(Non)Forclosure The Attorney's Don't Want To Touch - Any Ideas???

So here is the situation. My wife and I are looking to buy a home and today, actually, are having to give up the house we were 12 hours away from closing on. Apparently my wife and her ex husband purchased a home and filed for bankruptcy. He is active military so the foreclosure never went through.

Here are the facts:

-Bankruptcy occurred in 2008. The home was not reaffirmed.

-Old mortgage company was purchased by Chase and foreclosure was forgotten (file was misplaced, Chase confirms this was a mistake)

-Chase attempted to take ownership in 2011 and it was dismissed (unknown as to why for right now)

-Wife and ex husband are on deed BUT, cannot be removed without a short sale and a deed in lieu of foreclosure. Chase confirms that the property is not an "asset to the company" and so they don't have to accept a deed in lieu of.

- New home cannot be purchased without proof of (12) months of on-time mortgage payments or 3 years of non-ownership - Chase has confirmed debt was discharged and there is a zero balance on the account and they can't be removed from the deed.

My basic question is, WTH? The bankruptcy attorney said "I have no good advice to give you". Has anyone ever had this happen or have any clue as how to fix this?? I can't believe our system would let this even occur. It is mind boggling.

Thanks for any input.