I spoke to my advisors today. They recommended staying put and waiting for the completion of the modification. If at the end of the process, I decide to walk away from the house, I still can.
The advantage of staying in the house is to save what money I can since I am not paying the mortgage. That money will be used either as the first payment after the modification is complete or to do whatever I need to do should I walk away from the house. That made me feel a lot better.
Apparently, if I receive a foreclosure notice from the bank, I will still have 90 days to move. However, the modification will also work in my favor. As long as the modification is in process, the bank will not sell the house. I potentially will have 9 to 12 months to live here mortgage free.
Should I accept the modification settlement, all late payments and fees will be added to the principle. I will make payments according to the new arrangements i.e. a decreased interest rate with lowered payments. At that point, I will need the saved money as a down payment or first payment of the new arrangements.
Now, another key piece of this huge puzzle is that of getting kids in the daycare. I am already doing my best. I am also in the process of looking for other employment. We will just have to see how things go from here. In the meantime, I have decided to stay put and utilize my time as efficiently as I can.
I do feel much better. Kind of back where I was before I panicked...lol!