Carpenters, masons, electricians and other construction workers were pulled off the $40 million McLean Gardens condominium conversion project in Northwest Washington yesterday, leaving behind half-finished housing units and an air of uncertainty.

In what D.C. housing director Robert L. Moore called the largest residential foreclosure in the city's history, Continental Illinois National Bank this week moved to auction off 459 unsold housing units in the 723-unit complex, an action that has raised doubts about the future of one of Washington's largest and most controversial condominium conversion projects.

"The word 'foreclosure' always conjures up specters," said Philip Mendelson, chairman of the McLean Gardens Residents Association. "It could end up to be nothing more than a change of ownership. It could also be something else more extreme . . . . There's a feeling that things will turn out all right, but nobody really knows."

Mendelson said he and 48 other tenants have signed various kinds of contracts to buy units that list from $75,000 to $167,700. But they have not yet settled, he said. "We think that legally our contracts are valid," he said, "but we are dealing with something that is not supposed to happen in real estate."

Moore blamed high interest rates and the slumping economy. "And I think we are going to be seeing more of this, unfortunately, a lot more," he added.

At McLean Gardens, a handsome World War II-vintage complex of 31 three-story brick buildings surrounded by tall oak trees at Wisconsin Avenue and Porter Street NW, the foreclosure was the latest act in a turbulent history of a conversion that was initially proposed almost 10 years ago, fought bitterly by residents and concluded only last summer.

Residents say the foreclosure against the McLean Gardens partnership, led by Arthur Rubloff and Co. of Chicago, has left 250 owners concerned about the impact on their condominium fees and their property's resale value in a half-finished project.

In addition, the foreclosure makes it highly unlikely that the Rubloff firm will proceed with a $60 million plan to build 650 new units on a 9-acre parcel fronting Wisconsin Avenue, Moore said.

Neither the bank nor the developers would comment on the situation yesterday.

As she sat in her new condominium, Rosemary Soubiran, a retired government worker who has lived in "The Gardens" since 1953, said former apartment dwellers "lived with uncertainty" for many of the last 10 years and now face it again. She also recalled the history of the McLean family, which once owned the fabled Hope Diamond.

"You'll laugh," she said, "But I think it's the curse of the Hope Diamond. There's been a lot of bad breaks here."