THE LATEST THING in home financing is called the "locally issued, tax-exempt, single-family mortgage revenue bond." It means a local government borrows money and then lends it to people who want to buy houses. If that seems odd-local governments are usually not thought of as being in the mortgage business - it is. But after Chicago loaned $100 million to house buyers last August, the idea swept the country. In the following eight months, no fewer than 50 local governments in 12 states, including Maryland, borrowed $1.5 billion for this purpose.

On its face this seems an attractive arrangement. It opens the housing market to people who would otherwise be shut out, because the down payments required are lower and so are the interest rates. (The rates average about 8 percent instead of the 10 percent now common on regular mortgages.) The arrangement permits local governments to help some citizens in these ways without forcing them to spend tax dollars. And it helps at least some of a community's banks and/or S&Ls - those through which the money is channeled and which impose a charge for servicing the mortgages. Nor does it even undermine a community's credit very much since most localities don't put their full faith and credit behind the bonds.

Perfection, you say. Well, no. Once you cut through the numbers and the pretty rhetoric, what you have is simply a gimmick for eluding federal income-tax laws and churning out money for bond brokers. The mortgages carry lower interest rates because local (and state) governments can borrow money cheaper than anyone else. They can do so because the interest they pay is tax-exempt. The gimmick works as long as the spread between the interest rate on tax-exempt and non-tax-exempt bonds is large enough to attract big investors and to cover the service charge local institutions collect on the mortgages.

This might be all right, if the loans were aimed exclusively at low-income families who could not otherwise afford decent housing. (That, apparently, was the purpose for which Congress sanctioned such bonds in 1968.) But in most communities, they aren't. Generally, families with incomes up to $30,000 qualify, although in Chicago the magic cutoff number is $40,000 and in Archorage, Alaska, $60,000. Nationally, that $30,000 figure would make more than 80 percent of all families eligible.

If government is going to make cheap loans available to a small portion of that 80 percent, can it resist the inevitable political pressure to make such loans available to all? Chicago borrowed another $150 million this spring after its first $100 million had been exhausted in only 35 days. And if government is going to create this new housing subsidy for 80 percent of Amercian families, why must it discriminate against the other 20 percent, especially those who make, let us say, $31,000?

It is remarkable to see Wall Street pushing so hard for this gimmick, which is the brainchild of E. F. Hutton & Co., Inc. Carried to its logical, which is to say poticial, conclusion, it would put local governments in full competition with private enterprise - the banks and savings and loans. Those institutions could not win in such a competition because of the income-tax quirk and might well be replaced eventually by local governments as the source of almost all mortgage money.