The State of Maryland has close to $60 million that it would like to inject into the anemic housing industry, while helping families with low and moderate incomes obtain mortgage funds.

In order to channel the funds--proceeds from a $65 million mortgage-revenue-bond sale--into the various counties of the state, Maryland officials asked more than 400 mortgage lenders to act as conduits for the mortgage funds.

Much to the chagrin of officials at the state's Community Development Administration, which administers the funds, only 24 lenders agreed to participate in the program.

And of that 24, only seven are savings and loan associations.

Under the program announced last week by Maryland Gov. Harry Hughes, participating lenders will make below-market loans at 13.9 percent to eligible families. The state, acting through the CDA as a secondary market, will purchase the mortgages from the lenders with funds from the bond sale.

Participating lenders will earn a servicing fee of one-quarter percent annually on the unpaid mortgage balances and an origination fee of one percent.

The program would seem to offer the best of all worlds for prospective homebuyers, lenders and the housing industry. At least, that's what Hughes and CDA officials thought.

Indeed, Hughes proclaimed: "The funds will provide not only mortgage monies and construction loans to provide badly needed housing for lower-income Marylanders but will bolster the sagging housing industry at a time when help is desperately needed."

Although Sam Heath of the CDA agrees that the program is helpful to the housing industry, she maintains that "it's a boon for the lending industry."

Apparently state officials felt that, even though lenders don't stand to make a huge profit from participating in the program, they wouldn't turn their backs on an appeal to their civic pride and an opportunity to assist the housing industry.

The savings and loan industry nationwide is staggering through its worst earnings period since World War II as a result of high interest rates and portfolios that are filled with mortgages yielding rates far below current levels.

As a result, many S&Ls are awash in red ink, and some have withdrawn from the mortgage lending market.

"I read the papers and I hear them S&Ls crying, and we send out 400 invitations and we get 24 responses," complained an angry Maryland official, who asked not to be identified.

Interestingly, all of the major Maryland banking institutions based in Baltimore, or their mortgage lending subsidiaries, are participating in the mortgage purchase program. Except for a few mortgage bankers in metropolitan Washington, there is little participation by lenders in this area.

A check of several lenders in the Maryland suburbs showed a lack of interest in the program because officials either felt they couldn't improve profits or that their participation in a similar program didn't net satisfactory results.

"We'd be in competition with ourselves," explained Charles A. Dukes, chairman and chief executive officer of John Hanson Savings and Loan Association of Calverton.

"We've got plenty of money to lend," Dukes continued. "We were up $28 million in savings last month, and we have to put that money someplace."

The one-quarter percent servicing fee would mean, "frankly, no more than breaking even," Dukes added.

Besides, "There isn't that much loan demand in the Washington area" with the prevailing interest rate between 16 and 17 percent.

Dukes acknowledged, nevertheless, that mortgage loans made at 13.9 percent "probably would" generate more demand.

"I'm not knocking the program. I just don't want to lose my neck," Dukes said.

Robert Halleck, executive vice president of Maryland Federal Savings and Loan Association in Hyattsville, said that, as a matter of policy, "We participate in very few of these" programs.

"We're more a portfolio lender than an originator and seller-servicer of loans," he said.

Baltimore Federal Savings and Loan Assocation bid for $2 million of the mortgage funds, for which it paid a one-point fee, which will be repaid whenever a loan is closed. In addition, it will receive another point for closing a loan. It will net about one percent of the loan amount, said Thomas J. Reynolds, a senior vice president.

Maximum loan amounts range from $49,590 to $60,000, depending on the region in which they are made. In all, about 1,100 single-family loans will be made available through the program.