Someone thought that they were making life easier here and ended screwing things up considerably.  Although I'm not a PA attorney, I think I understand TBE and the basic PA marital homestead requirements (you didn't mention any waivers).  Going backwards, it looks like by getting rid of the TBE, surviving wife now needs to probate dead husband's marital interest, instead of filing a DC and A/Survivorship, to prove the immediate passing of his interest to her.  Also, there would not have been inheritance tax for being a surviving Tenant BE.  She got bad advice, or had a little dangerous knowledge, or a mortgage broker.