Having worked in the industry, unfortunately this is not uncommon. Sometimes it is just the contractor not reading the right address. Other times, bad data on the part of the bank (bad legal description, bad address in the file, etc). Joe Schmoe at the bank gets file across the desk, no diligence, just get it done.
Here in DFW we have had homes torn down by contractors acting on behalf of cities, torn down because the contractor had the wrong address.
The bank will face civil liability. The contractor will probably face civil liability, but the contractor often has minimal assets. Homeowner will file insurance claim, sue both.