>>Joe told us he would carry the loan and he would sell us the house, we
would just pay him as if he were the bank. The papers were drawn up
signed by everyone, and notarized. He gave us the paper work for the
house that stated we were the legal owners, and he told us that he would
give us all the tax papers for the interest write off when he got them
from the primary bank at the end of each year, which he has. <<

Rick,
I am not a lawyer, just a homeowner. Here is my take: If you have a notorized agreement that states he sold you the property and you have an agreement that he is a the mortgage lender and you are the borrower, you should be o.k. It does not matter that he needed to borrow money to loan it to you unless your house is the collateral for his loan. Then you better be darn sure he is making the payments to the bank. If you think enough time has passed since your unfortunate earthquake experience, you may be able to get a new mortgage on your home and eliminate Joe from the situation. Under this scenario, I would guess you have equity in the house because Joe sold it to you for his cost (prior to making improvements). With interest rates so low, this is definately a great time to have a lawyer look over all your papers. The money you spend to have a lawyer look it over should be minimal, especially compared to all the future trouble you could have if you really don't own the house (tax problems, no equity...

Best of Luck! AJE