UPDATE 1-Treasury's Paulson-GSEs can help ease mortgage woes

(Adds more comments from Paulson)

WASHINGTON, Oct 10 (Reuters) - U.S. government-sponsored mortgage finance enterprises (GSEs) could help resolve disruptions in mortgage markets, but any changes to their roles should be in conjunction with stronger regulatory oversight, Treasury Secretary Henry Paulson said on Wednesday.

"A lot of the discussion has centered around raising their investment caps," Paulson said at a press conference on mortgage markets.

"From a public policy focus what I'm really interested in is more mortgages for the people that need it," Paulson said. "And there, it's not their investment activity... For every dollar they're putting into their investment activity, they could be putting in five dollars into the guarantee and the securitization business, and that's really what we need."

The GSEs -- mortgage finance companies Fannie Mae and Freddie Mac -- could usefully take on more credit risk, but any changes to the congressionally chartered firms' roles should be accompanied by more oversight, Paulson said.

"The things that they could do that would be most helpful would require...an expansion of their business model, taking on more risk, and I think we should do that, where it makes sense, but we should do it in conjunction with a strong indpendent regulator," he said.