On a cool evening last April, a group of Washington area home builders gathered at the Marriott Hotel in Tysons Corner to raise money for a $1 million advertising campaign aimed at boosting new home sales, which had dropped to their lowest level since the early 1980s.

As the builders gathered for drinks in the narrow hotel hallway, a shortish man with Boy Scout good looks and a wide smile stood quietly amid his admiring colleagues.

"There's Dwight," one builder murmured to another as he strode forward to grasp Dwight Schar's hand.

"Hello, Dwight," another said.

Schar's name rippled through the crowd as builders paid tribute to the man who has been called a legend of the home-building industry.

But these days, the 48-year-old legend has his hands full. It has been a tough summer for Dwight Schar -- both professionally and personally.

As chairman of NVR L.P. -- which, through its Ryan Homes and NVHomes subsidiaries is the largest home builder in the Washington area -- Schar is grappling with the high debt levels his company took on in better times. Schar is pulling NVR out of certain markets and laying off scores of employees as he looks for ways to adjust to the real estate slump.

Last Tuesday, NVR reported a $53.5 million second-quarter loss after declaring that some of the land it holds is now worth less than it paid for it. Were it not for the down- ward adjustments in the value of its land holdings, NVR said it would have reported a profit of about $1 million, largely on the strength of its earnings from its financial services division. The challenge that Schar faces in the months ahead was underscored by NVR's statement that it expects additional charges against earnings later this year from the decline in the value of its land holdings.

On the personal side, Schar has seen the value of his publicly traded NVR shares fall in the last year from about $72 million to about $9.3 million, as NVR partnership shares have fallen to $1 a share from $7.75. He has put his beloved McLean mansion up for sale, although some friends said the move has nothing to do with his company's financial situation. Earlier this month, he was sued by Washington Bank, the Virginia subsidiary of the former National Bank of Washington, which claims Schar owes the bank $12.5 million. In June, he was sued by his former wife, who claims he owes her $1.3 million.

Much is riding on Schar's struggle.

The company Schar has built in just over 10 years has a commanding local presence, building almost 15 percent of the new homes in the Washington-Baltimore area. And the fortune Schar has amassed symbolizes the wealth and power that has come to area residential real estate developers in the last decade.

As the real estate industry endeavors to right itself in the unexpected storm that has swept in, Schar's situation is on the minds of many builders and developers who have seen their wealth drastically reduced in recent months. He is the biggest, some say he is the best, and even his rivals have a big emotional stake in his success. For if Dwight Schar is having trouble, what are the prospects for ordinary home builders?

As the rules of the real estate game changed during the 1980s, Dwight Schar was one of its most daring players.

Builders said that in the booming real estate markets of the late 1980s, land sellers began demanding that the builders buy land outright. Before that, home builders often were able to "option" building lots by making a small deposit and then paying the balance later.

Although buying land with borrowed money in a rising real estate market is considered a smart way for home builders to beat rising prices, it has come back to haunt Schar now that the market has slowed and it is difficult for NVR to sell land and new homes.

"There's nobody that doesn't have some of this problem," said Thomas Eckert, president of the Virginia division of Pulte Homes Corp. "He was the biggest in the area, so he's going to suffer the most when the market turns."

Added Northern Virginia developer Albert J. Dwoskin: "He and his associates made a few wrong assumptions about the market. If their assumptions had been right, they'd be on top of the hill."

Compounding the difficulty for NVR is the $218 million in high-yield, high-risk junk bonds it issued in 1987 to finance the acquisition of Ryan Homes, Schar's former employer.

Some real estate developers who played the corporate takeover game in the 1980s, and have suffered setbacks this year, have been ridiculed by their colleagues and competitors. Not Schar. "This isn't {Donald} Trump," one competitor said.

If anything, real estate industry executives seem to admire Schar's business style, including his willingness to take big risks in pursuit of rapid success.

"There are plenty of people in this industry who get a little bit of success and flaunt it," said Christopher Zell, vice president for marketing for Winchester Homes Inc. "Dwight doesn't come off that way."

"Dwight is a remarkable and unique individual," said Northern Virginia developer John T. "Til" Hazel, considered Schar's political "mentor." "He's one of the most straight and decent guys I know."

Hazel said that, in an effort to ease Schar's burden, he has released NVR from a couple of deals.

Dwight Schar, who declined to be interviewed for this story, was not born with a silver spoon in his mouth. He grew up in Ohio, leaving home at an early age to work on a relative's farm. He paid his way through college by working the night shift at a pipe-fitting factory. He married high school sweetheart Janice Winkler at the age of 20, and taught junior high school science after graduating from Ohio's Ashland College. After school and on weekends he sold real estate, but he gave up teaching after a few months to sell houses full time.

People who know Schar well said he was affected by the financial insecurity that shaped his childhood years, a factor which has contributed to his extraordinary drive to achieve wealth and success in the real estate business.

Schar quickly became a top salesman for Ryan Homes and moved to the Washington area when the company expanded to the East Coast. By 1977, at the age of 35, he was a top executive with Ryan in Washington. But then, faced with the prospect of being transferred back to Ryan's Pittsburgh headquarters, he quit.

An agreement with Ryan kept him from building homes in competition for Ryan for two years after his departure, so he started NVLand with partners William A. Moran and Stephen M. Cumbie. NVLand bought and developed raw acreage for builders, including Ryan.

Two years later, they started NVHomes, then known as Northern Virginia Homes. Longtime observers of the Washington area real estate market said Schar was one of the first to recognize that as the Washington suburbs expanded, there was plenty of opportunity for new-homes sales in the outer suburbs.

And he also was one of the first to see that Washington was producing a plentiful supply of upwardly mobile, double-income families who wanted more luxurious homes than those provided by Ryan Homes and Ryland Homes, which then dominated the industry.

Schar has said that he came upon NVHomes's more upscale niche while looking for a profitable market that hadn't been tapped by the area's home-building giants.

Northern Virginia Homes's first project was single-family homes in Burke Center, a planned community developed by Hazel in what was then considered remote western Fairfax County.

Schar hit a gold mine. NVHomes took off when the area's real estate market boomed. Schar and his partners also started NVCommercial, which develops commercial property, NVProperties, which builds and manages multifamily dwellings, and an assortment of other companies with the NV moniker -- such as NVRetail and NVIndustrial -- to benefit from every nook and cranny of the real estate industry here.

In 1986, Schar sold stock in NVHomes to the public as a way of obtaining financing for continued growth. NVCommercial, NVProperties and NVLand (now called Elm Street Development) were left as private partnerships. Earlier this year, Schar sold his interest in NVLand to the remaining partners.

Soon after going public, Schar launched the hostile takeover bid for Ryan, one of the nation's largest home builders.

NVHomes's move against Ryan was considered audacious, considering that Ryan was more than five times as large as NVHomes. But in late 1986, Ryan agreed to the buyout in a cash and stock transaction worth $360 million.

He didn't stop there. Schar created a building products group to manufacture parts for Ryan and NVHomes. Recognizing the need to diversify away from the highly cyclical home-building industry, Schar also created a financial services subsidiary that included a mortgage banking division, called NVR Mortgage, and a division that marketed other types of mortgage-backed securities.

In late 1988, assisted by a federal bailout, NVR acquired troubled McLean Federal Savings & Loan Association for $16 million and renamed it NVR Savings Bank. Analysts said the savings and loan has been performing well since its acquisition. Schar also moved into the California market by acquiring two California builders in 1988 and 1989.

Along the way, Schar became involved in Republican politics. Last year, he played an active role and was a major contributor to the unsuccessful Virginia governor's campaign of his close friend and neighbor, J. Marshall Coleman. And he has been a strong supporter of Fairfax County Supervisor Thomas M. Davis III (R-Mason).

Schar devotes considerable time and effort to local charity efforts. He is active in several organizations in the area, including the United Way, the American Cancer Society and fund-raising efforts at George Mason University. Joan Ozdogan, regional director of the Fairfax-Falls Church United Way, called Schar "one of my greatest resources in this community."

But with his successes, Schar has had some difficulties. Earlier this month, Washington Bank-Virginia filed a lawsuit alleging that he had failed to repay most of a $14 million loan. According to court documents, Schar used the proceeds from the loan to make investments in his company.

At home, friends said Schar and his former wife, Janice Winkler, had a stormy relationship and, after 24 years of marriage, they separated in 1986 and divorced in 1988. Schar married Martha McCartney the next year.

In June, Schar's former wife filed a lawsuit claiming that he has violated their divorce agreement, in which Schar agreed to pay her $4.2 million over five years and to turn over 390,000 limited partnership units of NVR stock.

According to the lawsuit, Schar hasn't paid some of the money he owed his former wife last year, $1 million he owes this year and hasn't relinquished some of the stock that was promised. The lawsuit also alleged that he violated the divorce agreement by taking out a $3 million mortgage last October on the McLean home from NVR Mortgage and by putting the house up for sale without his former wife's knowledge.

Schar's McLean home has been up for sale for several months. The initial asking price was $5.2 million, according to area real estate agents, but the price recently was cut to $3.4 million.

Friends said Schar has told them that he and his wife want to move down the street to Merryhill, an NVHomes development of million-dollar town houses. Friends said he also has said he might take his house off the market if it fails to command the right price. But other people who know Schar well express surprise that he would sell the house that has come to symbolize his rise from an Ohio farm to wealth and power.

Schar, who owns a beach house in an exclusive section of Rehoboth Beach, bought the 64-year-old McLean house, called Ballantrae, in 1983. Schar remodeled Ballantrae, a 10,000-square-foot mansion, and has been the host of a number of charity and political fund-raisers there, including a fund-raiser earlier this summer for U.S. Rep. Frank Wolf (R-Va.), at which best-selling author Tom Clancy signed books.

"That house meant everything to him," said one source. "It must kill him {to sell it}."

In a marked contrast to his bold business behavior, Schar is known for his laid-back, casual manner. He is rarely seen wearing a tie.

He is said to pick good executives, communicate what he wants and then step aside. His inner circle of top executives is said to include Michael J. Cannizzo, chief executive of Ryan Homes; Charles T. Langpaul, president of NVHomes; Joseph P. Berghold, NVR's chief financial officer; and Douglas H. Poretz, NVR's vice president for investor relations.

"He likes to have people around that are basically self-starters," said April Young, executive vice president of NVR Development. But Schar steps back into the picture if things aren't going his way, as he did last year when he replaced the president of Ryan Homes with Cannizzo.

Sources said that while Schar moved away from some aspects of day-to-day management of the company in the last two years, he has moved back in recently because of the company's financial troubles. "The reins are being tightened," said a former executive. But that same executive said that he didn't expect heads to roll as a result; Schar apparently believes the company had been going in the direction that he would have taken it had he been more involved in day-to-day management.

While NVR is struggling financially because of its hefty debt load, its home-selling operations, particularly Ryan Homes, appear to be faring well in a weak real estate market. One positive sign that emerged last week was that NVR's lenders have agreed to extend the company's $248 million working line of credit, which it uses to fund its operations, through Feb. 15, 1991. At a difficult time, it was a sign of lender confidence in Schar.

To the outside world and to some insiders at NVR, Schar has responded coolly and methodically to his company's predicament. Schar, like other developers, might be faulted for assuming that the Washington area real estate market would continue its explosive growth. But NVR insiders said that once the magnitude of the problem became clear, he and the rest of NVR's board of directors moved quickly to assess the damage and come up with solutions.

Investment bankers Wasserstein, Perella & Co. and the Kenneth Leventhal accounting firm were retained to assess the company's status and recommend solutions. Last week's decision to declare publicly that some of the land NVR holds has dropped substantially in value was a result of their efforts, sources said.

"It's not a 'the-sky-is-falling situation,' " said one company insider. "It's 'Hey, guys, this is the problem, this is the solution. This is the best way through it.' "

To friends and business associates, Schar has joked occasionally about his plight and has remained good-humored and upbeat.

Fairfax County Supervisor Davis recalled Schar's manner during another difficult time for him -- J. Marshall Coleman's campaign, which ended in defeat. "He's cool. I don't think he's going to act out of panic or desperation," Davis said.

"Hell, he could have walked off months ago and let the banks do their thing," added Til Hazel.

Said Northern Virginia developer Dwoskin, who has differed with Schar politically:

"Don't count him down or out and don't underestimate his ability or tenacity."