The Department of Housing and Urban Development's top investigator said new problems found in the troubled agency have cost the federal government millions of dollars and may have subjected thousands of poor families to unsafe and unsanitary housing conditions.

Errors made by HUD workers when they calculated debt and interest on about 80,000 loans used for home improvements or to buy manufactured houses accounted for $174 million of money owed to the department that was never collected. Manufactured houses are built in sections and then shipped to building sites.

When homeowners default on such government-insured loans, HUD pays the lenders and directs officials at loan-service centers in Seattle, Chicago and Albany, N.Y., to collect the debts from borrowers.

HUD Inspector General Paul A. Adams said the department will try to recover as much of this money as possible.

Employees at HUD's Seattle center cost the government $42 million when they manipulated debt data to "improve their own performance" records, according to Adams's recent report. Bills totaling $23 million were improperly sent to a collection agency in some cases or canceled in other cases, the report said. Adams said, however, there is a chance that some of the money could be recovered.

All three service centers have poor control of file documents and money they receive, the report said. "As a result, some debts will never be collected because needed files have been lost," it said.

HUD's Office of Housing disagrees with these findings and is expected to release a statement soon, a department spokesman said this week.

The inspector general's office uses a sampling approach -- investigating a few offices or grant recipients -- to determine where mistakes have occurred. Adams said his staff has been too small to conduct larger probes, but said Congress has appropriated funds to hire 60 workers in the investigating office this year.

The latest report, sent to Congress in December, covers investigations completed during the six months ended Sept. 30. During the period, officials recovered $29 million owed to the government as a result of audits and investigations, the report said.

In one probe, investigators found that "lax oversight" by the Cincinnati field office, which oversees 22,700 subsidized housing units in 369 projects, may be causing thousands of families to live in unsafe and unsanitary apartments.

In the Cincinnati probe, officials who inspected 86 units occupied by poor families receiving government rent subsidies found that all but four failed to meet government standards.

Poor management and inadequate staffing in the Cincinnati offices contributed to the problems, as did inadequate instructions from HUD, the report said.

Although investigators did not inspect the Chicago and Indianapolis field offices, the report said "available evidence" indicates workers in these regions also have not adequately inspected subsidized units.

"If these problems are national in scope, HUD could be paying millions in {rent} for units not meeting its standards," the report said.

Improper use of short-term loans in Community Development Block Grant projects in California, Maine, Massachusetts and Rhode Island cost the government more than $3 million in "unnecessary interest charges," the report found.

Money from the 30 loans, which totaled more than $103 million, was used to pay for ineligible projects, circumvent letter-of-credit regulations, as a permanent source of funds or for long-term loans, the report said.

In other areas, block grant loan guarantees were used to finance ineligible or economically unsound projects, the report said.

Investigators also found that a centralized procurement system that is supposed to save the government money actually is adding to the expense of some HUD programs.

Supplies for local housing authorities cost 18.6 percent more when they were bought under the system, while several public housing agencies saved $923,595 on 31 contracts totaling more than $4 million when they asked for competitive bids from local suppliers, according to the report.

Investigators recommended "termination or substantial revamping" of the centralized purchasing system.

Investigators also said a 1974 law prohibiting an "undue concentration" of people receiving federal housing aid in neighborhoods where large numbers of low-income families already live has never been fully enforced. HUD has not had a consistent method for deciding when undue concentration exists.