Housing finance company Freddie Mac plans to put $1 billion into mortgages and home-repair loans in areas damaged by Hurricane Katrina, an effort praised by critics of the company as Congress considers legislation to increase regulation of Freddie and its larger rival, Fannie Mae.

In Baton Rouge, La., yesterday, Freddie Mac chairman and chief executive Richard F. Syron and members of the Louisiana congressional delegation announced Freddie Mac's plan to buy $1 billion worth of bonds from state and local housing finance agencies. By accepting a below-market rate of return on the bonds, the purchase will allow cut-rate financing for homeowners.

The bond purchase "further demonstrates what Congress created Freddie Mac to do: to provide stability, liquidity, and affordability for housing markets -- both in good times and in crises like this one," Syron said in a news release.

Freddie Mac and Fannie Mae have "stepped to the plate in a big way on Katrina, while the rest of the banking industry is squabbling over how to shift their losses to taxpayers. That point won't be lost on Congress," said Howard Glaser, a housing industry consultant.

Freddie Mac seems to have tempered criticism from some of its fiercest opponents, including Rep. Richard A. Baker (R-La.), who has argued for years to increase oversight of Freddie Mac and Fannie Mae. Baker said yesterday in a news release that Freddie Mac's bond purchase would help provide homeownership opportunities "as we turn our focus from the temporary to the long-term housing needs of storm victims."

Last month, Freddie Mac was praised by another critic, Housing and Urban Development Secretary Alphonso Jackson, after the company pledged to buy up to $300 million in mortgages in hurricane-affected areas.

Syron, in an interview, said the company's good works were not intended to influence the congressional debate. "We're not doing this for any signal reason. . . . There could be no legislation and we'd still be doing this," he said.

The company's actions may help offset criticism of its $677.8 billion investment portfolio, which played a central role in Freddie Mac's recent accounting scandal. Freddie Mac officials said they could not have responded as they did to Katrina without the portfolio.

Freddie Mac and Fannie Mae buy mortgages from banks and other lenders and repackage them into securities to sell to investors. Over the past decade or so, the companies have held more mortgages and mortgage-backed securities on their books for investment purposes, increasing profit but also their vulnerability to interest rate swings. As a result, critics, including Federal Reserve Chairman Alan Greenspan, say the portfolios pose a risk to the financial system.

On Monday, Greenspan found a new ally: Armando Falcon Jr., the former director of the Office of Federal Housing Enterprise Oversight, Freddie Mac's and Fannie Mae's chief regulator. In a column in the Wall Street Journal, Falcon endorsed legislation that would force the companies to gradually shed their investment holdings.

In its response to Katrina, Freddie Mac may have found a way to keep its portfolio business and please everyone, said Kenneth A. Posner, an analyst with Morgan Stanley & Co., which owns stock in and does investment banking and other securities business with Freddie Mac.

Because many analysts did not expect Freddie Mac's portfolio would grow at all this year, investors are likely to be happy if they see Freddie Mac increasing its portfolio "at a pace and in a manner that doesn't exacerbate political concerns . . . and that creates economic value for shareholders," Posner said.

People in the Gulf Coast region with hurricane-damaged homes to fix or replace could be helped by Freddie Mac's bond purchase.