You are getting the tax rules from me regarding sale to a related party. The mortgage company is also using those rules. So, there is indeed some agreement.
As mentioned, and as the linked article discusses, if it were possible for me to sell my assets to family members and claim that loss for tax purposes then all of us would just keep selling assets back and forth to be able to generate losses and reduce our tax due.
Related party sales are not allowed to be claimed as a loss because of the potential for abuse. From the IRS publication at thhttp://www.irs.gov/publications/p17/ch14.html#en_US_2012_publink1000172296
"Losses on sales or trades of property.
You cannot deduct a loss on the sale or trade of property, other than a distribution in complete liquidation of a corporation, if the transaction is directly or indirectly between you and the following related parties.
Members of your family. This includes only your brothers and sisters, half-brothers and half-sisters, spouse, ancestors (parents, grandparents, etc.), and lineal descendants (children, grandchildren, etc.).
A partnership in which you directly or indirectly own more than 50% of the capital interest or the profits interest.
A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock.
A tax-exempt charitable or educational organization directly or indirectly controlled, in any manner or by any method, by you or by a member of your family, whether or not this control is legally enforceable. "
No loss is allowed on sale to a related party. Whether to sell at cost or below cost to a related party there is no gain and no loss. If you sell at a gain that gain is taxable, but it is usually at the ordinary and not the reduced capital gain rates.
Similarly, if I transfer an asset for less than fair market value it must be reported as a gift. Otherwise, rather than giving cash I could just give assets that are later resold by the person getting the gift for less than value and the gift tax would be avoided.
There are some strategies that use owner financing to sell property to a family member at full value and avoid the issue of reporting the difference as a gift. For example see the article at https://www.usaa.idmanagedsolutions.com/news/story?id=18 section called "Full-Price Sale With Seller Financing"
Also it may be possible for a married couple to each give 14,000 for an annual exclusion of 28,000 that will not be a reportable or taxable gift. Another expert assisted to comment on our discussion that "The wife (or husband) are each entitled to give $14,000. or one spouse can join in the gift of the other to get to the 28,000. if only one spouse holds title to the property."
Hope this helps to clarify the reason for these rules on sales to family and gifts.
Please continue to ask if you need more help or discussion.