First and foremost, many of your questions are legal in nature and the only suitable person to answer those questions is an attorney. A tax specialist is also highly advisable, as there are tax consequences from these issues. However, you probably don't need to worry about the bank garnishing wages, or taking another home you haven't bought yet. Usually, the lender's remedy in case of default is limited to repossession of the asset securing the loan, i.e. the mobile home. Your best option may be a short sale of the mobile home, where the lender agrees to take an amount less than owed to resolve the debt. An attorney specializing in these issues needs to be consulted. The cost is minimal compared to the potential financial damage you and your husband may face.
Mallery and Demaria in Monterey have helped some of my clients and many other people as well. http://www.mallerydemariapc.com/ for info/contact details. Good luck! There are lots of people in similar positions, and many have worked through the problems and come out of it OK.... more