A $1.8 million mortgage insurance program for high-risk, low-income home buyers in the District, scheduled to start Oct. 1, has been delayed until at least December.

D.C. Council member Charlene Drew Jarvis (D-Ward 4), the head of the council's Housing and Economic Development Committee, said she has requested a meeting with Housing Finance Agency officials to discuss their failure to produce regulations for the program. The lack of regulations has delayed the insurance program.

"Everyone expected the program to be running on time when we allocated the money in March," Jarvis said. But "for the past six months, we have been saying Oct. 1 is coming and we have been asking,'Where are the rules?'" She said she hopes the meeting "will spur them {Housing Finance Agency officials} on to produce the insurance program."

Jarvis said she expects to meet with the agency's acting executive director, Carol Madison, in a week to 10 days for a briefing on the agency's progress. The council also must approve any regulations the Housing Finance Agency develops.

Madison said the agency's staff has developed some draft regulations that "we have circulated to the board of directors for their review." Jerome Shuman, chairman of the board, said the staff has been working on program rules since July and is running only a month behind schedule. Although Shuman declined to say when the agency would send the rules to the council for approval, he said that the program "should be operating sometime in December."

Under the insurance fund program, the city would underwrite loans for low-income buyers who cannot obtain private mortgage insurance. Lenders generally won't approve mortgages without such coverage, which protects lenders against foreclosure losses. During the past year, however, private underwriters have been tightening their insurance requirements, preventing many buyers from qualifying for mortgages. The District's loan insurance program would apply less stringent underwriting requirements to its applicants.

Jarvis said she had counted on the program being ready by Oct. 1 so it could help people applying for loans under the Housing Finance Agency's single-family home mortgage program. That program, scheduled to expire Nov. 20, provides mortgages at 8 1/2 percent to low- and moderate-income buyers up to a maximum loan of $115,000. Jarvis estimated that up to one-fourth of all would-be buyers applying for loans under that program have been rejected because they do not qualify under current underwriting guidelines.

"The direct consequence of the {insurance program} delay has been that people have been getting turned down" for loans who otherwise wouldn't have been if the mortgage insurance program were under way, she said.

"We only had six weeks in October and November to get the loan insurance program running to be used in conjunction with the single-family mortgage program. And that's why I am so distressed. The city can do another single-family mortgage bond issue, but it won't be at 8 1/2 percent. Rates will still be lower than the market rates, but they will be higher than now because the market rates are higher. And that could mean the difference of whether a family of four can afford a mortgage."

About $1 million is left in the single-family mortgage program fund.

Madison attributed the delay in developing the regulations to staffing problems. Although the city has already allocated money for the program in this year's budget, money for a staff person to run it is still pending before Congress, which is reviewing parts of the District's budget. "It is a vital link in implementing the program," Madison said. "Consequently, we have to balance staff time on this program with others."

Gloria Cousar, executive director of the D.C. Mutual Housing Association, which advocates affordable housing in the District, said development of the mortgage insurance program rules also has been hindered by the lack of a permanent director at the Housing Finance Agency and the fact that the board is essentially running the agency on a daily basis. Madison, who declined to comment on the agency's internal workings, has been nominated to become its permanent executive director.

The agency's last executive director resigned in January 1985. Cousar said that without the full power of the position, Madison has been reluctant to act without the board's consent. "The agency needs people in positions who are confident about making decisions," Cousar said.