If this loan was secured by your property and the loan is in default, the property is at risk of foreclosure. This sounds like it may have been a HELOC, which can alter your remedies. However, you have a number of options available to you both with the bank and potentially against your sister-in-law. You should consult with an attorney immediately.
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From what i can gather your home is security for someone else's loan. That said, the bank has a secured interest in your home and if the loan that is secured by the interest goes unpaid the bank can foreclose on the loan. You should see a local lawyer familiar with real estate issues. A lawyer could help you to determine the current state of title and also help to figure out the complexities of the unpaid loan.
This is a general answer only and you should seek the advice of counsel to address facts specific to your circumstances.