The John Hancock Mutual Life Insurance Co. became one of the District's largest landlords this week when it took over five deteriorating Southeast Washington apartment projects with more than 1,100 units and thousands of dollars in unpaid city taxes and water bills.

Last Tuesday Hancock's attorney was the lone bidder at a foreclosure sale it had instigated to take the property from two Richmond-based developers who had failed for nearly three years to make payments on $7.7 million in mortgages from the Boston-based insurance company.

Hancock decided to become the landlord because "they just felt that they could not let the physical deterioration continue and protect their investment," said David S. Kahn, Hancock's local attorney.

Kahn added that "millions of dollars are involved and they cannot write them off."

The projects, 20- to 30-year-old garden apartments, are Southern Gardens, 160 units, at 13th St. and Southern Ave.; Atlantic Terrace, 198 units, 4301-4329 Third St.; Ambassador Square Apartments, 525 units, situated on a series of hillsides between Douglas and Stanton Rds.; Jeffrey Gardens, 165 units, at Seventh St. and Barnaby Rd.; and Jeffrey Additions at 4201-4237 Seventh St.

The District government last year tried with little success to improve the slovenly conditions at Ambassador Square, where one-third of the tenants have their rents subsidized by the city using federal aid.

The buildings' owners, Robert Cantor and his brother, Eddie, two Richmond businessmen with wide-ranging real estate holdings, could not be reached for comment on the foreclosure.

The insurance company has been running the five projects since October when it went to court and won the right to have the buildings placed in receivership because they were "in horrible physical condition and daily suffer great waste and appear to be in violation of numerous applicable housing laws and ordinances, including peeling paint and plaster, exposed light fixtures, ground erosion around the buildings, failing heating," broken and missing windows and doors and general unsanitary conditions.

The five properties have unpaid water and sewer bills totaling $1.03 million. Washington Gas Light Co., is owed about $750,000, and delinquent real estate tax bills on the projects total $295,967, according to Kahn. And the properties are awash in vacancies. Forty percent of the units at Jeffrey Gardens and Jeffrey Addition are empty and boarded up, according to Kahn. About 20 to 25 percent of Southern Gardens is vacant and about 30 percent of Ambassador Square is empty, he said.

This week's foreclosure marks the second time since the early '70s that Hancock has foreclosed on owners of the five projects. The insurance company took the the unusual action of advertising the foreclosure in The Wall Street Journal, hoping to attract prospective buyers for the current sale. But there were no takers.

In the early '70s, Hancock took back Ambassador Square, Southern Gardens and Atlantic Gardens after the original developer, Gordon Middleman, defaulted on the mortgage payments, said a source involved in the recent foreclosure. Six months later, the three projects were sold to the Cantors, who assumed the previous mortgages. To help the new owners, the insurance company granted an 18-month moratorium on the mortgage payments; then the payments resumed for the next nine or 10 years.

Five or six years later, Arnold Perper and Samuel Sugar, the developers of Jeffrey Gardens and Jeffrey Addition, ran into financial difficulties and gave the deeds to these properties back to Hancock to avoid foreclosure, the source said. Hancock immediately sold those two projects to the Cantors and declared a two-year moratorium on the mortgage payments.

Early last year, city housing officials tried to force improvements at Ambassador Square by threatening to cut off the project's financial life-blood--$13,000 a month in federal aid for 63 poor families who lived there. The city charged that the complex was filled with rats and roaches, had few fire alarms and extinguishers and had been cited for 2,080 housing code violations.

City housing director Robert L. Moore announced in March that the Cantors, through a written agreement with the District, had agreed to fix up the buildings at Ambassador.

Moore said at the time that the deterioration of the huge project was the fault of both the landlords who had failed to property maintain the buildings and tenants who vandalized the buildings and failed to pay their rent.

But tenants said yesterday that the agreement brought little improvement. They said there was little done until JGB Properties was hired by Hancock to run the properties after the receivership was granted in October.

"It is improved but not the extent that you can see it," said Edith Hackett, an official with the Ambassador Square tenants association.

City housing officials would not comment on their continuing payments to Ambassador Square or whether the housing code violations had been corrected.

Kahn said that Hancock "is very interested in making these places habitable and rehabilitating" the vacant units.