Although she has a washing machine, Josephine Mays, 67, said she has to haul her laundry several blocks to a laundromat because the antiquated electrical wiring in her Wallach Place NW home makes the appliance useless. The house needs a new roof, but she and her husband, Odell, retirees on a fixed income, cannot afford a bank loan to pay for it.

The Mayses are among many Shaw-area residents who live in houses that need repairs they cannot afford and who are under increasing pressure to sell their homes to affluent professionals whom the area has attracted in recent years.

In the meantime, a half-million dollars that was intended to repair and renovate such homes in the Shaw area has gone unused for two years and now is in danger of being lost to residents there altogether.

In 1981, the Department of Housing and Urban Development granted the District of Columbia's housing department $160,000 to make loans to residents like Mays for home improvements. Matching loans from two private lenders would have brought the total funds available to $510,000.

However, because of the complexity of the arrangements, slow decision-making by the city and the inexperience of the community organization in charge of the program, no loans have been made and one of the private lenders has withdrawn, according to various officials.

James Clay, director of the D.C. Department of Housing and Community Development, said the HUD area office has given him until today to show how the loans will be made quickly or it will abandon the effort.

"Clearly this is an activity that we think is needed and we will do whatever we can to get it off the ground," Clay said.

HUD awarded the money to the city housing agency under its Urban Development Action Grant (UDAG) program. It was to be administered by the 14th and U Streets Coalition, along with matching loans. Perpetual American Federal Savings and Loan (now Perpetual American Bank) agreed to lend $150,000 in matching funds and another $250,000 in loans was pledged by the Fund for an Open Society, a nonprofit mortgage company in Silver Spring that promotes racial and economic diversity in neighborhoods.

The grant from HUD was intended to reduce the interest payments on the loans from the private firms. To qualify, borrowers had to live in the area bounded by Sherman Avenue, and 16th, Euclid and R streets NW. They had to have occupied the house for at least six months and to have an annual income of less than $30,000.

Perpetual has since dropped out of the agreement because of delays in processing the money, according to Thomas Owen, chairman of the board of Perpetual. Since the UDAG program requires matching funds from private organizations, Perpetual's withdrawal may jeopardize the entire loan program, Clay said.

Although Owen said Perpetual would be willing to reconsider its decision to withdraw from the program, he also said his staff already has spent a substantial amount of time working with the coalition to organize the program, but has seen no results.

"Our people spent two years with them, meeting until 11 or 11:30 at night. After having worked at it for two years and nothing having happened, our people said no," Owen said.

Diane Williams, coordinator of the 14th & U Streets Coalition, said she is optimistic that the program can begin operating by the end of the year if Clay's department agrees to help her group.

"Why does it take so long? That's what I've been asking myself all along," Williams sighed.

The reasons are many, Williams said. At the time the grant was announced in early 1981, interest rates were climbing to record highs and DHCD staff members hesitated to put the program into operation immediately, reasoning that even with the interest reductions provided by the UDAG grant, most residents of the area would not be able to pay the interest rates, according to Williams.

Furthermore, she said, HUD regulations required that even before homeowners could begin to apply for the loans, the parties had to prepare a series of documents establishing conditions for the lending.

As the coalition's sole staff member, Williams said she was given responsibility for the bulk of that paperwork. Since the HUD money was lent to the city, which in turn was using the coalition as its agent to administer the loans, the city had to approve the documents.

Also, each document had to be approved by the private lenders, the HUD area office, and in some cases HUD headquarters, Williams said.

"A lot of it was a language-type thing," Williams said. " . . . Everytime a question comes up involving procedure, we have to go to DHCD, and they have to reach an agreement on it. Then we have to go to HUD and talk to the HUD area office, and sometimes they shoot it up to HUD headquarters. So you can't just pick up the phone and get an answer."

In one instance, two key documents sat in the office of the DHCD staff counsel for six weeks waiting for a lawyer to review them, Williams said.

Williams said her relative inexperience with financial matters also contributed to the delays. She said she had at first thought the two private lenders would take responsibility for writing some of the documents.

Instead, she said, "Perpetual's attitude was, 'It's your program, you handle it.' " Representatives from Perpetual and the Fund for an Open Society did offer suggestions on how to prepare the various documents, Williams said, but she was responsible for incorporating the suggestions and revising the documents.

Nor could the coalition afford to hire anyone with experience in renovation-loan programs. Williams herself is a donated employe. She is on the staff of St. Augustine Catholic Church at 15th & V streets NW, which contributes half her work time to the coalition.

HUD allotted $20,000 of its $160,000 grant for administrative costs incurred once the program was under way, but none of that money could be used to start the program, Williams said.

Most of the paperwork had been completed by the time Perpetual withdrew from the agreement in April, acccording to Williams, who said she is angry at the bank's decision.

"Everybody talks about how much better things work in the private sector. Well, it also profits from the community, and I think Perpetual could sacrifice a little bit of that profit and work with a community group instead of pulling out because there are delays," Williams said.

Owen, Perpetual's board chairman, defended his bank's decision to withdraw from the arrangement. "We've donated time. To date it's resulted in nothing," he said. "Perpetual lost money for the last two years. It will probably lose money this year. It's hard to keep donating time with no result," he said.

Williams said she was pleased to learn that Perpetual might reconsider the decision to withdraw. "Our interest is that Perpetual be willing to work with us as a member of the team," she said.

The coalition has asked the city housing department to lend it a staff member experienced in renovation-loan programs until the project gets under way. Clay said he intends to meet with the coalition's board members this week to see what specific proposals they have to keep the program alive.