President Clinton yesterday defended his reliance on a top Democratic Party fund-raiser to help him and first lady Hillary Rodham Clinton buy a house in suburban New York as "a legitimate business arrangement." And he said he understands why other wealthy friends would have shied away from offering similar help, out of legitimate fear that they would be "dragged around" through political and legal controversy.

In a brief appearance before reporters, Clinton said he accepted help from friend Terence McAuliffe--who agreed to guarantee the Clintons' $1.3 million mortgage by placing an equal amount of his own money in an account with Bankers Trust--only after receiving assurances from the Office of Government Ethics that the assistance "did not constitute a gift under federal law."

Aides have said the same thing previously, but yesterday was the first time Clinton has addressed the controversy. He also confirmed that he is considering getting out of the McAuliffe-backed loan in favor of a more conventional mortgage before the Nov. 1 closing.

Former White House chief of staff Erskine B. Bowles had backed out of a plan to help with the house financing, and the New York Times recently reported that former treasury secretary Robert E. Rubin signaled through intermediaries that he did not want to help.

Asked about these people yesterday, Clinton declined to comment specifically, but then added, "I think some people didn't want to do it because they know they live in a . . . Larry Klayman political press world in which what's true is not as important as whether you can be dragged around, you have to spend a lot of money you don't have or you'd rather not spend for reasons that have nothing to do with anything that's real."

Judicial Watch, run by Clinton antagonist Larry Klayman, has sued the Clintons, McAuliffe and Bankers Trust over the loan, claiming it is an illegal gift.

"It seems that the president is a bit testy these days after 38 scandals and an impeachment proceeding," Klayman told the Associated Press. "Mr. Clinton's defensiveness and personal attack on me is because he knows that Judicial Watch will hold him accountable legally."