A government organization created to raise cash by selling property from failed savings and loans is instead losing $1 million a month and has asked for a $10 million infusion to stay alive, federal regulatory sources said yesterday.

The Federal Asset Disposition Association (FADA) requested the money three months ago to make up for a $10 million operating shortfall in 1987, the sources said. It wanted to cover the shortfall, the sources said, to avoid embarrassment at a time when it is being investigated by two congressional committees, the Justice Department and the Federal Home Loan Bank Board on allegations of mismanagement and conflicts of interest.

Disclosure of the $10 million operating loss in 1987 is likely to intensify a debate in Congress over whether FADA ought to be scrapped or sustained to fulfill its intended mission of selling repossessed property. The money the bank board supplies to FADA comes from the beleaguered insurance fund that also must be used to guarantee deposits at S&Ls.

FADA yesterday defended the $10 million request, insisting the money represents fees that the Federal Home Loan Bank Board, the federal agency that regulates S&Ls, owes it for managing government-owned property.

The bank board said the $10 million request was in addition to $18.9 million in fees the bank board paid FADA in the first 11 months of 1987.

But bank board sources said that some board officials dispute the method FADA used to calculate the $10 million charge. The bank board said it is reviewing the request.

In addition, Rep. James Florio (D-N.J.) yesterday issued a statement questioning FADA's request for funds and asking the bank board for a full accounting of how FADA spends its money and charges for its services.

"I am concerned that FADA is asking for substantial additional federal funds, while its performance is subject to serious question," Florio said in a letter to bank board chairman M. Danny Wall.

The bank board created FADA in the fall of 1985 with $25 million in seed money, half of which it has used. The other half is needed for collateral for a $50 million line of credit with the government. The bank board expected the government-owned company to earn a profit within one year by helping it manage and sell the huge collection of condominiums, office buildings, loans and other assets inherited from failed S&Ls.

But more than two years later, FADA has not only failed to achieve many sales but is consuming so much cash that several members of Congress and the S&L industry said the company should be folded.

Several real estate developers and congressmen have contended that FADA has given contracts to friends and former business associates of FADA employes. They also complain it ignores telephone calls and other requests for information from other members of the public.

Those complaints have prompted several investigations. The Justice Department, for example, is investigating whether FADA broke any laws by hiring a private detective to investigate at least one real estate developer who was publicly critical of FADA.

Bank board spokesman Karl Hoyle said the agency is reviewing FADA from top to bottom, including how the organization charges fees to the bank board, how it answers requests for information from the public and how it awards contracts.

He said the bank board has not decided whether to keep or kill FADA and that the decision will be based solely on whether FADA can be economically viable.

Last year Congress approved a $10.8 billion bailout for the bank board fund that insures deposits at S&Ls. The fund ended 1986 more than $6 billion in the red because of record S&L failures.

Florio, who is chairman of the House subcommittee on commerce, consumer protection and competitiveness, and Rep. Fernand J. St Germain (D-R.I.), chairman of the House Banking Committee, have been investigating FADA for months.

Recently St Germain said he might call for FADA's abolishment.

Congressional sources said that among the complaints that Florio's office is probing are reports that some FADA employes may have improperly used a 110-foot yacht in FADA's inventory.

According to the reports, FADA could have sold or rented the boat to generate revenue. Florio has asked FADA for information about the boat.

Yesterday FADA said none of its employes have used the boat for pleasure. It could not sell the boat because of a dispute over who held the craft's title and it decided in the meantime that tying the boat up was cheaper than paying the insurance and maintenance to rent it out, a FADA spokesman said. The spokesman would speak only on the condition that her name not be used.

In addition to asking for $10 million to reduce its operating deficit, FADA is reviewing its overhead expenses, including six-figure salaries that have gained national attention. FADA's president earns $250,000 and its other top executives earn two to three times the salary of government employes who perform similar functions for agencies that regulate commercial banks.