I found Jerry Knight's article "Generous Loans Prove Costly for Area Companies" {Business, Oct. 14} to be slanted and inaccurate. This article, similar to a number I have seen recently in The Post regarding commercial real estate, presents the image of self-destructive lending to "greedy and reckless" Washington area commercial real estate concerns by local commercial banks and savings and loans. As a commercial real estate mortgage arranger, I know that this is not the case.

Rather than attempt to provide a complete summary of the actual conditions of our real estate market, I would take issue with a few basic points touched on by the article.

Mr. Knight points out in that it is extremely difficult to determine the actual circumstances behind the financial health of local developers. I do not question him on this, since it is clear he has not obtained an accurate understanding of the condition of developers. All four of the developers named in the article are in substantially better health than portrayed, and some are no doubt profitable at this time if not in the long run.

Mr. Knight mentions that on many loans, borrowers were funded not only 100 percent of cost but also an interest reserve. Interest reserves are routinely attached to a wide range of loans and are commonplace. In fact, they are a fairly conservative vehicle by which one can ensure payment of the loan interest.

Mr. Knight's challenge of the 100 percent of cost funding of developers fails to mention the loan structure he is describing: a joint venture investment in which both the developer and the bank engage in a partnership of risk. The developer, for example, risks losing all of the costs and value enhancement that has been generated or expended on a given project creating value and opportunity where there was none. A joint venture is one of the best and most professional ways in which lending institutions can participate in the tremendous profits experienced during the last decade in the Washington market.

Remember that when a property is affected by a slump, whether it be residential or commercial, one need only wait a relatively short time -- six to 18 months -- until recovery. At that time a superior price and profit can be realized.

It should be noted that in the long run just about every lending institution that has been active in the Washington market has had a rewarding experience regardless of the impact of current difficulties. Profits will be recorded in the future, and the real estate slump will seem short-lived when it is over.

TRACY A. BEER Washington