The Housing and Urban Development Department is going after the wages or pensions of more than 1,000 current or retired federal workers who have defaulted on government-insured home-improvement and mobile home loans.

The department identified its targets by matching records from the Office of Personnel Management against Federal Housing Administration lists of defaulted loans under its Title I program.

Locally, the program turned up 120 people who owe the department a total of nearly $400,000. Notices have been sent to them.

HUD isn't sure how much federal workers or retirees owe nationwide, but one official said the average loan is about $4,000, which totals approximately $4 million.

Under the Debt Collection Act of 1982, the government can "offset" -- that means we take it out of your paycheck," the official said -- up to 15 percent of the debtor's salary or pension unless he works out another arrangement.

So far the effort is limited to civilian workers, but HUD expects to be prepared next month to go after military personnel too.

Under Title I, a person may borrow up to $15,000 from a commercial lender to finance home improvements. The program also allows larger loans for mobile home purchases. The mobile home loans are first mortgages and, in the event of default, the lender must foreclose, sell the home and present a claim to HUD for any loss.

In the case of home improvements, the note is usually a subordinate lien, and HUD officials say it often makes no sense to foreclose because there will be nothing left after the primary notes are paid.

When a federally connected debtor is identified, he is sent a notice giving him 20 days to work out a payment plan or to appeal. If there is no response, or if the debtor becomes delinquent on the new arrangement, HUD notifies his agency to begin "offsetting" his salary.

Department officials said the initial round of notices here has "gotten a very positive response."