This is a really sticky question. There are so many factors in play here. First up, there is no question you should be seeking counsel on this. Bankrupcy, foreclosure, settlements and mold sickness are all huge legal issues that are best left to counsel to guide you through. Trulia is loaded with mortgage and real estate experts, but I doubt any of them can give you the perfect answer. The last part of your question about putting a future home in your sons name will depend on many factors as well (his credit, age, are you gifting him funds, etc.) These questions are best answered via a loan officer, but I would get your legal issues fixed first before I would be exploring your next house. I wish you luck in working this out.