Quit Claim Deed, Novation

my friend and her husband needed my help about 3 years ago. they quit claim deed their house to me and i got the loan in my name. they did this because they got into an arm loan and didn't want to lose their home. they told me it was only going to be for about 6 months. it has now been 3 years. they have always lived in the home and pay the mortgage and taxes every month on time.

the kind of loan they set me up with is also an arm loan which will increase the monthly payment from $1800 to $3600 per month.

i tried to help my friends, but the situation has ruined the friendship.

the wife contacted me by email last week and asked if i could meet her husband somewhere to sign some forms and to get them notarized. i asked her to send me the forms so i can review them.

one of the forms is a "quit claim deed" for the sum of $1.00 and the other document is called "notice of lis pendens" on this same form it says an action for "complaint to adjudicate mortgage contract & note.

if i do this i will still be responsible for the loan. is there anything i can do to get this house and loan out of my name and back into theirs without being penalized by the irs. the loan is for $570,000 and the home is now worth $200,000.

i read on one of your forums about "novation" could this apply to this situation?

[size=9:eaf1bc2f28][color=red:eaf1bc2f28][email address deleted as per forum rules. thanks.][/color:eaf1bc2f28][/size:eaf1bc2f28]