@Mohan Deep, in most situations you will never recover that money.

I by no means want to spend money especially that amount but in protection of my life, and my family 's life and property due to their lack of communication had no other choice.

You can supplement the funds that you're taking out of your home through additional funds from hard money. 

And not using a hard money lenders or gap funders.

I am new to this so I am running out of ideas but in reality to start living together we need a 4 bd house for our 3 kids and a bunch of pets so we know it would be a house around $800K until we can make more money from our jobs and side hustles.

Yes I understand it's to make money, but could you elaborate more please?

Where I am in Texas if it is a normal loan from normal bank, they step in the day before the sale or morning of the sale and get it resolved and the property never ends up in the sale.If the loan has small balance, or is some kind of private money loan or I would say unsophisticated lender then some chance it goes to sale.

The equity she wants is $55,000, which I don't have in cash fully, but I own a home now with that in equity, and I have money in an IRA. 

But again if your dealing with low value and your OK if your title is buggared you just give the  buyer back all their money that probably works.

Not trying to be a dream killer but there is simply no money to be made in the D.C. no cash flow, no margins to flip, labor either to flip or just hold a property is insane, the money was made years ago, even going forward I see limited appreciation, investing is HARD everyone these days but to the extent there is money to be made you have to go to places that haven’t popped yet.