Van and Meg Anderson thought they had found the perfect lot, a tract of rolling farmland that looked out on a pond and was bordered by a stand of trees and a neighboring barn.

But a year after buying the land, one of seven lots in the Brookeville Farms development north of Olney in Montgomery County, the couple stood staring into a muddy pit. The hole was dug for their basement, but that's as far as their new home got.

"Everybody has dreams, and that was our dream," Meg Anderson said of the four-bedroom, $667,000 house they wanted to build.

Now their dream is tangled in a web of lawsuits and foreclosures. After their builder, Evangelos Enterprises Ltd. of Brookeville, Md., went bankrupt, Columbia Bank foreclosed on the property. The bank, based in Columbia, Md., has scheduled an auction next week on the Anderson's lot and existing Rockville home to cover $135,000 in loans taken out to start building the new house.

But the Andersons have filed suit against the bank, questioning why the institution allowed them to release money to their builder. The Andersons contend that the bank knew the builder was headed for bankruptcy, but allowed the couple to release its loan money anyway.

"All we heard from the bank was how good this builder was," Meg Anderson said. "Later, we learned {the bank} had hired someone just to handle problems with his account."

In one three-month period, the Andersons later learned Evangelos Enterprises had bounced nearly 90 checks from an account at Columbia Bank. Some of those checks were for as much as $100,000, said Brad Hill, a former construction manager for the company.

By the time the Andersons hired Evangelos in November 1989 to build a house, the company already owed $800,000 to its suppliers and had "grossly underestimated" the costs of building its homes, Hill said. At Brookeville Farms, Evangelos had contracted to build seven homes costing $725,000 to $1.2 million, but had bid as low as $550,000, according to the families there.

The promise didn't hold up and soon Evangelos Enterprises was living off money that home buyers borrow from a bank and pay to a builder as work on a house is undertaken. This money typically is paid after work is in place, such as when a foundation is constructed or the drywall installed, but most of the families in Brookeville Farms had agreed to advance money to the builder even as construction on their houses slowed.

"If you are front-end loading a loan, you are in for major trouble," Hill said.

Concerned that this "house of cards was going to collapse," Hill said he went to Columbia Bank Nov. 15, 1989, to tell a loan officer about his concerns. The loan officer, Mike Galleone, said he does not recall meeting with Hill.

Two days later, the Andersons closed their deal, and within two weeks they too had agreed to advance $135,000 to Evangelos.

The Andersons in their lawsuit claim the bank convinced them to release the money. The bank said in court filings that Van Anderson insisted on paying the builder upfront. Hill said he recalls that the Andersons didn't want to agree to any advances, but changed their minds after meeting with the bankers. The bank declined to answer detailed questions about the dispute.

"There was no question in anybody's mind that the Andersons were against making that advance," Hill said.

"We didn't need the bank to hold our hands," Meg Anderson said later. "But they knew the money wasn't going into our house."

Around the corner from the Andersons' lot, workers hired by Columbia Bank recently finished laying cedar shingles on the roof of Robert and Margaret Parker's $705,000 dream house, but not before months of exposure had rusted fireplace flues and warped floorboards underneath.

The Parkers, both doctors at the National Institutes of Health, had hoped to be the Andersons' neighbors by now. But now the Parkers cannot afford to finish building their house.

The Parkers also have filed suit against Columbia Bank, claiming they were encouraged to release $160,000 of their loan money after Evangelos stopped work on their house.

So far, the Parkers said in their suit, they approved $290,000 in loan draws to Evangelos for their new home, but only $190,000 worth of work has been done. The Parkers said it will take at least $200,000 to finish building the house.

The couple and their four sons have rented a house in Rockville while their case works through the courts. Ultimately, the Parkers talk about the prospects of being forced into bankruptcy if their suit against the bank fails.

"We don't have a house, our money from savings went into the new house, and what {equity} we got from selling our first house has been tied up by the bank" because they had used it as collateral to secure the loan on the new home, Margaret Parker said.

The bank so far has rejected three settlement offers from the Parkers and plans to take the case to trial in October 1991. The bank said it willcontest the Parkers' claims of fraudulent misrepresentation and negligence.

The Parkers stand to lose their stake in the unfinished house soon. The shell was scheduled for auction yesterday, at just about the same time the Andersons were to appear in court to try to fight the foreclosure on their lot.

"We've got nothing to lose," Margaret Parker said of their lawsuit. "They can't take our children."

The Parkers said they didn't realize anything was wrong at Brookeville Farms until last fall, nearly a year after construction had started on their house. The roof was to be completed and the windows put in before a $50,000 loan draw was made in July 1989. But the work was still not finished three months later, when an additional $110,000 draw on funds was scheduled.

"The bank kept telling us, 'The value's in the ground,' " Margaret Parker said, recalling the bank's way of saying the partially built home was worth the amount of the loan draws they had approved. "How can I assess whether the value is in the ground? I'm not a builder."

George Paleologos, owner of Evangelos, also had a dream. According to his customers, he wanted to make a name for himself and his Evangelos Enterprises by putting up homes that would be worth twice what they cost to build.

"He sold us the line that builders were making wild profits," said Diane McMinamin, whose house overlooks the Andersons' lot. "He knew what you wanted to hear."

Paleologos' company was forced into bankruptcy earlier this year by its suppliers. His plans to build four more homes on a farm adjoining the Brookeville Farms development were scrapped when the land was foreclosed upon.

Paleologos could not be reached for comment.

Ultimately, Evangelos Enterprises didn't complete any of the original seven homes it had contracted to build. The company ran out of money.

So before they could move in, each of the five families now living in Brookeville Farms had to find new builders and pay tens of thousands of dollars more to finish their homes. Then the families had to pay $30,000 each to have their road paved.

"To some extent, greed was our downfall," said Diane McMinamin, who lives with her husband, Peter, and two daughters on the corner of Brookeville Lakes Court and Goldmine Road. Brookeville Lakes Court is the road paid for by the families.

"The value is here, it's just that there was no bargain," Peter McMinamin said.

There are bargains to be had for buyers who are interested in building a custom home, but the risks cannot be ignored, according to home builders. Especially now, the lesson at Brookeville Farms is that buyers have to consider the financial strength of a builder. And offers to build for a fraction of its ultimate value should raise red flags.

"That's a signal your greed is sweeping you away," said Brad Hill, now a construction manager with Vanguard Co. in Rockville.

Hill and other builders recommended that buyers look into a builder's background by talking to former customers. Subcontractors also will know if a builder is facing a financial squeeze.

Most importantly, bankers recommend that draw payments never be released before work is completed on the house. That construction becomes collateral on the loan, protecting the bank and the borrower, they said.