Max Weich, vice president of Roosevelt Federal Savings and Loan Association of St. Louis, thinks he has discovered the alternative to 18percent mortage rates.

More important for home buyers and sellers, though, he's one of a small but growing number of S&L industry leaders who see a partial solution to high interest rates and low real estate sales sitting in their own deposit vaults.

Weich maintains that the fastest, least painful way out of this prolonged home-sale deep freeze is through a new policy of "enlightened mutual self-interest" on the part of lenders and their mortgage customers. At Weich's S&L, this means using recent All Savers certificate deposit inflows as a tool to convert low-yielding old loans into money-making new loans with discount rates.

Roosevelt Federal, with $90 million in assets, took in $12 million worth of tax-exempt All Savers certificate deposits in October alone. That gush of money has put the S&L back in the black by lowering its cost of funds.

That, in turn, opened the way for Roosevelt Federal's "replacement loan program," featuring 12 and 13 percent mortgages of up to $100,000 for new-home buyers.

The program works like this: Homeowners with nonassumable loans under 13 percent at Roosevelt can offer prospective buyers the opportunity to get a new mortgage--up to twice the size of the existing loan--at a 12 to 13 percent cut rate.

For example, if a couple has a $40,000, 9 percent mortgage with Roosevelt, a buyer of their home can qualify for a new $80,000 mortgage at 12.31 percent. This removes the need for the couple to either slash the asking price of their home or to use some form of creative financing, such as taking back a large second mortgage or trying a legally risky wraparound.

The new loan carries a fixed payment for the first five years with adjustments once every five years thereafter tied to a national "cost of funds" index.

From the S&L's point of view, the replacement-loan plan gets the old 9 percent mortgage off the books permanently, and converts it to a larger investment carrying a rate of return that will rise or fall with inflation. From the buyer's point of view, the 12 percent loan is a godsend, even with the monthly payment adjustment five years down the road.

Weich believes that during the past 30 days, economic conditions have finally come together that allow banks and S&Ls to help themselves and consumers out of the current mess:

The success of the All Savers certificate, which pumped $16 billion into S&Ls during October alone, and should attract another $100 billion in the coming 10 months at rates in the 11 percent range or below.

The grudging, belated recognition by lenders, behind closed doors, that their tough, no-compromise position on mortage assumptions has virtually killed the housing resale market--and hurt themselves to boot.

Moderate declines in the cost of long-term money in the national capital markets, as well as significant easing in the overall inflation rate.

A lot of S&Ls, including Weich's, have operated in the red during 1981. The losses at his and most institutions are the direct result of holding onto billions of dollars worth of 7 to 11 percent mortgages from the 1970s, while having to pay out 12 to 16 percent to attract new short-term savings deposits.

Since most of the fixed-rate, low-yielding loans carry "due on sale" (anti-assumption) clauses, lenders have generally stuck to their guns during the past several years, refusing to allow home sellers to pass along their low rates to subsequent buyers. Weich says the lenders believed that by taking a hard-line stance, they'd force buyers to apply for new, higher-rate loans, and force sellers to pay off their old single-digit-rate mortgages.

What actually happened, though, Weich concedes, was very different: "The market froze. It went dead." People with low-rate, nonassumable loans who'd planned to sell their homes simply closed their doors and went into hibernation. Buyers vanished. And in some states, such as California, Georgia, Colorado, Michigan, New Mexico and a dozen others, courts and legislatures moved to restrict banks' rights to curtail assumptions and raise rates.

Lenders, meanwhile, remained stuck with their money-losing old mortgages, many of them with 25 years or more of red ink yet to spill.

Picture Roosevelt Federal's plan in profitable operation at hundreds of banks and S&Ls elsewhere across the country. Imagine what an impact it could have on a market that everyone assumes is dead.

(For more details, contact Max Weich, Roosevelt Federal S&L, 825 Locust, St. Louis, Mo. 63101.)

Kenneth R. Harney is executive editor of Housing & Development Reporter, published here by BNA, Inc.