With a judge looking over their shoulders Monday, mortgage companies and consumer advocates in Philadelphia opened talks intended to achieve an agreement to allow thousands of cash-strapped homeowners in the city to avoid foreclosure.

In a closed-door session, President Judge C. Darnell Jones II of the Court of Common Pleas of Philadelphia told lawyers for the two sides to spend the next week or so hammering out a streamlined process to make loans more affordable for homeowners who want to keep their houses but can't keep up with their current payments.

"If there are people in dire straits, for whatever reason, who would be amenable to a [loan] modification, we want to keep those people in their homes, and it's clear to me that the lenders want to do that, as well," Judge Jones said after the meeting.

The judge's intervention is the latest in a series of aggressive steps by states and localities to stem the foreclosure crisis, and it is another sign that they are growing impatient with federal efforts that rely largely on the industry to voluntarily ease up on borrowers. Nationwide, as many as two million borrowers are expected to enter foreclosure this year.

Maryland's governor signed a measure last week effectively creating a 150-day moratorium on foreclosures, and an Illinois lawmaker introduced a bill for a two-month hiatus. Monday, nine mortgage lenders in Ohio agreed to a deal under which they would modify adjustable-rate loans for borrowers facing foreclosure, the Associated Press reported.

In Philadelphia, the sheriff's office auctions off about 1,000 foreclosed properties a month, up from an average of 300 to 400 a month in recent years. Judge Jones's move grew out of a nonbinding resolution by the Philadelphia City Council last month calling for a moratorium on such sales. The sheriff then canceled the April auction.

Judge Jones said the sheriff alone does not have the authority to stop the sales, although the court has more discretion. A mortgage is "a contract, and the law allows for these things to be foreclosed on if the obligations aren't met," he said. But the foreclosure wave "is a major problem, and we still want to do something about it."

Mortgage companies were not happy with the sheriff's action.

"Lenders feel that their legal rights were not properly protected," said Michael McKeever, an attorney representing large mortgage companies, which he would not identify. "The court is aware of that but is hopeful that lenders will put that aside and create a program that will be a success for everyone involved."

Without issuing a formal court order, Judge Jones instructed lawyers for mortgage-servicing companies and borrowers' advocacy groups to work out a "quasi-legal" accord that he hopes will create enough of an industry consensus to stave off litigation. "It's giving an opportunity for lenders and borrowers to work something out without having to go through the full foreclosure process," the judge said.

Under Judge Jones's plan, a lender or its agent would indicate on a foreclosure filing that the borrower lives in the house. The court would then arrange free counsel for the homeowner and set up a conciliation hearing between lender and borrower. The negotiations would ideally lead to modified loan terms or some other arrangement that would keep the borrowers in their homes.

The judge indicated that foreclosure auctions would likely be suspended, at least through May, for homeowners qualified for the negotiated settlement.

"In our view, everybody's a winner if they become performing loans and people make payments," said George Gould, managing attorney of the housing unit at Community Legal Services, a local nonprofit legal-aid agency. Mr. Gould represented two urban advocacy groups, Acorn, or Association of Community Organizations for Reform Now, and the Philadelphia Unemployment Project, at the meeting with Judge Jones.