Now Cisneros is back in the housing fray as chairman of CityView, a California start-up that finances and develops housing for modest-income earners, who often can't afford to live where they work.

In three years, CityView has financed about 4,000 homes from South San Francisco, Calif., to Boulder, Colo., to Pflugerville, Texas, at prices ranging from less than $100,000 to more than $500,000.

Cisneros' venture highlights a small but growing move by U.S. homebuilders into housing for the urban work force, including both big, publicly traded companies such as KB Home and closely held firms such as John Laing Homes.

U.S. homebuilders constructed a record 1.6 million single-family homes last year, according the National Association of Home Builders. But as the housing market cools, the likelihood of a glut of expensive homes and a shortage of affordable ones grows, especially in cities where land is expensive.

Cisneros aims to profit from this scenario, but he also is taking on a formidable issue. The run-up in housing costs over the past decade, especially along the East and West coasts, has taken a toll. In the Los Angeles area, just 1.9 percent of homes sold in the second quarter were affordable to those earning the area's median income of $56,200, according to the home builders' association.

The National Housing Conference, an advocacy group, says at least 5 million working families spend more than half of their income for housing, or live in dilapidated conditions.

''Prices tend to run up because of the cost of land, construction and the difficulty of getting approval to build,'' says Cisneros. ''Builders say, 'If I'm going to go through with that, I might as well build high-end.' ''

Cisneros has long held an interest in housing, which he sees as a tool for economic development. As secretary of Housing and Urban Development under President Clinton, he has helped write a bipartisan platform on national housing policy with Jack Kemp, a Republican and another former housing secretary. Cisneros also has written on how to address the housing needs of the nation's growing Latino population.

''There's a policy vacuum,'' says Bruce Katz of the Brookings Institution, a think tank, and former chief of staff under Cisneros at the housing department. ''Henry is trying to fill it.''

CityView represents something of a comeback for the 59-year-old Cisneros, who was once a boy wonder of the Democratic Party. Elected mayor of San Antonio in 1981 at age 33, Cisneros made the vice presidential short list in 1984 and was interviewed for the spot by Democratic nominee Walter Mondale. Cisneros used his stint as housing secretary in large part to replace public housing projects with developments featuring a mix of home prices.

But his career came crashing down a decade ago, when an independent council sought by then-Attorney General Janet Reno began investigating whether Cisneros had lied about payments to a former mistress when accepting his post in the Clinton administration.

Cisneros pleaded guilty to a misdemeanor in 1999 and paid a $10,000 fine. But the independent counsel continued to investigate whether Cisneros had committed any tax violations, resulting in a decade-long, $20 million-plus investigation that ended in January with no additional charges.

Buffeted by controversy and facing legal fees that eventually reached $3 million, Cisneros left Washington in 1997.