It appears the title may have to be transferred twice, once from the estate to child A (to meet the terms of of the estate), then from child A to child B. Be sure to check tax obligations on the transfers.
Neither the law, the regulation, the official interpretations nor the small entity compliance guide addresses this question. In the second transaction it appears that child B is purchasing title for the property securing the loan. The sales price is the amount of debt owed by the estate. If that amount is listed in the contract of sale then it should be shown as Purchase Price.
The debt of the estate could also be viewed as a payoff of additional debt of the seller, in which case the transaction would be listed as home equity, rather than home purchase.