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By Morgan Lee
The Associated Press

MORELIA, Mexico - Mexican police are testing a new weapon against widespread corruption in their ranks: home ownership.
Officers and prison guards in Michoacan state can now get special deals on houses and financing through a pilot program designed to keep them out of the pockets of organized crime. The strategy is part of Mexico's desperate push to professionalize local law enforcement, infamous for extorting bribes at bogus traffic stops and providing security for drug lords.
Through a partnership between a private homebuilder and the state, more than 4,000 police and prison guards who normally wouldn't qualify are eligible for mortgages on brand new homes under construction outside Morelia, the state capital. The state provides the land and gets refunded from the mortgage payments. The homeowners must pass background checks and forfeit the property if convicted of a crime.
The program fulfills a dream deferred for some police officers.
"It's the first time they've given us the opportunity and that anyone has cared about us," said Fabian Arreola, 33, a Michoacan highway patrolman and army veteran who grew up on a small ranch with a dirt floor. He supports a wife and three boys on about $9,600 a year.
"This is a dream for all of us who never had our own home," said Michoacan SWAT team officer Luis Alberto Cruz, a mortgage applicant who grew up in a one-bedroom apartment with seven siblings. He relies on hazard pay to make ends meet.
The program so far is exclusive to Michoacan, but the homebuilder, Real Estate for the Promotion of Housing with Dignity, is courting other Mexican states that cannot afford to build police housing. As it pours the first foundations on land provided by the state, the company says it could eventually crack an untapped mortgage market for 750,000 state and local police across Mexico.
It's a market with inherent risks. Most Mexican police officers earn less than $10,000 a year. And they are considered bigger credit risks than even street vendors or handicraft makers because of the chances of corruption or that they will get killed, said Jesus Perez, president of the development company, also known as INPROVIDI.
Also, corrupt officers fired from one police force often show up for work in other states.
"There's a high percentage of police who go jumping from state to state, from city to city because they don't do their job," Perez said. "Once a police officer understands that it means more to have a home, to set down roots, than to receive a bribe - albeit three times his salary - they're going to think twice about being corrupt."
Mexican President Felipe Calderon considers many police forces so corrupt and incompetent that he has sent 20,000 soldiers to fight gangs in drug-trafficking hot spots, starting with Michoacan, his home state. His administration also is raising federal police salaries, improving training and using soldiers to clean up corruption in local forces.
Last year, Tijuana police were stripped of their guns for weeks while soldiers checked to see if the weapons had been used in crimes. Police carried slingshots in protest.
Officers who remain clean become targets of intimidation and assassination. The war with organized crime has killed more than 450 law enforcement officials in the 18 months since Calderon took office.
Some analysts have doubts that a new home - and the prospect of losing it by committing a crime - will make Mexico's police walk the line.
"The police are incurably corrupt, and I don't see any way around it," said George Grayson, a Mexico expert at the College of William & Mary in Virginia.
Rights groups that monitor police corruption see potential in the new approach.
"It's quite an innovative way of doing business," said Jose Miguel Vivanco, executive director of the Americas for Human Rights Watch. But he also warned that more credible sanctions are needed, or else corrupt officers will have access to cheap mortgages.
Most homes in Mexico are still either inherited or built by hand. But government housing credits and a new generation of entrepreneurial nonbank lenders have spurred a housing boom over the past decade by reaching out to legions of Mexicans with no formal credit history. Developer INPROVIDI is partnering with at least two such private mortgage lenders to finance the Michoacan program.
More than half the 4,196 houses under construction in the parched hills outside Morelia are reserved for police and prison guards. About 2,100 police and guards have applied for loans on the houses, and 600 have been approved.
Those who pass criminal background checks can qualify for houses averaging about $32,000. They range from two-bedrooms and 410 square feet to two stories and 1,300 square feet.
Buyers will spend between 25 percent and 30 percent of their monthly income on mortgage payments, said Kristian Frich, INPROVIDI vice president. The annual fixed interest rate is about 13 percent - considered competitive in Mexico.
To minimize the risk of default, the lender pays for a financial adviser to help buyers with month-to-month planning. The police officers will also pay into an association to finance the upkeep of the development and retain home values.
Officers on the Michoacan force said homeownership will bring more dignity to a risky, poorly paid profession.
"I understand that corruption won't end," said Efrain Barrera, a 48-year-old deputy director of traffic and highways, whose says his mortgage application was accepted. "By bringing a little dignity to the police and elevating their living situation, it's an incentive for them. It also brings self-respect to their families."
Cruz, the SWAT officer, applied for a mortgage in June, eager to move out of a home owned by his in-laws. He's still awaiting approval.
He says mortgages may help attract better qualified officers. But housing probably won't make much of a dent in corruption, which he said usually starts with top commanders.
Meanwhile, Cruz is not too concerned about living in a subdivision full of police, who often are threatened by organized crime.
"It's going to be a safe subdivision because it's going to be full of police out there," he said. "I don't owe anyone anything. So why be scared?"

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