The Department of Housing and Urban Development announced yesterday that it is cracking down on mortgage delinquencies by striking 27 lenders from the list of those eligible to receive federal mortgage insurance to back home loans.

The 27 lenders were the first to feel the effects of HUD's Homebuyer Protection Plan, announced in April.

The move targets specific branch offices of mortgage lenders where default and foreclosure rates have reached as high as three times the regional average. It prohibits the branches from insuring loans with the Federal Housing Administration effective immediately.

"This is simply an effort to assist the industry in weeding out the worst in the business, while protecting consumers by providing them with lenders they can trust," FHA Commissioner William Apgar said.

Under the program, HUD will evaluate its 7,000 lending partners quarterly. Those with delinquencies that reach three times the regional average will be terminated from the FHA insurance program.

A larger group of lender branches with foreclosure rates that reach or exceed 1.5 times the regional average will be placed on a "credit watch" to determine the cause of their problems. Branches will have three months to show "significant improvement" before they are cut off from FHA-insured loans, HUD officials said.

In the Washington region, recent terminations included branches of Capitol Mortgage Bankers, based in Millersville, Md.; the Baltimore branch of Harbor Financial Mortgage; and the Home Mortgage Center office in Alexandria.

HUD said yesterday it also has assigned 53 lenders to credit-watch status.

The move toward performance-based evaluations was largely praised by industry and consumer groups.

"We're thrilled this has happened," said Gale Cincotta, chairman of Chicago-based National People's Action and longtime HUD critic. "My sense is that the more of these folks that get cut off, the more likely it is that the others will straighten up over time." Last year Cincotta led 800 activists in a demonstration on HUD Secretary Andrew M. Cuomo's front lawn, calling for the measures that were announced yesterday.

But Steve O'Connor, senior director for single-family housing at the Mortgage Bankers Association, cautioned that HUD's 300 percent threshold is fairly generous.

"If a company's got a claim to a default rate of more than 300 percent [of the local average], that suggests a serious problem in their credit-review mechanisms."

FHA coverage insures mortgage lenders 100 percent against borrower default. Last year the agency paid out $6 billion in claims because of foreclosures on about 75,000 houses.

Local Effects

These mortgage company branches have been prohibited from receiving federal mortgage insurance to back additional home loans:

* Capitol Mortgage Bankers, all branches

* Home Mortgage Center, 3227 Duke St., Alexandria

* Harbor Financial Mortgage, 5024 Campbell Blvd., Suite H, Baltimore