BOOK REVIEW / FICTION : Caught in Generations of Lies, False Pride : THE HOUSE ON THE LAGOON <i> by Rosario Ferre</i> ; Farrar Straus & Giroux $23, 407 pages

“The House on the Lagoon,” Rosario Ferre’s multigenerational narrative, is a cautionary tale about Puerto Rico, but it could easily inform conflicts in Ireland, the Middle East, or any place else where the political situation splinters families and overwhelms love.

Recently nominated as a National Book Award finalist, if “The House on the Lagoon” should win on Nov. 15, it’ll be the first book by a Puerto Rican or Latina writer to be so honored.

A well-known and critically respected writer in Puerto Rico, Ferre is the daughter of a former pro-statehood governor of the island. And while she shares his ultimate wish of making Puerto Rico America’s 51st state, “The House on the Lagoon” is hardly an exercise in flag waving.

This is a painful story in which Ferre turns an unblinking eye on the inflexible politics that paralyze both sides of the drama. As much as Ferre has her opinion, she respects dissenting views. Her rendering of the independentistas is remarkably warm, genuinely sympathetic.

Written in alternating voices, “The House on the Lagoon” is a novel within a novel. Authored by Isabel, the long-suffering but also pampered wife of one of San Juan’s most successful businessmen, it starts as a history of the marriage and the couple’s intertwining families. But when Quintin, the husband, discovers the manuscript, he’s horrified by what he perceives as an alteration of the truth.

Convinced that Isabel is writing the novel as a kind of revenge for his past misdeeds, Quintin responds by writing corrections and comments in the margins that eventually become a narrative itself. In this way, Ferre presents a startling critique of the way history is told and created.

“The House on the Lagoon” is chock-full of facts and figures, historical dates and congressional acts. Ferre plays with these things, not so much to prove her knowledge, but to question what they really mean.

Although the “facts” are rarely altered in the two versions of events, Quintin and Isabel interpret them to fit their needs. Their stories are like fun-house mirror images--and the absolute truth is lost in a flurry of color and the furious passage of time.

Ferre tips her hand toward Isabel with one technical gesture: Her story is almost always in first person, while Quintin’s is in third, except for his notations, which appear between quotation marks.

A quintessential “Puerto Rican” novel, “The House on Lagoon” is composed of both Latin American and North American elements. Like her Latin American counterparts, Ferre contemplates the possibilities of magic, yet like her northern counterparts, she remains firmly rooted in reality.

“The House on the Lagoon” is alternately curious and wise, ambivalent and forthright. As Ferre writes, the house itself clearly becomes Puerto Rico, trapped by generations of lies and false pride, and now faced with an inevitable, and final, decision about its future. The novel’s last scene is nightmarish and shattering; that the violence does not result in a definitive answer is part of its power.

Perhaps because Ferre herself is a reluctant member of what passes for Puerto Rican aristocracy, her portrayal is intimate but uncomfortable. Readers looking for a sweeping condemnation will be disappointed; those looking for comfort will feel similarly.

Perhaps more importantly, Ferre is neither an advocate nor an apologist, and that fuels the novel’s disturbing tones and rhythms. If there’s any one problem where class and race may have gotten in her way, it’s the portrayal of blacks. Ferre, unfortunately, imbues them with an inherent nobility and erudition, loyalty and spirituality, inadvertently fueling stereotypes.

Readers will find Ferre’s language rich and textured, carefully crafted and somewhat hypnotic. That may be attributable to her native Spanish.

Although Farrar Straus & Giroux is pushing “The House on the Lagoon” as Ferre’s first English-language novel, that’s a bit misleading. Ferre, who is bilingual but Spanish-dominant, wrote the first 200 page draft in Spanish. The manuscript grew to its present size in subsequent revisions, all of which were in English.

Perhaps because it’s not a strict translation, “The House on the Lagoon” manages to incorporate qualities of both languages and cultures--a rarity, and a joy.