I agree with the below. If you currently have an agent make sure you are keeping them in the loop. Escondido has been hit hard and there is a great deal of inventory right now, with more to come. Based on the information provided, my suggestion is a short sale. You asked about your credit and the 2nd. You can not sell your home without the approval of both 1st and 2nd lenders. I am not a credit or tax expert so as far as the ramifications I would consult with those who specify in those fields.
If you know you are asking too much, then you honestly are wasting your time and missing opportunities to sell. "Rule #1 price the house well and it will sell. Price to high and no one will come by." So get with your agent, get a real picture of comps and upcoming foreclosures and price your house realistically, do not chase the market and begin the process of short sale.
Again, if you have an agent be upfront with them. I will reiterate...talk to your agent and get the ball rolling, because with your husbands job loss, time is ticking and time is something you will need with a short sale. Your agent is there to help you. That is their job!
Prudential California Escondido