Hans J. Schultz, a civil engineer with a penchant for "exotic materials," has a impassion for foam.

Of course, there's nothing very new about building houses with walls of hardened foam; that's good for insulation. But Schultz believes foam is just as good at holding up the whole house, and his company has built foam houses in Maryland and Virginia to prove it.

Schultz, dieseling down the interstate in his Audi 5000, said he has "experimented with everything that has ever come along. Usually, something experimental is new and better, but more expensive. This stuff is new and better, and it isn't any more expensive than conventional wall construction."

In the Montclair subdivision in Prince William County, Multi-Con Inc., the Silver Spring contractor Schultz works for, is finishing its third house made out of expanded polystyrene (EPS).

The frameless, snow-white walls standing alone on concrete slabs in early construction phases bring curious stares, for the EPS houses scattered accross the nation have been, until recently, experimental. David Johnston, an ARCO Polymers representative who markets Dylite, the material used to make EPS panels, said there are fewer than 10 firms making EPS wall and roof panels.

But in the coming weeks, Multi-Con plans to begin sales of houses built with EPS in a subdivision near Manassas. Schultz said they hope to offer the homes, indistinguishable in appearance from standard houses, at around $68,500.

EPS panels are made from the same, squeaky type of material that goes into Styrofoam coffee cups, a material used for ther past 15 to 20 years as insulation between wood studs and drywall. But for the past year, builders have been making houses using various types of EPS panels as the sole outer structural support.

The advantages, builders and sales people eagerly point out, is that solid foam panels give an insulation value in standard, 3 1/2-inch-thick wall that could be achieved in conventional walls only by making them five inches thick. They claim that EPS walls, unlike those built with pine studs, won't dry, crack or warp, "so you don't get cracks and nail-pops that require maintenance later on," Schultz said.

Radva Corp. of Radford, Va., holds patents in the United States, Canada, Mexico and Central American countries for its system of free-standing EPS walls. While the company has begun marketing in this country only over the past year, it has sold panel systems in Panama for nearly two years. The foam system is particularly advantageous there because lumber is scarce and unskilled laborers are able to assemble buildings that, when coated with stucco, are indistinguishable from the nation's traditional houses, according to Donald Dickens, Radva's thermal structure manager. He believes his is the only company that makes free-standing wall panels made of nothing but EPS.

Dickens and his father, the company president, have been building and testing their walls on houses around Radford since 1975, he said. As they are currently sold, wall sections come in various sizes. Electrical conduits are cast in the foam, and outlets--as well as any other opening--can be made with a hot-knife. The sections are connected by screwing together light-guage channels molded onto the edges, he said.

The prices for EPS wall and roof sections range from $41 to $66.50, depending on thickness and whether they are fitted with window or door frames, said Schultz, whose company distributes them to local builders. Builders and their customers may choose any outer coating they like--aluminum siding, brick, clapboard.

"It's very much like a Thermos," said Richard W. Davis, a Radford lawyer who lives in a two-story cement-coated EPS house. "Once it's warm, it's warm, and once it's cool, it's cool."

Davis said his utility bills run "considerably less" than those of friends with similar-sized, but conventionally constructed, homes.

EPS panels have met building standards set by Building Officials and Code Administration (BOCA). They can support more than 1,200 pounds per linear foot, according to William Jacobs, a BOCA staff engineer. He said the Dylite material easily met flame-spread and smoke-thickness standards, comparable with some types of wood, but was not measured for toxicity.

Independent testers hired by ARCO, however, have found when Dylite burns, it produces carbon dioxide and "far less than 1 percent" of carbon monoxide--not enough to present fume danger, Johnston said. Building standards require that combustable EPS walls be enclosed, as are wood-frame walls, by a cementitious sheet, like drywall.