The Department of Housing and Urban Development, as part of a nationwide effort to sell off apartment buildings it has acquired, is putting seven District projects on the auction block, including the Clifton Terrace Apartments, a 285-unit development whose former owners have been charged with theft and misappropriation of funds in connection with their management of the project.

HUD has sped up its efforts to sell projects like Clifton Terrace, cutting its inventory to 144 projects with about 14,000 apartments, the lowest level since 1972. "Our concentrated efforts to return these properties to private ownership are taking hold," said Philip Abrams, HUD assistant secretary for housing. "HUD should not be in the business of owning and operating residential properties."

HUD, the department foreclosed and took ownership.

Figuring that it was costing the government $10 per unit per day to own and operate the projects, HUD changed its sale policy in 1981. "The basic decision was to sell them on a 'as-is' basis, rather than repairing them and then selling them," said Abrams. HUD requires potential buyers to put money for repairs in escrow before the sale to ensure the repairs are made.

By doing the repairs before sales, HUD increased its costs and delayed sales, Abrams said. "The property would generally deteriorate during that period so you had a double losing situation. The tenants had increasingly poor housing conditions and it was costing a great deal of money in holding costs," he said.

With the change in policy, HUD also set a goal to sell projects within six months after they were acquired. Abrams said it now takes seven or eight months to sell most projects but he hopes to meet the goal next year. The department's projections call for sales of a total of 238 projects in fiscal 1983, which would reduce the inventory to 40 or 50 projects, depending on how many new ones are acquired.

To help sell the projects, HUD may provide attractive mortgage financing and is attempting to sell less desirable projects by offering them as part of a package that includes projects with high market values.

The department came under fire last year when it negotiated the sale of seven projects with especially attractive financing to First American Housing Preservation Corp., which had ties to the Reagan administration. HUD offered the projects for $11 million, with a 11.5 percent mortgage and a 2.5 percent second loan to finance rehabilitation.

"The negotiated sale was done because it was never done before. It was an experiment, and it proved it was an effective way of disposing of hard-to-sell properties," Abrams said.

HUD has also standardized its policy on mortgages it will provide. It will offer mortgages at the regular maximum FHA rate, now 13 percent, or at a below-market rate, now 8 percent. But all bids will be discounted to present value or the equivalent of an all-cash sale, to make sure the government is getting the best deal.