The problem is that it has not been recorded. Buyer's title is willing to insure the property, but my bank is not willing to proceed until this is cleared!!!

If it has not been recorded, how did you get this deed? In an event, since this deed is not recorded, the title company will insure the buyer's title and you can close the escrow - do it asap. Your bank - the existing lender - should not be concerned with this - they just want to be paid at the close of escrow. There is no reason to involve your bank at this point.