More and more military veterans are losing their homes, particularly in the nation's economically depressed sections, and a record number of others are buying and refinancing houses, the Veterans Administration reports.

At the same time, the VA is more often paying off loan guarantees, an amount frequently far lower than the amount owed on the mortgage, and leaving lenders to get rid of the foreclosed houses.

Low interest rates have ignited a real estate boom in many communities, including the Washington area, but mortgage defaults are rising in states where the problems of the oil, manufacturing and farming industries are most severe, said Raymond Brody, a VA loan guaranty official.

Five states -- Texas, Colorado, California, Illinois and Ohio -- accounted for 43 percent of all VA foreclosures in March and for nearly half of all the cases in which the agency paid lenders' claims rather than buying the foreclosed properties.

Houston is a housing disaster zone where the VA is holding about 7,000 houses it has been unable to sell, and the number could rise to as many as 10,000 by the end of the year, a Senate Veterans Committee staff aide said.

With the Federal Housing Administration, secondary mortgage corporations and private lenders holding thousands of other foreclosed properties in Houston, the VA's chances of selling its houses quickly are slim.

"The VA is taking a beating in areas such as Houston, but the problem extends beyond economically depressed areas," the Senate aide said.

Under deficit reduction legislation passed in 1984, the VA now buys fewer of its foreclosed homes than in the past, and legislation recently introduced in the Senate would cut back the number even further, he said.

A total of 20,500 unsold houses in the agency's inventory at the end of April were valued at $847 million, according to VA figures. The number of loans in default -- meaning the veterans had stopped making mortgage payments -- have risen from 99,061 at the end of 1983 to more than 118,000 at the end of March this year.

Foreclosures on veterans' homes have risen steadily from 6,184 during the last three months of 1983 to 8,613 in the quarter that ended in March.

Under the terms of the 1984 deficit reduction law, the VA increasingly is passing on its problems to the banks and savings and loans that made the loans.

In the past, the VA routinely bought the foreclosed homes and resold them, with the proceeds going back into its loan guaranty fund.

Under this system, however, the VA often lost thousands of dollars, especially in the Southwest and "Lenders will lend as long as they can make a buck and you can still make a buck on GI loans." -- Raymond Brody, VA loan official Midwest, because the costs of acquiring and maintaining the property, plus the cost of the guarantee the agency had to pay the lender, far exceeded the proceeds from sales, the aide said.

Now the agency uses a formula to determine whether it will be able to recover these costs, and if it cannot, the VA pays only the guarantee, which is 60 percent of the value of the home up to a maximum of $27,500, and saves the cost of acquisition and maintenance. The lender then is left with the job of disposing of the house.

The VA formula now places the cost of acquiring and maintaining a foreclosed home at 10 1/2 percent of the property's appraised market value.

Under the proposed legislation in the Senate, the agency also would be required to take into account how long it would need to dispose of the property. The VA would be instructed not to buy a house unless it believed resale would be possible "within 12 months of the date of foreclosure at a price advantageous to the federal government," according to the Senate aide.

With the 10 1/2 percent-of-value guideline now in use to determine acquisition and holding costs, "the VA is only realizing 70 percent of what it is having to pay out," he said.

"It may take four years to sell" the Houston houses alone, he said. "How much loss will the taxpayers eat up between now and when we sell them? Property loses value the longer it sits vacant" because of deterioration and vandalism, the Senate aide said.

"Lenders are getting off scot-free. With VA loans they incur almost no liability. Our feeling is that it is not the taxpayers' responsibility to assume all the risk."

Lenders disagree with this assessment. They warn that banks and other lending institutions, fearing they will be unable to sell houses quickly and for enough money to recoup their losses on the defaulted mortgages, may toughen their stands on VA-backed loans.

As a result, some veterans may be denied financing under the VA loan guaranty program, said Glen S. Corso, a senior vice president with the Mortgage Bankers Association of America.

Corso noted that the VA guaranty program was established to aid veterans who might have trouble qualifying for conventional financing, and tougher standards could defeat this purpose.

The bankers' organization is telling its members that "unless they want to suffer losses they must be a lot more conservative in underwriting and amounts they lend" than in the past, Corso said.

In the 12 to 14 percent of foreclosures where the VA does not buy the houses, lenders "are getting stuck with the worst cases" and are incurring losses averaging about $20,000 per property, compared with about $2,000 per property when the agency acquires the property, he estimated.

When making VA-guaranteed loans, lenders decide whether to approve a borrower's credit, but "where they are vulnerable is in appraisals. These are all done by VA appraisers. . . . If the property is significantly overvalued . . . the lender ends up with the loss," Corso said.

A bank or savings and loan can order its own appraisal if it does not like the look of the VA's assessment, but this adds time to the loan approval process.

"In times like this, each appraisal can take 2 1/2 months" and borrowers won't wait, he said. "Theoretically, lenders have a way to protect themselves but it's not a practical way."

Brody said he has not noticed banks and savings institutions backing away from making VA loans.

"Lenders will lend as long as they can make a buck and you can still make a buck on GI loans," he said.

The VA is watching underwriting practices, the guidelines lenders use in deciding whether a prospective borrower is a good credit risk, and "looking to be more realistic in appraisals. We are asking appraisers to use a little more common sense."

The intent of the 1984 legislation may have made lenders more cautious when making loans to veterans, "but that was a secondary consideration. Primarily, we were spending money and not taking into account" the extent of the VA's costs. "Everybody felt the government was taking losses," Brody said.

Another measure, passed by the Senate last year and now pending in the House Veterans Affairs Committee, would make several other changes in the loan guaranty program, adding stricter credit underwriting standards like those used by most commercial lending institutions.

The bill, introduced by Sen. Frank H. Murkowski (R-Alaska), chairman of the Senate Veterans Committee, also would change appraisal, foreclosure, property management and sales procedures.

During hearings on the bill in March, VA chief benefits director R. J. Vogel said the agency already has adopted many of the underwriting standards used by private lenders and that other provisions of the legislation would result in a heavier paperwork burden for already overworked VA staff members.