A District housing official says the city stopped taking applications for its home rehabilitation loan program under orders from the U.S. Department of Housing and Urban Development, rather than at the direction of city officials as earlier reported. Sandy Robinson, a spokeswoman for the D.C. Housing and Community Development Department, said she had mistakenly provided incorrect information for an Aug. 7 Post story. Phillip A. Murray, a home rehabilitation specialist in HUD's office for the Washington area, said HUD in September 1980 required the District to stop taking applications for the federally funded loan program because of serious problems with the program and a backlog of 938 applicants. A May 1980, HUD-paid consultant's study of the program cited problems in staff training and morale, recordkeeping, quality of the rehabilitation work and inspections of the work. A city-paid report, released a month later, by the accounting firm of Lucas, Tucker & Co. concluded that the program had been "grossly mismanaged." However, Murray said city officials generally have since corrected the problems. The program has made "a complete turnaround," he said. "The program will now be 180 degrees different." Robinson has said the District soon plans to ask HUD's approval to again take applications for the program and is optimistic permission will be given by October.

Willie Bell Davis had watched her two-story home in Arlington slowly deteriorate as termites ate away the floors, walls and attic.

"I had often thought of fixing up the house, but I didn't have the money," she said.

Near Poolesville in Montgomery County, Alonzo O. Graham also couldn't afford to repair his home's decaying floor joists, crumbling asbestos siding or antiquated electrical system. They were just getting worse and worse, he recalled.

Both Davis and Graham turned for help to home rehabilitation programs offered by their counties. Davis received a $22,000 loan at 3 percent interest, with monthly payments of $25, while Graham was given a $15,000 deferred loan, payable upon sale of the house or his death.

They're among at least 4,000 local homeowners who have received similar loans or, in some cases, grants under rehabilitation programs that generally have been operated by area governments since the mid-1970s.

The aid is intended for low- and moderate-income families who own houses that do not meet building codes and need energy conservation measures. In addition to rehabilitation work, some communities allow homeowners to make general improvements but bar luxury items, such as pools.

The hiring of contractors, workmanship and type of improvements are monitored by the local governments.

Local officials say the programs, financed wholly or mostly by money from the Department of Housing and Urban Development, were prompted by strong needs in their communities to upgrade housing for low- and moderate-income families.

In Hyattsville, for example, a survey in September 1980 of the city's older section found that of 1,400 houses, about 60 had major building-code violations and 542 had minor defects, according to Connie Govern, the city's community development block grant administrator.

Bowie and Alexandria, except for a senior citizen aid program, limit their loans to specific neighborhoods that officials said need the most rehabilitation. In Alexandria, the aid is available for residents who live between the Potomac River and Russell Road, except for Old Town. In Bowie, homeowners in the Huntington neighborhood qualify for the rehab programs.

"In Takoma Park, we have quite a few old Victorian homes, and the housing stock generally dates from the turn of the century," said William Gardner, Takoma Park's community development coordinator. "There's a great need for money to rehabilitate the homes and to maintain the housing stock. Many low and moderate [income] families in Takoma Park could not afford to upgrade their homes, to meet plumbing and safety needs" without the aid.

Paul D'Anna, a rehabilitation specialist for the Arlington Housing Corp., a nonprofit group that administers Arlington County's loan program, said the program fills a gap for those who can just barely afford to buy a home and have problems keeping it up.

"This program is good because in a lot of houses that I go to the people don't have the $800 it will take to fix a hole in the roof. They have just enough to make their house note," he said. "They don't have money for maintenance, and without maintenance the house will just deteriorate."

A leaky roof left unrepaired will cause more damage, he noted. "A $1,000 job quickly turns into $4,000," he said.

Local officials reported a strong interest in the programs, and some have waiting lists.

The District stopped taking applications for the city's rehabilitation program in April 1979 because of an overwhelming demand for aid, said Sandy Robinson, a spokeswoman for the D.C. Housing and Community Development Department. No figure on the number of applications was available.

Robinson said the program is supposed to start accepting applications again in October.

Criteria to qualify for the rehabilitation aid vary from community to community. In Montgomery County, for example, a family of four can earn no more than $21,600 to qualify for county-and HUD-funded loans and no more than $29,900 for state loans. In Fairfax County in 1981 a family of four with income of $42,800 could receive aid if it lived in one of eight areas targeted for special rehabilitation attention, officials said.

Interest rates charged for loans also differ. In Prince George's County, homeowners can obtain loans ranging from 1 to 10 percent, depending upon their family's size and income, while in Fair-fax County, the interest rate can reach 13 1/2 percent -- the highest reported among the local rehabilitation programs.

The amount of the loans also varies, ranging from $5,000 in Hyattsville to $25,000 in Arlington County. The average cost to rehabilitate a home ranges from $7,000 to $20,000, officials said.

Without the loans or grants, the officials contend, most houses of low- and moderate-income families would continue to deteriorate. "With bank loans at 16 to 17 percent, they're beyond the means of most homeowners, let alone low and moderate homeowners," said Roger Wentz, chief of housing programs for the Metropolitan Washington Council of Governments.

Todd Davis, 28, said he wanted to improve his duplex home on South Harrison Street in Arlington ever since he bought it six years ago, "but I really could not afford to go to a commercial lending-type association to get the money."

Instead, he borrowed $15,000 at 3 percent interest a year ago from Arlington County to install a new roof, kitchen, windows, bathroom and furnace and to update the electrical system.

He estimated his $63 monthly payment is about a third of what he would have had to pay under a bank loan. Davis, who lives with his wife and son, qualified for the county loan with an income of $16,900 a year.

"We got some pretty nice things done that made it livable to us," said Davis, manager of an International House of Pancakes restaurant in Laurel. "We're not in a position to afford it ourselves.They did things that we could not have done without their help. I'm pretty pro on the program."

Other homeowners who have had their houses rehabilitated through Arlington and other communities' programs also had nothing but praise for them.

Kevin Michael Reilly, 29, of Rosemere Avenue in Colesville, turned to Montgomery County's program to renovate his home after a May 1979 motorcycle accident left him paralyzed from the neck down, ending his rehabilitation work.

He said he received a $40,000 deferred loan to repair his home, which "looked like it was a [Jesse] James gang hideout." The roof and doors were rebuilt to building codes, a new air conditioning system and storm windows were installed, and a bidroom and large bathroom were added to accommodate his special needs.

Reilly, a programmer for IBM Corp., said he qualified for the loan because of his medical expenses. Without the loan, he said, he probably would have been forced to sell the house and move into an apartment designed for the handicapped.

Davis, 64, said her 80-year-old home on North Edison Street in Arlington probably would have been condemned without her rehabilitation loan. Termites had so weakened the home that extensive structural repairs were done.

"They had to put in new floors," Davis said, pointing to spots where the floor had fallen to the foundation below. "I had to put plywood under the hot water heater to keep it from falling through."

Davis, who shares the home with a niece, said she couldn't have afforded the repairs on her income of $80 a week for housework. "It's a hundred times better now," she said. "I was so tickled when they did the work . . . . It's real confortable and real nice."

Other houses in her neighborhood, Highview Park, also have been rehabilitated through Arlington County's program, ending the area's run-down look over the last five years, Davis said. Highview Park is one of three neighborhoods designated for special attention by county officials. The others are Columbia Heights West and Green Valley-Nauck.

Graham, 77, also is pleased with his home's rehabilitation. "It makes me happy and prouder of my house," he said. He shares the home, on Trundle Road three miles west of Poolesville, with his wife and three grandchildren.

He said the deferred loan he received from Montgomery County's rehabilitation program particularly is halpful to him because he's retired and lives on a limited income. "I think it's a wonderful program because they help you," he said. "There's a lot of people that need help."