Any advise on how to be proactive?

[Anne Morris]

My husband and I have excellent credit, own 2 homes/mortgages (1 is a rental property), and due to a job loss and other issues, our income has been cut by half. We have tried to wait out the recession, but have given up and put our home on the market. We are not upside down, but keeping it is draining what little savings we have left. Then, there's the rental property; it was trashed by tennants, and we are currently in process of fixing it up (again, draining our savings rapidly).
We are wondering what the best approach would be to keep ourselves out of hot water. Our house that is for sale may not sell for months, and our agent warns we will be reducing the price along the way if we want to sell it. Our rental is available, and we could move in there and cut costs (when our house sells). Or we can put both on the market at reduced prices, so they sell, then at least out of two sales, have enough equity left to buy another home, OR . . .
the shocker - what if we were to stop making payments on our house, and move into the rental. Could the bank take both houses, or just the one we let go? :cry: