losing one's house is a very good reason for anyone to quit. Given the newsletter saying they will try to help, the fact that the guy found out and paid for an account (and was present), I see no issue.