Mayor Marion Barry launched a program yesterday that will give low-interest loans to homeowners in the 14th and U Street NW neighborhood to correct plumbing deficiences, repair leaky roofs and fix other housing violations.

Barry, standing outside the home of Louise Morton, the first loan recipient, said the program, along with construction of the new municipal building, will help revitalize the area.

The 14th and U Street neighborhood is the city's best-known drug trafficking center and was one of the areas hard hit by the 1968 riots following the assassination of the Rev. Martin Luther King Jr. Small businesses from carry-out food to liquor stores exist amid older homes.

The Home Improvement Partnership -- known as HIP -- loan program is designed for both new and longtime homeowners with low or moderate incomes. The intent, authorities said, is to help residents improve and retain their homes, as part of an effort to bring a new and more desirable face to the area.

"The HIP program will complement other measures we have taken to make the neighborhood cleaner, safer, and more comfortable for area residents and families," said Barry before accepting a $160,000 Federal Urban Development Action Grant (UDAG).

The grant was supplemented with a $540,000 loan from the American Security Bank, bringing the amount of HIP loan money to $700,000. City officials said they hope to give loans to 50 homeowners.

Under the program's guidelines, homeowners in the designated area -- bounded by Euclid Street on the north, Georgia Avenue on the east, S Street on the south and 15th street on the west -- can borrow up to $12,000 at a 10 percent interest rate to improve both emergency and nonemergency conditions in their homes.

Morton, 33, said her home has so many housing code violations that she isn't sure where repairs will begin. "I think they will begin by taking the gas meter out of the living room, but I hope they start fixing the leaks in my son's room before we get another big rainstorm," she said.

Morton is unemployed and lives with her three sons on a monthly income of $415. She purchased her three-bedroom home for $16,000 with a loan from the Home Purchase Assistance program. Her HPAP payments will be deferred until her rehabilitation loan is paid in full.

Marie Nahikian, housing development chief for People Involvement Corporation, said PIC will administer the loans and offer counseling.

"At an interest rate of 10 percent I expect people will be lining up at the door . . . all we can hope to do is process the applications as fast as possible and help people through all their kinks," said Nahikian.