My initial thought is to be concerned about brother having a conflict here.And I don't see how title properly transfers without a deed signed by a party with authority... which is nobody right now.

You will need to discuss with your FI on receiving your credit back and show contractual proof that the payment was authorized.

I am just curious  how much do you think these author's are making selling these books that are quite specific to very narrow niche's in the real estate industry.?

From a code enforcement perspective if the kitchen and/or other essential portions of the property are truly uninhabitable then the property is condemnable by the authority having jurisdiction. 

Is the basement part of their rental or are they using the space without authorization?

Either that or you can get a form from an attorney.As far as using state association forms, those are usually copyrighted and non-members are not authorized to use them.

I would tell them they must contact you for any repair authorization.

These are typically billed annually by your insurance company and taxing authority.

Authorization letter from seller 2.

You have to be a creditor with the credentials and authorization to do so.