Question: We have what I think is a "piggyback" loan. There will be a foreclosure on the second lien, which is smaller than the first loan. What happens, do we lose our home?

Answer: Yes.

Imagine that you bought a home for $500,000. You can place 10 percent down ($50,000 plus additional money for closing costs) and finance the rest ($450,000). However, if the first loan is for more than 80 percent of the purchase price, lenders will want you to obtain private mortgage insurance (MI).

To avoid MI premiums, borrowers in this example sometimes get an 80 percent first loan ($400,000) and a 10 percent second ($50,000). In this way MI premiums are avoided -- but not without additional cost and risk.

That second mortgage or trust -- often called a "piggyback" loan -- has more risk to lenders than a first loan, thus the interest rate is often higher. Also, that second loan usually has a shorter term, say 5, 10 or 15 years instead of 30 years. Since the piggyback loan term is shorter, monthly payments must be bigger when compared with 30-year financing or the loan will have a huge "balloon" payment at the end of the term.

It is unusual for a second loan holder to foreclose. Here's why: In a foreclosure all money received from the sale must first go to pay off the first loan. Anything left over, if there is anything, can be applied to the second loan -- your piggyback mortgage. If the piggyback loan is not re-paid, the lender may sue for the balance -- thus leading to bankruptcy.

What to do? First, speak with an attorney to see if the foreclosure can be postponed. Second, see if you can get new financing to replace the piggyback loan. Third, sell the house -- it is better to sell and pay off all loans than to have a foreclosure on your credit record, get hit by foreclosure costs and possibly face bankruptcy.

Question: My elderly father's modest house in is need of repairs which he is not willing to make or pay to have done. Would it be in my interest to have my name added to the deed, take out a home equity loan, and have the repairs done? I would be responsible to pay back the home equity loan. I am his only child, married with grown children and working.

Answer: Certainly your concern is well placed and you are obviously trying to help your father. That said, changing names on titles can set off a number of concerns. For instance, is there a current mortgage on the property? Adding a name to the title is usually regarded as a change in ownership and thus grounds for the lender to call the loan. However, under the Garn-St. Germain Act when there is "a transfer where the spouse or children of the borrower become an owner of the property" a lender cannot enforce a due-on-sale clause.

But, if your name is added to the title what about state transfer taxes and federal gift taxes? If your ownership is for "good" consideration (love and affection) it may be that there are no transfer taxes -- you'll need to check.

What about your father's will? Although you are the only son, it is possible your father has other plans for the property. You both need wills and living wills.

Does your father have a guardian? If yes, perhaps the guardian could have the repairs made.

An alternative approach which avoids the title issues might be to get a home equity loan on your house. Then you could pay for repairs at your father's place with the money you receive. Do not go further with this until you speak with a local real estate attorney about title and tax issues.

Question: How can I find information regarding how much a home was worth in 1998? I need to see what other houses sold for during that timeframe.

Answer: Contact the local property records office -- they will have sale information for 1998. Or, speak with a local real estate broker. Some MLS systems retain past sale information and may go back that far. Or, if you need something informal and general, go to the library and check newspaper classifieds from that year.

Question: We recently bought what seemed to be a well maintained house. We didn't get a home inspection and after being in the home two weeks, noticed that the ceiling bellowed in the living room.

After having heavy and constant rain fall for two days we noticed two leaky areas in the roof. Are the sellers liable for not disclosing the faulty roof when it is evident that they knew? The bellowing ceiling was patched (and not well done.) Also, our basement flooded.

Answer: Supermarkets sell eggs in plastic holders. If you look at the cartons you can see if the eggs are okay. If you don't look you can't blame the supermarket.

If the ceilings were badly patched, you could plainly see that there had been problems. The repairs were not hidden. In effect, you were on notice that questions should be asked.

As a buyer you should have obtained a professional home inspection to find problems, including those that you might not see. As to the responsibility of the sellers, it depends on the jurisdiction where the home was sold, what disclosures were made, and whether or not the property was sold in "as is" condition. As a practical matter, if the sellers have moved 1,000 miles away your chances of recovery, even with a valid claim, would be reduced.

Also, in the past few weeks some areas of the country have experienced levels of rain not seen in decades -- and thus leaks and flooding not seen in years. Sellers are not responsible for freak storms or the leaks they might cause.

Question: I have had hard times which have resulted in surgery, job loss and now a new job that pays less. I fell behind in my mortgage payments. I was one month late, so I went to the lender to see if I could get any type of help with modifying my loan or putting my payment on the back end or a partial claim through the homeowners insurance. The only thing they offered with my loan was a repayment plan.

I then sent in the paperwork and the lender said my income was too low. I went for credit counseling and a new budget was prepared and sent to the lender. They then said I could pay current mortgage and then something on the back end. This wasn't helping me, because I had got two months behind and couldn't see how I was going to catch up. I put the house on the market in May and only had two showings and then finally the end of August I got a contact for purchase on my home.

The day before the closing the buyer's loan fell through. Now I'm four months behind and the bank wants to foreclose the property. Can I save my home?

Answer: By any standard you have had a string of terrible problems. In response the lender offered to modify the loan. This may not have been a perfect solution but at least it was an attempt to help.

Homeowners insurance won't help in this situation: It provides coverage in the event of fire, theft or liability or if the property is damaged as a result of a covered claim. There is something called "unemployment insurance" which might have helped.

You have no choice but to contact an attorney to see if foreclosure can be delayed. It may be that a bankruptcy filing will be needed. In the meantime, get a local real estate broker and see if the house can be quickly sold. Your lawyer can provide specifics.

Question: I'm interested in investing in a home and want to find a seller with an assumable mortgage. They seem to be non-existent. Is there any way through the Internet or any other means that I can access that information?

Answer: Assumable loans come in two forms: Freely assumable and qualified assumptions.

A freely assumable loan is a mortgage than can be assumed by anyone, regardless of their income or credit. As examples, FHA loans originated before December 15, 1989 and VA mortgages from before March 1, 1988 are often freely-assumable. The problem, obviously, is that with sales and refinancing not too many of these loans now exist.

With a qualified assumption you may take over the debt -- but only if your finances are acceptable to the lender. However, since loans are typically paid down over time, an assumption may require a substantial downpayment or a second loan to buy property at today's prices.

Since you have to satisfy lender standards for a qualified assumption anyway, why not just sit down with local lenders and see what you can borrow today? If you have your own financing you would have access to a far larger choice of homes and not just those with assumable loans.

This column is designed to provide accurate and authoritative information in regard to the subject matter covered. It is made available with the understanding that neither the author nor the publisher is engaged in rendering legal, accounting, or other professional services. If legal services or other expert assistance is required, the services of a competent professional person should be sought.