The tenants of a Cleveland Park apartment building said this week their efforts to buy the 69-year-old structure may collapse, a victim of stricter lending rules placed on financial institutions.

Ten banks have rejected their loan application so far although residents of 25 of the 29 apartments have signed up to buy their units and have contributed a total of about $100,000 toward the down payment, said tenant leader Dan Harris.

Other financing is lined up, the owner wants to sell the property to the tenants and the building is in a prime location at the corner of Connecticut Avenue and Porter Street NW, making it top-notch collateral for a lender, Harris said.

But bank after bank has "slammed the door in our faces," he said. Harris is president of the tenants' association and a nine-year resident of the building, which is called the Monterey.

"It's just amazing, the hoops we're going through with the banks. We're getting some pretty crazy" responses to loan applications, he said. One lender is still considering the application but wants more cash down than the tenants have been able to produce, he said.

The building "is prime real estate, right in front of a Metro stop {the Cleveland Park station}, and it's in pretty good shape," Harris said.

"No one's making loans in this market," said Ben Hecht, the tenants' attorney. "In this {economic} environment, everything's upside down, and some lenders want 20 percent to 30 percent" ownership of the building.

The residents expect to get a permanent loan of $1.65 million from the National Cooperative Bank and a $690,000 construction loan from the Savings Association Financial Enterprises, a consortium of savings and loans that lend to moderate-income buyers, according to Hecht, who is with the nonprofit Harrison Institute for Public Law at Georgetown University. But so far, 10 lenders have refused to give them a $1.16 million loan to acquire the property.

After the building is purchased and rehabilitated, the permanent loan would be used to help pay off the other two loans. Before making long-term loans on an apartment building that is being converted, bankers want to know that renovation work is completed and that the units have been sold, Hecht said.

Representatives of several banks either did not return a reporter's phone calls or said they would not comment on loan applications and their decisions.

Effects of bank losses caused by "the Antonellis and the Cafritzes are trickling down," Hecht said. "The bad commercial loans are coming back to haunt these people {the Monterey residents} who had nothing to do with it."

Dominic F. Antonelli Jr., one of the Washington area's largest commercial developers, declared personal bankruptcy last week, owing about $1.3 billion. Developer Conrad Cafritz reported last September that he owes $1.1 billion to 71 lenders.

Charles Rinker, a financial consultant who specializes in helping tenants buy their buildings, believes banks are passing up a sound investment. "The Porter Streets of the world are much safer {as security for bank loans} because they're people's homes," he said.

If the building is bought by the tenants, it will be what Rinker calls a "cond-op," a combination of condominiums and cooperatives. There will be an "underlying condominium regime," with the store and the offices on the first floor to be sold as condos. The 29 apartments will be condominiums, which will be purchased by the residents' cooperative, Rinker said.

Rinker said he believes this unusual structure may be contributing to the tenants' difficulties in getting a loan, because most lenders are unfamiliar with how cooperatives work.

Although the building's residents have missed two deadlines set for purchasing the property in the last two months, "the sellers are still willing to consider the tenants' request" to buy the structure, and no new deadline has been set for a decision, said Leslie Strauss, the owners' attorney. "All things being equal, it would be wonderful to sell to the tenants. All things being unequal, I don't know what we will do," she said.

The Monterey's residents fear that if they cannot get their financing soon the owners will decide to sell the building to a New York real estate developer and investor. The investor, Peter Sharp, reportedly has made an offer to buy the property. He did not respond to a telephone request for his comments.

The residents said they believe Sharp would raise rents substantially within a few years. Sharp bought a 304-unit Dupont Circle building in 1986 and over the next two years used a provision of the D.C. rent control law to increase rents by a total of 50 percent, said Hecht, who represented residents of that building in a fight over rent increases Sharp brought before the D.C. Rental Housing Commission.

At the Monterey, resident leader Harris organized a tenants' association soon after the building was put up for sale two years ago. In addition to the 25 units that will be purchased by their residents, two vacant apartments would be sold after the cooperative is established. Under D.C. law, the elderly residents of two other units may remain as tenants.

The ground floor houses a 7-Eleven store, two offices for doctors and a beauty salon. A potential buyer for the 7-Eleven space has offered the residents $400,000, which the tenants would apply toward the purchase of the building, Harris said.

Under rent control, apartments in the building rent for much less than market rates in noncontrolled buildings. For example, Harris pays $423 a month for a large two-bedroom apartment. Many of the tenants have lived there for years, he said.

Jeanne McIntire, who is the tenants' association secretary and a resident of the building since 1959, said the neighborhood is friendly and convenient, with shops, restaurants and the Metro station all within two blocks.

And besides, McIntire said, "I like the 10-foot ceilings, thick walls. I like the character of the building."