When Shirley and Bernard Carroll heard two years ago that the house they rented was going to be sold, Mrs. Carroll prayed for someone to help them.

The couple has an annual income of $29,000, but had just helped two of their five children part-way through college and didn't have $5,000 for a down payment. A major savings and loan association had turned them down on the grounds that the house needed repairs.

The Carrolls had rented the rowhouse at 617 11th St. NE from an absentee landlord for 17 years. They were active in the nearby Israel Baptist Church and were fond of their neighbors.

"There's no trouble on this block," Mrs. Carroll observes proudly.

Last month, the couple learned they could obtain a 30-year, $33,250 mortgage at 12-3/4 percent interest from a special fund. They will borrow money from relatives for a small down payment.

The loan was one of 24 made in the District by a nonprofit mortgage company, Fund for an Open Society, which calls itself Open. Open has lent $399,000 over the past nine months to low-and moderate-income buyers who can't get financing through conventional institutions. The aim is to keep them from being displaced by more affluent newcomers to the inner city.

"I can't really believe it's true," Mrs. Carroll said of the loan. "I'm going to be crying and boo-hooing all over the place at settlement."

Open is the brainchild of Morris Milgram, one-time owner of Rosemary Village in Silver Spring, who has been active in the development of integrated housing, and James Farmer, founder of the Congress on Racial Equality (CORE) and a former assistant secretary of the Department of Health, Education and Welfare.

Milgram and Farmer founded Open in 1975. It helps residents of racially mixed inner-city neighborhoods, the kind of neighborhoods that have attracted affluent white buyers in recent years. The organization's national committee includes Vice President Walter Mondale, Rep. Morris K. Udall (D-Ariz.) and former U.S. ambassador to the United Nations Andrew Young.

Board members include David I. Ashe, a labor attorney from New York; Roland C. Baker, senior vice president of Colonial Penn Insurance Group; and Paul Yzaguirre, president of the National Council of La Raza, a national Hispanic organization.

Open's national office is in Philadelphia, where Milgram lives and where it operated in several neighborhoods before coming to Washington. It has an office in Silver Spring but plans to move into the District this summer.

To finance its mortgages, Open sells debentures at 8 to 10 percent interest. It seeks other kinds of investments from individuals and institutions and resells its mortgages to pension funds and corporations such as the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp.

The Cooperative Assistance Fund lent Open $200,000 for five years at 10-1/2 percent, for instance. It is a consortium of 10 foundations, including the Ford Foundation, the Ford Foundation, the Rockefeller Brothers Foundation and the Charles Stewart Mott Foundation.

Open also makes short-term emergency loans to families whose houses are in hazardous condition or who have a financial crisis that prevents them from meeting mortgage payments.

Money for these higher-risk loans comes from a special revolving fund financed through tax-deductible contributions and grants from foundations.

Out of the revolving fund, Open also lends to tenant groups who need "earnest money" to buy cooperatives and makes loans for "gap financing" -- money used by tenant groups buying their buildings until individual apartment buyers go to settlement.

Decisions on these loans are made by a local volunteer committee that includes specialists in such fields as law, real estates, banking and counseling.

A spokesman for the organization said the committee reviews applications using "firm underwriting criteria." Those who receive Open mortgages must attend counseling sessions on how to maintain houses and deal with contractors.

Michael Mayer, executive director for Open's displacement prevention program, said the organization does not necessarily take any more risks in making its loans than other lenders, but is willing to allow smaller down payments, make loans quickly and oversee rehabilitation work on all its property.

"By hiring, monitoring and paying contractors ourselves, we can usually get the job done in 60 days or less," Mayer said. The city's Department of Housing and Community Development has a backlog of emergency rehabilitation work, Mayer said.

The shorter the time spent on the rehabilitation of a house, the less time the mortgage money will be tied up, Mayer pointed out. Since banks can't sell their mortgages on the secondary market until all rehabilitation work is done, many banks refuse to lend money to homeowners if they believe a building's rehabilitation will take several months, Mayer said.

Open has recently entered into an agreement with the District's Neighborhood Improvement Administration (NIP) to take on some of the program's emergency rehabilitation cases, such as families whose homes have been damaged by fire.

The city's housing department is also considering funneling over a million dollars through Open so that the organization can match a portion of the city money with money from private sources.

Open has "crossed the boundaries of redlining," said NIP administrator, Marcus Dasher Jr., referring to the bank and S&L practice of refusing to make loans in poorer neighborhoods. Dasher said he did not know of any other private organization that lends exclusively in the inner city, although a consortium of S&Ls was set up several years ago for that purpose.

The Rev. Raymond Kemp, whose Sts. Paul & Augustine Church at 15th and V streets NW is considering investing money in Open's debentures to help its neighbors and parishioners buy their own homes, observes: Southeast, Prince George's and the eastern part of Montgomery County? The real point is who's going to own the city."