When Susan and Jeffrey Williams found a house they wanted to buy in Fairfax last winter, they faced the prospect of paying 13 percent interest on a mortgage loan. The existing 8 3/4 percent mortgage on the house was not assumable, according to the sales agent.

The Williamses, through their settlement attorney Paul D. Scanlon, then resorted to a legal device called a land trust that they thought would allow them to assume the lower loan. What this meant in effect was that the owner of the house, Sharon Bailey, would retain title to the property while the Williamses paid the mortgage. They went to settlement.

However, the lending institution, First Federal Savings and Loan Association of Arlington, objected to the arrangement and notified Bailey it would take action to foreclose if the outstanding balance on her loan was not settled. As an alternative, it offered the Williamses a chance to assume the loan for a 1 percent fee. (Assumption was possible at the stated rate because the S&L already had sold the loan on the secondary market.)

But the Williamses refused. They authorized Scanlon to bring suit against First Federal to force it to recognize the validity of the land trust. Scanlon, who has arranged more than a score of land trusts for real estate clients, wrapped in two similar cases and filed a class action suit against First Federal and Herndon Federal Savings and Loan and Arlington-Fairfax Savings and Loan as well.

In U.S. District Court yesterday, the Virginia lenders agreed not to foreclose on the loans pending a hearing on May 12.

This is believed to be the first court case involving loan assumption in this area, although there has been a rash of similar cases around the country in recent years. The outcome may determine the fate of similar "creative financing" methods now enjoying popularity as a way for homebuyers to get around paying onerous interest rates.

The issue centers on the "due-on-sale" clause in mortgage contracts, i.e., the clause that allows the lender to demand payment of the outstanding balance of a loan when the house is sold. Courts have upheld the right of buyers to assume mortgages written by state chartered savings and loans, but conversely have upheld the right of federally chartered S&Ls to enforce the "due-on-sale" clause.

Legally speaking, the Northern Virginia case is not identical, as Scanlon decided not to challenge "due-on-sale." Instead, the case hinges on the legality of a land trust, an arrangement whereby the homeowner names him or herself trustee, retains title to the property and sells a "beneficial interest" in it. Thus the owner is selling personal, not real property, according to Scanlon. The buyer makes payments on the real estate without the need to get approval from the lending institution.

In the case of First Federal, the issue was not so much one of upgrading the loan by raising the lending rate as the lender having a say about who is going to take over the loan, said the S&L's attorney, Waller Dudley.

In the case of Herndon Federal and Arlington-Fairfax, the mortgages were not assumable at the original rates after all. Marsha and Peter Bittner, and Richard E. Nault could not take over the 9 percent mortgages on the houses they bought in Fairfax.About 10 days ago, after several mortgage payments, the lenders informed the original owners they had 30 days to pay up or the Bittners and Nault could discuss assumption agreements.

No offers were made nor did Nault or Scanlon inquire about a deal. Paul Kincheloe, attorney for Herndon Federal and a member of the board, said it was Herndon's policy to permit assumptions at a "reasonable rate, not a token 1/4 or 1/2 percentage point less, but not splitting the difference (between the old and current mortgage rates) either." Arlington-Fairfax had no comment.

If the plaintiffs are successful, they will open up a loophole for getting cheaper mortgage rates. If they are not, they may have to face up to paying interest rates that are even higher than those they sought to avoid.