Cut your losses and quit. With a baby on the way, you don't need this stress.
Ask yourself, what's the worst that could happen? Well, if you can't pay your mortgage, you may - and I place the emphasis on 'may' - lose your house. Whilst that, if it happened, wouldn't be nice, it's not the end of the world. You're highly unlikely to be left homeless.
OK, so you'll be a little poorer, but what price your sanity? And if it makes you feel better, tell the boss exactly why you're leaving.