NVR, the area's largest home builder that is struggling to cope with massive debt and a soft real estate market, says one of its subsidiaries is unable to make some interest payments and it expects to report its first loss ever in the second quarter.

The McLean-based company, the seventh-largest builder in the country, said land development partnerships it operates will not make interest or principal payments until the loans are restructured. In addition, the company said NVR Development is in default on its $10 million line of credit with which it funds its operations.

"I think this is going to be characteristic of the problems the company will have over the next year," said Lawrence Horan, a vice president of Prudential-Bache Securities, who has recommended that NVR's shareholders sell their holdings.

According to company documents filed with the Securities and Exchange Commission, NVR Development, the subsidiary now behind in its loan payments, acquires and develops land in the Washington-Baltimore area and sells lots to home builders. Most of those lot sales have been to NVHomes and Ryan Homes, NVR's two main home-building subsidiaries.

A company spokesman said NVR Development is developing about a dozen projects in Maryland and Virginia, including Centre Ridge in Fairfax County and Hobbit's Glen in Columbia.

NVR Development's upper management has been in upheaval. NVR Development President Jim Martell resigned earlier this month, and April Young, NVR senior vice president, is leaving at the end of the summer.

NVR is in the process of scaling back and reorganizing its operations, according to an NVR executive who requested anonymity. "We're kind of trimming back toward 1987 levels," he said, referring to a period before the company expanded to take advantage of the real estate boom then sweeping the Washington area.

NVHomes, which sells upscale houses, has combined 10 divisions into seven, resulting in some layoffs, the executive said. The NVHomes marketing department has been disbanded and its four employees have been laid off, including marketing director Ray Smith. Ryan Homes, which hasn't been hit as badly by the slow real estate market because it sells most of its homes to first-time buyers, is contemplating taking similar actions, including division consolidations and layoffs, the source said.

The company also announced Monday that it has hired the investment banking firm of Wasserstein Perella & Co. Inc. to provide financial advice and the firm of Kenneth Leventhal & Co. to assist in evaluating its real estate portfolio. Douglas Poretz, NVR's vice president for partnership affairs, declined to elaborate on why the two firms have been hired. But analysts noted that both companies have been involved in restructurings and sales of other troubled firms.

Until recently, NVR has been a consistently profitable and highly successful player in the real estate industry. It has developed a reputation for building high-quality houses, and its 48-year-old chairman, Dwight Schar, is held in high regard within the industry because of his bold moves in creating one of the country's largest home builders in just 10 years.

Schar, who launched NVHomes in 1980, acquired Ryan Homes in 1986 in a leveraged buyout worth $360 million. NVR, gambling that the Washington real estate market would continue to soar, bought substantial tracts of land in the ensuing real estate boom. In a bid to diversify the company away from the cyclical real estate industry, NVR created a financial services division with a mortgage banking unit and a savings bank.

However, the heavy debt has come back to haunt NVR now that the real estate market in the Washington region, where NVR builds most of its homes, and elsewhere in the country has unexpectedly stalled. The company is saddled with $850 million in debt from its home-building and development operations while its cash flow is being eaten up by the costs of paying interest and taxes on land and houses that are unsold, according to analysts.

"Their land position is causing the most trouble," according to one analyst who asked not to be identified. "There is not enough cash flow out of their home-building operations to support the debt."

In a reflection of the financial markets' concern over the company's ability to service its debt, NVR bonds are trading at deep discounts from their original prices. One bond, is trading at $33, up from its 52-week low of $25.25 -- in effect, paying new buyers a yield of 30 percent a year.

The company has said it is scaling back home-building and development activities in its various markets, including the Washington area, Florida and the Midwest. As a result of the provisions NVR will make against earnings because of these moves, the company said it will report a net loss for its second quarter that ended June 30. In the second quarter of 1989, the company reported a profit of $9 million.

NVR said that, after meetings with its lenders, it expects by next Monday to have its working capital and mortgage financing extended at current levels at least through Aug. 31. The $248 million line of credit and $105 million in mortgage financing expired June 15, but had been extended for one month.

NVR's stock, traded on the American Stock Exchange, fell yesterday to $1.50, down 50 cents, in heavy trading. The stock price has plunged 79 percent in the last year, when it traded as high as $7.25.

Some of the pain of that stock price decline has been felt close to home. NVR Chairman Schar, who owns 9.49 million NVR units, as its stock is called, has seen the value of those units fall from $69 million at this time last year to $14 million yesterday.