See the fact that mortgage rates are up about 1% from Oct when the fed started to cut the fed funds overnight rate as evidence. 

Unless you have a solid plan to turn this around, selling now and cutting your losses might be the best move.

If I do this, my PITI would jump up to $3,090, really cutting into any cash flow and the interest rate would jump to 8%.

A clean cut, I get that it might be hard emotionally and financially but a clear break on stuff is what you need not more stuff that keeps you together that will just be one more thing to fight over later.

This has created a "shared driveway" with the neighbor making an ugly curb appeal, not to mention cutting their lot in half.

It builds wealth and most importantly cuts your expenses and gives you a front row seat at being a landlord.Was the best thing my wife and I ever did.  

In related news, we had a guests for a  10 day stay and they wanted to cut the stay short.

You both clearly have experience dealing with this firsthand, and I want to see if there's a way to balance enforcement with profitability.

:(The system found out that many people were NOT cut out to be property owners.

I own the property free and clear and i use the equity as part of my business line of credit.