<PAGE>
 
                                                                    10.(i)(G)(5)
                                                                                
                        WAIVER AND SECOND AMENDMENT TO
                   POST-PETITION LOAN AND GUARANTY AGREEMENT


          WAIVER AND SECOND AMENDMENT TO POST-PETITION LOAN AND GUARANTY
AGREEMENT, dated as of February 20, 1998 (this "Amendment"), among MONTGOMERY
WARD & CO., INCORPORATED, an Illinois corporation and a debtor and debtor in
possession ("Borrower Representative"), MONTGOMERY WARD HOLDING CORP., a
Delaware corporation and a debtor and debtor in possession ("Parent" or
"Guarantor"), as Guarantor, the other Guarantors signatory hereto (together with
Parent and the Borrower Representative, the "Credit Parties"), GENERAL ELECTRIC
CAPITAL CORPORATION, a New York corporation (in its individual capacity, "GE
Capital"), for itself, as Lender, and as Agent (the "Agent") for Lenders, and
the other Lenders signatory hereto.

                                 RECITALS
                                 --------

          WHEREAS, the Borrower Representative, the Guarantors, the Lenders and
the Agent are parties to that certain Post-Petition Loan and Guaranty Agreement,
dated as of July 8, 1997 (as amended by the Waiver and First Amendment to Post-
Petition Loan and Guaranty Agreement, dated as of July 30, 1997 and as further
amended, supplemented or modified, the "Loan Agreement"). The Borrower
Representative and the Guarantors have requested that the Lenders agree to amend
and waive certain provisions of the Loan Agreement. The Borrower Representative,
the Guarantors, the Lenders and the Agent have agreed, upon the terms and
conditions specified herein, to amend and waive certain provisions of the Loan
Agreement, all as hereinafter set forth.

          NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained and for other good and valuable consideration,
the receipt and sufficiency of which are acknowledged, the parties hereto agree
as follows:

          SECTION 1.  Defined Terms and Interpretation.

          (a)  The capitalized terms used herein which are defined in the Loan
Agreement, shall have the respective meanings assigned to them in the Loan
Agreement except as otherwise provided herein or unless the context otherwise
requires.  In addition, as used in this Amendment, the following terms shall
have the following meanings:

          "Second Amendment" shall mean the Waiver and Second Amendment to Post-
Petition Loan and Guaranty Agreement dated as of February 20, 1998.

          "Second Amendment Effective Date" shall have the meaning specified in
Section 5 hereof.

          (b)  Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.

          (c)  No provision in this Amendment shall be interpreted or construed
against any Person because that Person or its legal representative drafted such
provision.
<PAGE>
 
          SECTION 2.  Waiver.

          (a)  As of the Second Amendment Effective Date, Lenders hereby waive
the provisions of Section 6.4 of the Loan Agreement, for the limited purpose of
permitting the Borrower Representative to sell the real property and
improvements that constituted the premises (the "Premises") of the Closed
Locations (as such term is defined in the Waiver to Post-Petition Loan and
Guaranty Agreement, dated November 7, 1997) and of the Borrower Representative's
Greenwood, Indiana retail store and auto center; provided, however, that the
Borrower Representative acknowledges and agrees that it is hereby permitted to
sell or cause to be sold, over and above the limit set forth in Section 6.4 of
the Loan Agreement, Premises which, in the aggregate, have a book value not to
exceed $70,000,000.

          (b)  The Lenders agree that any Premises sold pursuant to subsection
2(a) above, not in excess of an aggregate of $70,000,000, shall not be included
in calculating the amount of assets permitted to be sold by the Borrower
Representative and its Subsidiaries pursuant to Section 6.4 of the Loan
Agreement.

          (c)  As of the Second Amendment Effective Date, Lenders hereby waive
(i) the provisions of Section 8.1(r) of the Loan Agreement, for the limited
purpose of permitting the Credit Parties to make modifications to their cash
management systems including the treatment of Automated Clearinghouse
transactions pursuant to that certain Motion of Debtors and Debtors in
Possession for an Order, Pursuant to Sections 363 and 364 of the Bankruptcy
Code, Authorizing Certain Modifications to Cash Management System and Granting
Superpriority Status to Certain Claims that Would Arise Thereunder and (ii) the
provisions of Section 1.4 of the Loan Agreement, for the limited purpose of
permitting the Credit Parties to pay certain prepetition claims pursuant to (x)
Motion of Debtors and Debtors in Possession for an Order Approving Participation
in Consent Decree, Purity Site Work Agreement and Agreement for Participation of
Montgomery Ward in Purity Oil Sales Superfund Site Settlement and (y) Motion of
Debtors and Debtors in Possession for an Order (A) Approving Compromise and
Settlement of Eminent Domain Action, (B) Authorizing the Use of Estate Assets to
Make Certain Tax Payments in Connection Therewith and (C) Modifying the
Automatic Stay to Allow Such State Court Proceedings as Are Necessary for
Implementation of Settlement.

          (d)  As of the Second Amendment Effective Date, Lenders hereby agree
to waive the provisions of Section 6.3 of the Loan Agreement, for the limited
purpose and solely in connection with, the granting by the Borrower
Representative or any Guarantor of any Lien in favor of any Person acting as an
agent of such Credit Party in connection with any dispositions or sales of the
Premises pursuant to a valid and enforceable order of the Bankruptcy Court,
provided that: (i) any such Lien shall not extend to any assets or properties
other than the Premises that are being disposed of or sold and shall only secure
the fees and obligations owed to such person by such Credit Party and (ii) such
Premises shall not be considered Eligible Real Property for purposes of
calculating the Borrowing Base.

          SECTION 3.  Amendments to the Loan Agreement. The Loan Agreement is,
effective as of the Second Amendment Effective Date, amended as follows:

          (a)  Annex E to the Loan Agreement is hereby amended by inserting in
the second line of paragraph (a) thereof after "Fiscal Month" and before the
comma the wording "except the last Fiscal Month of each Fiscal Quarter" and by
adding the following paragraphs (n) and (o) thereto:

                                       2
<PAGE>
 
               "(n)  Minimum Requirements for Additional Monthly Reporting.  To
     Agent and Lenders, (i) within 15 days after the end of each Fiscal Month,
     for all stores of the Borrower Representative with respect to which no
     order has been entered by the Bankruptcy Court authorizing the closing
     thereof ("Comp Stores") in the aggregate, sales, gross margin dollars and
     gross margin percent on a preliminary basis for each division within such
     Comp Stores for such Fiscal Month, together with the aggregate divisional
     sales, gross margin dollars and gross margin percent for such Comp Stores
     included in the annual operating plan for that Fiscal Month, (ii) after the
     end of each Fiscal Quarter except the last Fiscal Quarter of each Fiscal
     Year, a copy of the financial report required to be delivered by the
     Borrowers and their Subsidiaries to the United States Trustee in connection
     with the chapter 11 cases of the Borrowers and their Subsidiaries that
     summarizes, on a cumulative basis, the financial performance and the
     results of the last Fiscal Month of such Fiscal Quarter and Fiscal Year to
     date contemporaneously with the delivery of such report to the United
     States Trustee, but in no event more than 30 days after the end of such
     Fiscal Quarter (the "Fiscal Quarter Report") and (iii) after the end of
     each Fiscal Year, a copy of the financial report required to be delivered
     by the Borrowers and their Subsidiaries to the United States Trustee in
     connection with the chapter 11 cases of the Borrowers and their
     Subsidiaries that summarizes, on a cumulative basis, the financial
     performance and the results of the prior Fiscal Year contemporaneously with
     the delivery of such report to the United States Trustee, but in no event
     more than 60 days after the end of such Fiscal Year (the "Fiscal Year
     Report").

               (o)  Preliminary Compliance Estimates. No later than 45 days
     after the end of each Fiscal Quarter, to Agent and Lenders a statement in
     reasonable detail showing the calculations used in determining compliance
     with each of the financial covenants set forth in Annex G based upon
     Borrower Representative's preliminary estimate of the numbers to be used in
     such calculations."

          (b)  Subsection (b) of Annex G of the Loan Agreement is hereby amended
and restated to read as follows:

          "Minimum EBITDA.  At the end of each Fiscal Quarter set forth below,
     EBITDA, for the respective periods set forth below, shall be an amount not
     less than the following:

     (i)       $(125,000,000) for the three Fiscal Months ending the first
               Fiscal Quarter of 1998;

     (ii)      $(150,000,000) for the six Fiscal Months ending the second Fiscal
               Quarter of 1998;

     (iii)     $(185,000,000) for the nine Fiscal Months ending the third
               Fiscal Quarter of 1998;

     (iv)      $(185,000,000) for the twelve Fiscal Months ending the fourth
               Fiscal Quarter of 1998;

     (v)       $(175,000,000) for the twelve Fiscal Months ending the first
               Fiscal Quarter of 1999; and

     (vi)      $(150,000,000) for the twelve Fiscal Months ending the second
               Fiscal Quarter of 1999."

                                       3
<PAGE>
 
          SECTION 4.  Representations and Warranties True; No Default or Event
of Default. The Credit Parties represent and warrant to the Agent and the
Lenders that on the date of and after giving effect to the execution and
delivery of this Amendment (a) the representations and warranties set forth in
the Loan Agreement are true and correct in all material respects on the date
hereof as though made on and as of such date (unless any such representation or
warranty expressly relates to an earlier date); and (b) neither any Default nor
Event of Default has occurred and is continuing as of the date hereof.

          SECTION 5.  Conditions of Effectiveness.  As used in this Amendment,
"Second Amendment Effective Date" shall mean:

          (a)  in connection with Sections 2 and 3(a), the date when, and only
when, Agent has received executed counterparts of this Amendment from the
requisite number of Lenders that comprise the Requisite Lenders; and

          (b)  in connection with Section 3(b), the date when, and only when:
(i) Agent has received executed counterparts of this Amendment from the
requisite number of Lenders that comprise the Requisite Lenders; (ii) the
Bankruptcy Court has entered a final order that is not subject to appeal, in
form and substance satisfactory to the Agent, in its sole and absolute
discretion, authorizing the payment of a fee to Agent from the Borrowers, for
the account of the Lenders who execute this Amendment, in an amount up to
$1,000,000 (the "Fee") and (iii) Agent has received the Fee.

          SECTION 6.  Reference to this Amendment and Effect on Loan Documents.

          (a)  From and after the Second Amendment Effective Date, each
reference in the Loan Agreement (including in any Exhibit thereto) to "this
Agreement," "hereunder," "herein" or words of like import shall mean and be a
reference to the Loan Agreement, as affected and amended hereby.

          (b)  From and after the Second Amendment Effective Date, each
reference in the Loan Documents (i) to the Loan Agreement shall mean and be
reference to the Loan Agreement, as affected and amended hereby and (ii) to the
terms whose definitions are amended pursuant to this Amendment shall mean and be
a reference to such term as affected and amended hereby.

          (c)  The Loan Agreement, the Notes and the other Loan Documents, as
affected and amended hereby, shall remain in full force and effect and the Loan
Documents are hereby ratified and confirmed in all respects.

          (d)  The effectiveness of the waiver evidenced by Section 2 hereof,
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of the Lenders or the Agent under the Loan Agreement, or
constitute a waiver of any other provision of the Loan Agreement or any other
Loan Document.

          SECTION 7.  Governing Law; Binding Effect.  In all respects, including
all matters of construction, validity and performance, this Amendment shall be
governed by, and construed and enforced in accordance with, the internal laws of
the State of New York (without regard to conflict of law provisions) and any
applicable laws of the United States of America, and shall be binding upon the
parties hereto and their respective successors and permitted assigns.

                                       4
<PAGE>
 
          SECTION 8.  Execution in Counterparts.  This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.

          SECTION 9.  Consent of Guarantors.  By their execution and delivery of
this Amendment, each Guarantor hereby consents to all of the terms and
provisions of this Amendment and ratifies and confirms that each of the other
Loan Documents to which it is a party remains in full force and effect and
enforceable in accordance with their respective terms.

          IN WITNESS WHEREOF, this Amendment has been duly executed as of the
date first written above.



                                    BORROWER:


                                    MONTGOMERY WARD & CO., INCORPORATED

                                    By:     /s/ Douglas V. Gathany
                                            -----------------------------------
                                    Name:   Douglas V. Gathany
                                    Title:  Vice President and Treasurer


                                    GUARANTORS:


                                    LECHMERE, INC.

                                    By:     /s/ Douglas V. Gathany
                                            -----------------------------------
                                    Name:   Douglas V. Gathany
                                    Title:  Assistant Treasurer



                                    AMERICAN DELIVERY SERVICE COMPANY

                                    By:     /s/ Philip D. Delk
                                            -----------------------------------
                                    Name:   Philip D. Delk
                                    Title:  Vice President, Secretary



                                    CONTINENTAL TRANSPORTATION, INC.

                                    By:     /s/ Philip D. Delk
                                            -----------------------------------
                                    Name:   Philip D. Delk
                                    Title:  Vice President and Assistant
                                            Treasurer

                                       5
<PAGE>
 
                                    JRI DISTRIBUTING, INC.
                                    STANDARD T CHEMICAL COMPANY, INC.
                                    WFL REALTY, INC.

                                    By:     /s/ Philip D. Delk
                                            -----------------------------------
                                    Name:   Philip D. Delk
                                    Title:  Vice President and Secretary



                                    M-W PRESTRESS, INC.
                                    MW DIRECT GENERAL, INC.
                                    MW DIRECT LIMITED, INC.

                                    By:     /s/ Philip D. Delk
                                            -----------------------------------
                                    Name:   Philip D. Delk
                                    Title:  Secretary



                                    MONTGOMERY WARD
                                     INTERNATIONAL, INC.
                                    MPI, INC.

                                    By:     /s/ Philip D. Delk
                                            -----------------------------------
                                    Name:   Philip D. Delk
                                    Title:  Assistant Secretary



                                    BARRETWARD PROPERTIES CO., INC.
                                    BRANDYWINE DC, INC.
                                    BRANDYWINE PROPERTIES, INC.
                                    BRETTWARD PROPERTIES CO., INC.
                                    FIRST MONT CORPORATION
                                    FOURTH WYCOMBE PROPERTIES,
                                     INC.
                                    GABEWARD PROPERTIES
                                     CORPORATION
                                    GARDEN GROVE DEVELOPMENT
                                     CORPORATION HUGA REALTY INC.
                                    JOSHWARD PROPERTIES
                                     CORPORATION
                                    LECHMERE DEVELOPMENT
                                     CORPORATION
                                    M-W FAIRFAX PROPERTIES, INC.
                                    M-W PROPERTIES CORPORATION
                                    M-W RESTAURANTS REALTY
                                     CORPORATION
                                    MARCOR HOUSING SYSTEMS, INC.
                                    MARYWARD PROPERTIES
                                     CORPORATION

                                       6
<PAGE>
 
                                       MF NEVADA INVESTMENTS, INC.
                                       MICHAELWARD PROPERTIES CO.,
                                        INC.
                                       MONTGOMERY WARD
                                        DEVELOPMENT CORPORATION
                                       MONTGOMERY WARD LAND
                                        CORPORATION
                                       MONTGOMERY WARD PROPERTIES
                                        CORPORATION
                                       MONTGOMERY WARD REALTY
                                        CORPORATION
                                       MW LAND CORPORATION
                                       NATIONAL HOMEFINDING SERVICE,
                                        INC.
                                       998 MONROE CORPORATION
                                       PAULWARD PROPERTIES CO., INC.
                                       ROBERTWARD PROPERTIES
                                        CORPORATION
                                       SACWARD PROPERTIES, INC.
                                       SECOND MONT CORPORATION
                                       7TH & CARROLL CORPORATION
                                       SEVENTH MONT CORPORATION
                                       618 CORPORATION
                                       619 CORPORATION
                                       THE 535 CORPORATION
                                       THIRD WYCOMBE PROPERTIES, INC.
                                       2825 DEVELOPMENT CORPORATION
                                       2825 REALTY CORPORATION
                                       UNIVERSITY AVENUE
                                        MARKETPLACE, INC.
                                       WFL DEVELOPMENT CORPORATION
                                       WYCOMBE PROPERTIES, INC.


                                       By:     /s/ G. Tad Morgan
                                               ---------------------------------
                                       Name:   G. Tad Morgan
                                       Title:  Vice President and Secretary



                                       GOODE FURNITURE COMPANIES, INC.
                                       MONTGOMERY WARD SECURITIES,
                                        INC.
                                       R M P DEVELOPMENT CORPORATION
 
                                       By:     /s/ G. Tad Morgan
                                               ---------------------------------
                                       Name:   G. Tad Morgan
                                       Title:  Secretary

                                       7
<PAGE>
 
                                       MONTGOMERY WARD HOLDING
                                        CORP.

                                       By:     /s/ G. Tad Morgan
                                               ---------------------------------
                                       Name:   G. Tad Morgan
                                       Title:  Assistant Secretary


                                       JEFFERSON STORES, INC.

                                       By:     /s/ G. Tad Morgan
                                               ---------------------------------
                                       Name:   G. Tad Morgan
                                       Title:  Vice President and Treasurer


                                       AGENT and as LENDER


                                       GENERAL ELECTRIC CAPITAL
                                        CORPORATION

                                       By:     /s/ James C. Ungari
                                               ---------------------------------
                                       Name:   James C. Ungari
                                       Title:  Its Authorized Signatory



                                       LENDERS:


                                       THE CHASE MANHATTAN BANK

                                       By:     /s/ William P. Rindfuss
                                               ---------------------------------
                                       Name:   William P. Rindfuss
                                       Title:  Vice President


                                       BANK OF SCOTLAND

                                       By:     /s/ Joseph Fratus
                                               ---------------------------------
                                       Name:   Joseph Fratus
                                       Title:  Assistant Vice President

                                       8
<PAGE>
 
                                       BANKAMERICA BUSINESS CREDIT,
                                        INC.

                                       By:     /s/ Thomas G. Sullivan
                                               ---------------------------------
                                       Name:   Thomas G. Sullivan
                                       Title:  Vice President



                                       BANKBOSTON RETAIL FINANCE INC.
                                        (f/k/a GBFC, INC.)
 


                                       By:     /s/ Joseph V. Balsamo
                                               ---------------------------------
                                       Name:   Joseph V. Balsamo
                                       Title:  Vice President



                                       BANQUE PARIBAS

                                       By:     /s/ Duane Helkowski
                                               ---------------------------------
                                       Name:   Duane Helkowski
                                       Title:  Vice President


                                       By:     /s/ Robert G. Carino
                                               ---------------------------------
                                       Name:   Robert G. Carino
                                       Title:  Vice President



                                       CREDIT AGRICOLE INDOSUEZ
 
                                       By:     /s/ David Bouhl, F.V.P.
                                               ---------------------------------
                                       Name:   David Bouhl
                                       Title:  Head of Corporate Banking,
                                               Chicago


                                       By:     /s/ Dean Balice
                                               ---------------------------------
                                       Name:   Dean Balice
                                       Title:  Senior Vice President, Branch
                                               Manager

                                       9
<PAGE>
 
                                       THE CIT GROUP/BUSINESS CREDIT,
                                        INC.

                                       By:     /s/ Nicole Cangelos
                                               ---------------------------------
                                       Name:   Nicole Cangelos
                                       Title:  Assistant Secretary



 
                                       CITIBANK, N.A.


                                       By:     /s/ John Calder
                                               ---------------------------------
                                       Name:   John Calder
                                       Title:  Attorney-in-Fact


                                       CITICORP USA, INC.


                                       By:     /s/ Claudia Slacik
                                               ---------------------------------
                                       Name:   Claudia Slacik
                                       Title:  Vice President


                                       FLEET CAPITAL CORPORATION

                                       By:     /s/ Thomas E. Joyce
                                               ---------------------------------
                                       Name:   Thomas E. Joyce
                                       Title:  V.P. & Portfolio Manager



                                       FLEET NATIONAL BANK

                                       By:     /s/ Kevin Chamberlain
                                               ---------------------------------
                                       Name:   Kevin Chamerlain
                                       Title:  Vice President



                                       GOLDMAN SACHS CREDIT PARTNERS
                                        L.P.

                                       By:     /s/ John Urban
                                               ---------------------------------
                                       Name:   John Urban
                                       Title:  Authorized Signatory

                                       10
<PAGE>

                                       GREEN TREE FINANCIAL SERVICING
                                        CORPORATION


                                       By:     /s/ Hugh M. Norris
                                          ------------------------------------
                                       Name:   Hugh M. Norris
                                       Title:  Director of Credit


                                       HELLER FINANCIAL, INC.


                                       By:     /s/ Thomas Bukowski
                                          ------------------------------------
                                       Name:   Thomas Bukowski
                                       Title:  Senior Vice President


                                       IBJ SCHRODER BUSINESS CREDIT
                                        CORP.


                                       By:     /s/ Alfred J. Scoyni
                                          ------------------------------------
                                       Name:   Alfred J. Scoyni
                                       Title:  Vice President


                                       JACKSON NATIONAL LIFE    
                                        INSURANCE COMPANY
                                         By:  PPM FINANCE, INC.
                                         Its Attorney-in-fact


                                       By:     /s/ Jeffrey J. Podwika
                                          ------------------------------------
                                       Name:   Jeffrey J. Podwika
                                       Title:  Vice President


                                       LEHMAN COMMERCIAL PAPER, INC.


                                       By:     /s/ Michele Swanson
                                          ------------------------------------
                                       Name:   Michele Swanson
                                       Title:  Authorized Signatory


                                       NATIONAL CITY COMMERCIAL
                                        FINANCE, INC.


                                       By:     /s/ Mark Hanak
                                          ------------------------------------
                                       Name:   Mark Hanak
                                       Title:  Account Officer


                                      11
<PAGE>
 
                                       STAR BANK, N.A.


                                       By:     /s/ Mike Ehlert
                                          ------------------------------------
                                       Name:   Mike Ehlert
                                       Title:  Vice President


                                      12