SAN FRANCISCO — Housing and Urban Development Secretary Steve Preston urged mortgage lenders and servicers to be bold in using government programs to help borrowers avoid foreclosure.

Mr. Preston also reiterated Tuesday at the Mortgage Bankers Association's annual convention that HUD plans to issue a final rule this year revising Real Estate Settlement Procedures Act enforcement. The mortgage industry, which has opposed the proposed revamp of the good-faith estimate of closing costs they must give applicants, would have a year to implement the rule, he said.

"With so many families in trouble with their mortgages because in many cases they didn't understand, our goal is to make sure it never happens again," Mr. Preston said.

He praised the Hope Now coalition's efforts to help borrowers modify loans, but he said more action is necessary.

"Now is the time to continue to be bold, especially with the new tools that the government has provided and especially as it relates to people who are coming forward and raising their hands and saying 'I've got a problem. I can't pay my mortgage. I need help,' " Mr. Preston said. "We have got to meet them where they are to help them with a path forward to stay in those homes where it makes sense."

The government will work to "leverage programs" at Fannie Mae and Freddie Mac and the Treasury Department's Troubled Asset Relief Program, all of which have capital to invest in troubled mortgages, "to support those Americans in their need to have a loan modified for foreclosure prevention," he said.

"We continue to receive consistent feedback from borrowers and counselors that servicers often don't have the ability to help them, or that loan modification guidelines are so rigid that many people who can be helped are unnecessarily falling through the cracks," Mr. Preston said. "I'm concerned that unless the industry continues to address these issues head-on and aggressively, Congress may lose patience and impose stronger measures upon those in the business of home ownership."

On Respa reform, he said the "unnecessary complexity" of mortgages had contributed to the housing crisis. "We must make mortgages more understandable and the process more transparent."

HUD has been trying to overhaul mortgage disclosure rules for years; its latest proposal was issued in March. Mr. Preston said the department had gone through a "lengthy period of public comment" and engaged many people in the industry. "We are committed to striking a balance between the needs of the consumer and industry concerns."

Also at the convention, the MBA said that, despite initial reluctance by some members, it is advocating an extention of the temporary loan limits for Fannie, Freddie, and the Federal Housing Administration.

The economic stimulus plan enacted in February temporarily increased the maximum size of loans the FHA and the government-sponsored enterprises can guarantee to as much as $729,750 in high-cost areas. That provision is scheduled to expire at yearend; loan limits for next year would be determined by a provision of the American Housing Rescue and Foreclosure Prevention Act, which sets conforming and FHA loan limits at 115% of the local median home price, not to exceed $625,000.

Jerome A. Cipponeri, a senior vice president of secondary marketing at JPMorgan Chase & Co.'s Chase Home Finance LLC, said Monday at the convention that the MBA's secondary and capital markets committee, which he chairs, had voted to support an extension of the higher limits. He also said he expected the group's residential board of governors to do the same Tuesday.

"Many of the banks had opposed this before," Mr. Cipponeri said, but lenders are realizing that additional measures are needed to increase liquidity. "There are lots of suburbs where the current plan has no effect."

Last year the MBA opposed increasing the conforming loan limit, saying that the jumbo market did not need federal support, and that the GSEs would be distracted from their affordable housing mission. This year liquidity has become scarcer, and the trade group supported the loan limit provisions in the stimulus package.

Some mortgage market participants are looking for positive signs of a turnaround for the industry, but Mr. Cipponeri said the outlook remained bleak.

"I think it's actually underreported how bad it really is," he told an audience of roughly 200 mortgage lenders. "There is no doubt about it. The last time any of us were talking about this, we said how bad things were, and I would have to say they've gotten worse."

Dean Schultz, the president and chief executive of the Federal Home Loan Bank of San Francisco, cautioned against looking for an upturn soon, though he said he has seen "a leveling off of deterioration" in the bank's mortgage-backed securities portfolio.

He said his Home Loan bank is working to understand how its members value the underlying collateral of their holdings. The Treasury Department's Troubled Asset Relief Program plan will offer "a broader range of valuation plateaus."

This month Fannie announced a deal to buy 15- and 30-year mortgages from the Federal Home Loan Bank of Chicago, which had stopped purchasing loans from its members in July. Mr. Schultz said he expected GSEs to form similar partnerships now that Fannie, Freddie, and the Home Loan banks share the same regulator, the Federal Housing Finance Agency.

"There is no shortage of interest, no shortage of ideas, and I think the regulator will be supportive," he said.

Attendance at this year's convention fell 35% from last year, to about 2,600 people.

"Welcome to the recession," John Courson, the MBA's chief operating officer, quipped at the opening reception.

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