Banks are SUPER wise to wholesalers - they want CASH BUYERS with funds for quick settlement.

The money is summarized on the HUD-1 settlement statement.

After the settlement is signed and the funds are exchanged I escort the person out thanking him/her for helping on this deal and discussing any other leads they might be interested in.

This comes after they've approved the hud (settlement statement) and the title company has the mortgage docs they need for the buyer to sign.2) All docs are signed and lender reviews and then gives the approval to release the funds.In your case, it sounds like the lender never even gave a clear to close.

You’ll give this to your CPA after the end of the year along with the settlement statement from your closing.

In the end, most landlords make a cash settlement to the complaining party, because it is cheaper than the mounting legal fees and the non-performing rental unit. 

Easiest and cost-effective way is to reach out to the title company that did help you with closing or there are quite a few settlement companies or a real estate attorney can help you with quit claim. 

I would either have to negotiate a settlement or pay them the amount owed or walked away with a loss of my initial investment.  

An attorney friend of mine told me that I have to draft a settlement agreement.

I assume you've been dealing with the settlement agent who also issued the policy and not the title insurer.