When it was started in 1974 by the National Associaiton of Home Builders, the Home Owners Warranty program, or HOW, was hailed as one of the best things to happen in housing since the federal government began insuring home mortgages during the Depression.

Buyers and ocnsumer activists thought that, at last, someone had come up with a way to make sure defective new houses wre fixed, even if their builders quit the business. Builders thought the strict construction standards and inspections required by the program would answer criticism that their houses were built more shoddily each year and might forestall federal regulation of home building.

"There's no question the HOW program was a damned impressive effort to begin with," says Thomas Stanton, a Federal Trade Commission official who has watched the program evolve.

But almost from the start, critics have assailed the HOW program, which so far has provided warranties against structural defects for about 950,000 new homes. The loudest critics are builders themselves, some of whom are turning to similar programs. Some companies, such as U.S. Home Corp., the nation's largest builder, recently have abandoned HOW to set up their own warranty programs, while others have stopped offering warranties altogether.

Unlike buyers and consumer groups, who seem pleased with HOW, these builders say the program is too expensive, encourages irresponsible builders and is poorly run.

"I have more negative feelings than positive feelings about HOW," says Doyle Stuckey, a Houston builder. "In the beginning, it was operated unprofessionally, and even now it seems so experimental that many of us are still disenchanted."

Modeled after a warranty program in Britain, the HOW warranty is simple enough. It covers structural defects for 10 years. In addition, during the first two years, builders are responsible for repairing at their own expense nonstructural faults, including plumbing, wiring, ductwork and cosmetic flaws. During the final eight years of the warranty, an insurer assumes the cost of repairs, which are limited to structural problems.

Originally, the premium cost was arbitrarily set at $2 for each $1,000 of a home's selling price. Builders also were asked to pay a service fee ranging from $10 to $50 for each home. The costs were usually passed on to the buyer in the price of a house.

The program seemed like a good deal to builders and buyers. But it ran into problems before it built up much momentum. During the severe housing recessio;n of 1974-75, it "became a bankruptcy insurance program," Stuckey says. Builders were going out of business before their two-year responsibility for repairs expired; HOW and its insurers got stuck with the bills.

The program began running up deficits, and even now, after seven years of operatio;n, it owes the homebuilders association $200,000. "We've made our mistakes," concedes Robert Reid, president and chief executive of HOW. "We might have grown too fast, and, as it turns out, the $2 per $1,000 premium was inadequate." The current building slump hasn't helped matters, he adds.

As far as HOW officials are concerned, however, the foundations of the program are bing shored up. Last winter HOW increased its premium rate to an average $3.25 for each $1,000 of a home's purchase price. The rate varies by locality. Also, after the first two years of the warranty, each claim is subject to a deductible of 1 percent of the purchase price. That means that for a $500,000 house, the owner would have to pay the first $500 on any claim.

Early this year, HOW decided, at the urging of its insurer, to sever its ties with the homebuilders association and become independent. Since March, reports Dallas builder and HOW Chairman David Fox, the program has been runnin;g in the black.

Consumer demand for warranty programs, meanwhile, apparently hasn't waned. Nor has the need for them. A recent Federal Trade Commission survey showed, for example, that 62 percent of new homeowners had at least one repair problem costing more than $100 that the builder wouldn't resolve.

As a result, a few companies have come up with their own warranties. In just two months, Home Owners Multiple Equity Inc. of Houston has lured away 16 Houston builders from HOW. The group has commitments to insure 20,000 new homes in Texas, according to its president, N. Rovert Batten, who helped draft the original How program. ASA Service Agreements Inc. of Anaheim, Calif., in less than three years, has signed up 15,000 new homes across the country for its 10-year warranty. Its charge is a flat fee of $375 a house.

HOW's recent premium increases have made the alternative warranties more attractive. So far, builder defections, coupled with builder attrition caused by the current building slump, have trimmed HOW's list of participating builder to about 16,000 from 17,000 last December.

Some observers think the competition will help HOW because it emphasizes that the warranty program has been a good idea all along. "HOW is beginning to prove that providing homeowner warranties isn't charity, but a profitable business," says the FTC's Stanton. "I suspect that competition will give HOW some beneficial incentives" to improve itself, he said.