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I'm not in your state but a neighboring one Georgia. That's what they do here. The state typically does not TPR for a relative placement. The way relative placements in my state have gotten around that trick is they allow the child to go to a regular foster home and let the state TPR then they come forward to request the placement. It's sad but true. Certain states really treat relative placements poorly.
Since you already have the child in your home you have to take a different angle.
Did you complete the PATH classes? You need to go ahead and do the PATH classes because the state is not exactly through with you yet. There's usually a 6-12 month supervised placement that has to be met. They will come out to your home periodically to visit but it's not monthly like a regular foster placement. Once the timeframe is up that's when they close the case and disappear. They will not TPR but at least you will have time to be considered as long term foster parents for your neice. Don't give up yet.