Boosting homeownership tops President Bush's (search) housing agenda, but the biggest battle facing his administration during the second term is how to overhaul a program that helps 2 million poor families pay their rent.

Bush wants a new tax credit for builders that he thinks could increase affordable housing (search) for middle-income families by at least 40,000 units a year.

The president also wants to reduce local and state regulations that discourage developers from putting up affordable housing. A separate proposal would create zero down-payment loans for first-time buyers whose mortgages are guaranteed by the Federal Housing Administration (search).

Successes could help Bush reach the goal, which he set in his first term, of 5.5 million new minority homeowners by decade's end. The Housing and Urban Development Department said about 1.9 million have been added so far.

Since Bush took office in 2001, the percentage of U.S. homes that are owned has grown from 67.5 percent to 69 percent today. Democrats contend that record-low interest rates during the period were the main reason; the president has said his tax relief programs provided a big boost, too.

Bush is expected to try again to have Congress enact the major changes he wants to the $14.5 billion Section 8 voucher program, which is about half of the department's total budget. That is up from one-third in 1998.

Housing authorities get a set number of vouchers every year for helping families cover the rent, so there is little incentive for local officials to manage their program efficiently, HUD Secretary Alphonso Jackson has said. Washington bureaucrats play too large a role in an issue that state and city officials can better manage, he says.

He gives some examples: One local agency may not be able to fill all the voucher slots it has because not enough people qualify for help; a second agency may not know it is giving vouchers to families that no longer qualify because their income has risen since they signed up.

Bush's 2005 proposal called for the program to be based on dollar amounts rather than on a fixed number of vouchers. The plan allows local agencies to shape the program to their specific needs but add incentives to ensure that money is used efficiently, the government says.

Opponents contend voucher recipients now would not be guaranteed to keep their assistance if Bush's changes pass. They also claim local agencies would not have to ensure that vouchers go the poorest applicants.

Sunia Zaterman, executive director of the Council for Large Public Housing Authorities, agrees that changes are needed, but says HUD is unwilling to spend the money necessary. She and other advocates say the 2005 Section 8 budget falls $1.6 billion short of what is needed.

In past years, Congress and Bush also encouraged local agencies to use as many vouchers as possible and to make available to voucher recipients more housing in middle-income neighborhoods, resulting in higher costs now, the Public Housing Authorities Directors Association contends.

"The term that we are using is that the budget situation is bleak," said Tim Kaiser, the group's executive director.

Some of the other housing issues include:

—HUD's wish to move quickly on a proposal to create opportunity zones that would give struggling urban and rural communities priority in receiving federal help for housing, education and job training.

—Renewed efforts by Bush and congressional Republicans to tighten oversight of mortgage companies Fannie Mae and Freddie Mac, both of which have experienced accounting scandals.

—The department's pursuit again of changes in procedures governing real estate settlements and closing costs.