However, I have NO IDEA how - or even if - this affects probate and vice versa. When my mother passed, IL state law required her estate go to probate in order for us to sell her house. But you are not selling and are actually living there. And most importantly, state laws vary.
My suggestion would be to please talk to your attorney again. Maybe ask specifically about The Garn-St. Germain Depository Institutions Act of 1982, as mentioned in the article below. (Note, too, that this is a federal law.) Ask if a quit claim deed is a possibility.
I would make some calls to other attorneys. They will usually provide a consultation for free, so you can ask about your specific situation and see what they think. You may get the same answer(s) your current attorney is giving you, in which case you can be more confident in your current attorney's advice. If you get very different answers, then you and your sister will have a decision to make regarding whose legal advice to trust.
Can You Assume a House Loan After a Parent Dies?
Inheriting Mortgaged Homes
When you die, your property is held by your estate until it's passed to others. Normally, a deceased person's estate executor distributes that person's property according to a will or applicable state laws when there's no will. Inheriting a home from your parent by will or by state law is no different than inheriting your parent's favorite comforter. Complications to inheriting a home from a parent include what to do about an existing mortgage.
Relatives and Mortgages
A 1982 federal law makes it easy for relatives inheriting a mortgaged home to assume its mortgage as well. For example, your deceased parent may have left you a mortgaged home. When a mortgaged home is inherited, the mortgage's due-on-sale clause prevents the loan from being assumed. However, relatives inheriting mortgaged homes, such as the adult children of deceased parents, can also assume their mortgages if they intend to live in those homes.
Garn-St. Germain
The Garn-St. Germain Depository Institutions Act of 1982 allows relatives inheriting mortgaged homes to take over their mortgages. Under Garn-St. Germain, you won't need to refinance your deceased parent's mortgage or even assume it. Just notify your deceased parent's mortgage lender that you're inheriting your parent's home, will be living in it, and will be making the mortgage payments. After inheriting your parent's home, you might need to obtain a new deed in your own name.
https://homeguides.sfgate.com/can-assume-house-loan-after-parent-dies-55090.html
I'm sorry I'm not of more help, moriah. I'm sorry for the loss of your mother. 💔 This is such a stressful time and the fact that your housing situation is directly affected makes it more so. You absolutely need a lawyer well-versed in probate and real estate. Good luck and best wishes to you and your sister.
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