WE ARE TALKING ABOUT HOMES. A Great University Against Its Neighbors. By Lynne Sharon Schwartz. Harper & Row. 175 pp. $15.95.

WHEN LYNNE Sharon Schwartz refers to Columbia University as a great university in the subtitle of her new book, We Are Talking About Homes, she almost certainly intends for us to appreciate ambiguity in her words. Greatness in a university means distinction, and there is no question that Columbia has distinguished itself as a place of scholarship and learning. But greatness can also mean sheer size and force, as in a great beast, and I believe that is the meaning Schwartz had in mind when she worded her title.

Schwartz is such a fine wordsmith (she is best known for her novels and short stories about modern men and women) that the linguistic ambiguity could not have been lost on her. Also, the Columbia University she personally encountered, and reports on here, has nothing to do with academic excellence and everything to do with size and power. It is Columbia University the landlord, the third largest landlord in New York City, which according to Schwartz's account is devouring the Morningside Heights neighborhood like some great beast. Schwartz, her family and neighbors had the misfortune of getting in its way.

This is what happened. On March 2, 1983, a fire occurred in an apartment house at 547 Riverside Drive, a rent-controlled building owned by Columbia in which Schwartz and her husband had lived since 1964, raised two daughters, and made many close friends. Although the serious fire damage was confined to a few apartments, university housing officials decided to close the building down; they relocated those tenants who were affiliated with the university and left the others, some of whom had lived at 547 for mor than 40 years, to fend for themselves in the notoriously difficult Manhattan rental market.

We Are Talking About Homes is an insider's account of the unaffiliated tenants' effort to persuade, then to battle, their monolithic landlord. It is a story of face-to-face negotiations, negotiations gone sour, lawsuit, delays, victory and appeal, more delays, protest march, and finally more negtiations and settlement -- encompassing a year of uncertainty and destabilized home life for the 14 families who were evicted. It was a Pyrrhic victory at best for the tenants. It would be another year before the university would satisfactorily restore the apartments for occupancy, and in the meantime they had turned the vacant half of the building into a dormitory, subdividing the roomy apartments and filling the smaller units with people who had little interest in neighbors or community. The character of 547 Riverside Drive was irreparably altered.

THAT SCHWARTZ can convey the poignancy of the tenants' loss so effectively is testimony to her considerable skill as a novelist. Who wouldn't want to live in the comfortable world she describes? Not only are these six- and seven-bedroom apartments relatively cheap, they are occupied by idealistic and creative people -- famous anthropologists, novelists and musicians -- who spend their afternoons discussing Proust and their evenings rating the sunsets over Palisades Park across the river. Their children grow into adulthood in nearby Riverside Park and babysit one another while the parents party and associate with the likes of Theodore Bikel and the Reverend William Sloane Coffin. In Schwartz's deft hands, the passing of an apartment building becomes the passing of a neighborhood and an era characterized by rich diversity.

This is a real dilemma for Columbia University, and for other large urban universities caught in a similar bind: How do they provide for their own real estate needs and protect their own financial interests without alienating and destabilizing the community? Schwartz is obviously a biased observer, but one searches in vain for any evidence that Columbia officials regard Morningside Heights as anything more than housing stock; it is easy to believe (as Schwartz suggests) that the strategy of the imperious officials described here was to wait out the tenants of 547 and (in the university's own official language) "recapture" the apartments for their own use. It is a less than humanistic policy for one of the world's great centers of humanistic learning, and that irony informs this account from start to finish.

I wonder if this slender volume would have been published if Schwartz were not an accomplished writer with access to an editor; or if some other disgruntled tenant had submitted the manuscript for publication. There are certainly greater misfortunes than a middle-class family losing its rent-controlled apartment, and a victim's account of her own victimization must always be suspect. But there are important larger issues raised here, and Schwartz has tried to raise them honestly. Whatever the circumstances of its publication, We Are Talking About Homes makes a valuable contribution to public discussion of the worsening conflict between university and community.