This goes to the title or escrow agent and along with a HUD or settlement statement documenting the fees paid out clearly states and is agreed to by all parties that the EMD funds are loaned and must be repaid at closing from the assignment fee owed to the wholesaler or from the sellers funds. 

Consider consulting a CPA and attorney to address tax implications, liability, and ensure proper documentation for your multifamily investment partnership.

Implement documented repeatable processes to reduce errors and improve service levels.By being efficient, and cutting some of your costs you can hire better talent with the leftover cash. 

I know the process from beginning to end and documented this thoroughly.

This requires an independent appraisal valuing the property at $400k and proper documentation from the seller confirming the $200k donation.Ensure the church is a qualified 501(c)(3) entity, and consult your tax professional to comply with IRS rules.

Instructing or deliberately causing a borrower to sign business-purpose loan documents when you know the money will be used for consumer purposes has always carried civil liabilities.

The sooner you regain control, prove that you fully intend to enforce the terms of your lease, and that you will not be 'played' by their recall of events or documents, the more effective this action will be.  

Also consider all lenders will require to review your insurance when underwriting a loan and it's likely a violation of your existing loan documents to let the properties go uninsured even if they didn't require insurance escrows. 

Are you researching this yourself or asking your borrower to provide documentation to support this?

https://www.biggerpockets.com/files/user/ventekrealty/wholesaler-documents this link doesn't work. i havent scrolled through the comments yet to see if there is a new one but im just stating this now