There's little holiday cheer this season at the homes of Lori and Myles Kehs and Robert and Kathleen Clogg. Though they've never spoken with each other and live hundreds of miles apart -- the Kehses in Orefield, Pa., near Allentown, and the Cloggs in Chesterfield Township outside Detroit -- they share remarkable similarities.

Both couples bought their first homes about a year ago. Both are raising two children ranging in age from 2 to 6. Both bought their homes using Federal Housing Administration-insured mortgages. After settlement, both discovered that the appraisers who valued their homes failed to report flagrant structural, electrical and other health and safety hazards.

Both now face huge repairs they can't afford -- at least $57,000 in the Kehses' case, and from $35,000 to $40,000 for the Cloggs. Worse yet, both couples have been approached by contractors and lenders this year with promises to get the money they need by milking other FHA programs -- fix-up loans that will put them deeper in debt.

Housing experts say that hundreds of unsuspecting first-time buyers around the country are falling into the trap that snared the Cloggs and the Kehses: FHA appraisers who apparently "see no evil and speak no evil" when they evaluate houses with potentially costly defects.

The problem is so serious that, for the first time ever, the General Accounting Office is conducting simultaneous national probes of the FHA's two major home-improvement loan programs, and is studying the performance of FHA appraisers in general. The appraisal study by the GAO, which is the investigative unit of Congress, is expected to be the focus of congressional hearings next year.

These two families and several others with appraisal complaints contacted this reporter after failing to get a response from FHA authorities and other public officials. Here are the two couples' stories, beginning with that of the Kehses. The Cloggs' situation will be the subject of next week's column.

After a six-month search, Lori and Myles Kehs settled on what they called their "dream home" in the Lehigh Valley of eastern Pennsylvania. The four-bedroom farmhouse on nearly an acre in Orefield cost them $68,000.

The appraisal for the loan noted no problems with the foundation, no dampness in the basement, no electrical wiring problems, no troubles with the septic system. The house "conforms to {FHA} standards," according to the appraisal submitted to fund the loan.

But shortly after moving in with their infant son and 5-year-old daughter, the family began what Lori Kehs now calls "our nightmare." For starters, the basement flooded every time she washed clothes or turned on the dishwasher. They later learned the house needed an entire new sewage system.

The house also had numerous electrical code violations that should have been obvious to any real estate professional. There was exposed well-pump wiring running from the well through the yard and into the house.

Virtually every room contained unsafe electrical wiring, according to a subsequent inspection documented on videotape. Dangling, exposed cable fed one exterior light. Electrical sockets were located in the floor directly under hot-water radiators and windows. Three bedrooms had only one electrical outlet apiece, leading to jumbles of extension cords.

The house's foundation "has been crumbling for an extended period," according to a private FHA property-inspection consultant, James Hawthorne of Elmer, N.J. The chimney is cracked. The grading is sloped so that rainwater funnels into the Kehses' basement from neighboring yards. An addition to the house "is not and never was properly tied into the main house," according to Hawthorne.

Basic FHA minimum property code items of great importance in a house with toddlers afoot -- like missing stair rails -- never were identified in the appraisal. Nor were bad subflooring through much of the house, extensive insect damage to porch supports, or the lack of heating, electrical power or insulation in rooms counted as interior living space for purposes of valuation. The list of what appear to be FHA health and safety violations at the Kehses' house is long, according to Hawthorne. One estimate the couple received earlier in 1997 to fix up the place, minus the costly work necessary on the dwelling's foundation, was $57,000. That's 84 percent of the original house price. Contacted by phone, the Kehses' appraiser declined to comment. Lori Kehs, who said she and her husband are "overwhelmed by what it will cost just to make this house safe for our kids," has written letters and phoned FHA officials in Philadelphia -- and has yet to receive a response.