1. The bank needs time to solve the title issue. Instead of signing the release form, request an extention of two or three months for the bank to solve its problems. I had successful experience before.
With a lien on the house, it might not appropriate or even legal to transfer the title to a third party. The title company might be in trouble depending on which state the property is in.
2. Yes, true. You may tell your broker that you are still working on this case and once you are buying the house again, you will still use him/her. Let her wait.