I'll make it 3 that have never heard of this type of transaction. I would have to agree with Ute "the last thing banks want is take on more real estate" and Christopher "the bank will only consider such a trade if it is highly advantageous for them."
I would also second Ute's advise to go back to the financial adviser and ask for more details. It wouldn't hurt to contact a few banks and lenders to ask them a few questions as well.
I, too, have never encountered this scenario. I suppose that anything is possible, but I imagine the bank will only consider such a trade if it is highly advantageous for them. Value, condition, desirability, mortgage amount, etc would all have to be evaluated by the bank.
In this scenario, I can only think that you would end up with the short end of the deal.
Your Fairfield County Real Estate Agent
William Raveis Real Estate