St. Charles, like nearly all other federally backed "new communities," has defaulted on financial commitments, prompting the government to seek a "salvage deal" with the developer, a U.S. Department of Housing and Urban Development official said.

Albert R. Diehl of HUD's new communities office said St. Charles failed to pay $8.5 million in interest on its federally guaranteed loans of $37.25 million. HUD anticipates that the developer will not be able to pay other interest or the loans themselves, he said.

In an effort to head off a HUD foreclosure of undeveloped sections of St. Charles, the agency is seeking a settlement with the developer of near $20 million -- the value of the undeveloped land, he said.

"We don't want to foreclose because that tends to taint the community," Diehl said.

Charles E. Stuart, vice president of St. Charles Associates, a subsidiary of Puerto Rico-based Interstate General Corp., acknowledged that his firm was "in arrears, but so is anyone else in the real estate business with loans."

He said he expected a deal would be reached early this month. He also said St. Charles has yet to turn a profit for his firm, "but we hope to."

Diehl, like Stuart, blamed St. Charles' financial problem on the 1973-74 and current economic recessions. "This is not a management problem, but the economy," Diehl said.

Of the dozen other new communities HUD granted loan guarantees or other types of federal assistance, only one -- The Woodlands near Houston -- has not defaulted, he said.

By September 1984, when the new communities program is set to be abolished, HUD expects to have paid $249 million to cover the defaulted loans, not including interest, Diehl said.

St. Charles' problem "is the rule rather than the exception" in the program, Diehl noted.

HUD has taken over nine of the new communities that failed financially for a variety of reasons, including the 1973-74 recession, overly optimistic market projections by developers and poor management.

HUD is seeking salvage deals with the developers of two other projects in addition to St. Charles.

St. Charles was the second development approved for federal assistance under the 1968 New Communities Act.

The other new communities are Cedar Riverside in downtown Minneapolis; Soul City in rural North Caroline; Jonathan, Minn., near Minneapolis; Newfields, near Dayton, Ohio; Gananda and Riverton, near Rochester, N.Y.; Flower Mound, Tex., near Dallas; Maumelle, Ark., near Little Rock; The Woodlands; Harbison, S.C., near Columbia; Shenandoah, Ga., near Atlanta; and Park Forest South, Ill., near Chicago.