See: Mortgage.
The Mortgage subsidy bond was a child of the '80s, child of the Mortgage Subsidy Act of 1980. In the 1970s, state governments bit off a bit more than they could chew, issuing a lot of tax-exempt bonds to subsidize home purchases, mostly to help out lower-income homebuyers.
Yes, it’s very American to own a home, with all the incentives federal and state governments put in place to encourage home ownership, like mortgage subsidy bonds.
With the Mortgage Subsidy Act of 1980, a new process was put in place, mostly to limit state bond programs that subsidize mortgages. With official mortgage subsidy bonds, many are taxed (that way, the government isn’t subsidizing as much), but some are still tax-exempt. Also known as mortgage revenue bonds, mortgage subsidy bonds are used by lower-level governments (states, cities, local...just not federal) to help finance lower-income homebuyers, and especially first-time, low-income buyers.