When Maria Jussara Oliveira went to the bank last year to apply for her first mortgage, she expected weeks if not months of tedious, obstructive Brazilian bureaucracy ahead of her, according to Reuters. A half hour later, she stepped out of the meeting in the city of Recife with a letter of credit that allowed her to become the first in her family to own a home. The 35-year-old school teacher was also among the first Brazilians to benefit from the government's attempt to tackle a gaping housing deficit in Latin America's largest economy by building 3 million basic homes in the coming years. "We heard about this program but didn't think we had much chance of succeeding because these things are usually so difficult," she said in the living room of her new apartment in a suburb of Recife. "To our surprise, we got it." Launched by President Luiz Inacio Lula da Silva last year, the "Minha Casa, Minha Vida" (My Home, My Life) program is now taking concrete form as apartment buildings partly funded by subsidies for low-income families sprout up throughout the vast South American country. In poor northeastern states such as Pernambuco, whose capital is coastal Recife, the construction boom is a glaring display of how an emerging middle class is thrusting Brazil -- once a chronic underperformer that struggled to live up to its potential -- toward developed-nation status. How to extend this new-found prosperity to millions more is shaping up as a major campaign issue in this year's presidential race, in which the housing program could be a big vote getter among the lower middle-class for Lula's preferred candidate, Dilma Rousseff. Just under 410,000 contracts to buy apartments under the program had been completed by April, and the goal is 1 million by the end of the year, according to government bank Caixa Economica Federal, Brazil's biggest mortgage lender. It expects 140,000 apartments to have been built by year-end. The cost of the the first phase of the program to build 1 million units for families with a monthly income of up to 10 minimum salaries (about $2,700) is estimated at 34 billion reais ($19.2 billion). A second phase, with a target of building 2 million more homes, was announced in March at a cost of 80 billion reais ($45.2 billion). In Oliveira's case, the bank spent 17,000 reais ($9,600) to subsidize her two-bedroom apartment, valued at 86,000 reais ($48,590). Her monthly payments are less than she used to pay in rent. PRIVATE SECTOR PROFITING In common with many other big Brazilian cities, Recife's growing number of apartment blocks look out over slums -- testament to a housing deficit estimated at more than 7 million in the country of about 190 million people. Ahead of October's presidential election, the program is likely to be a boon for Rousseff, who is strongly linked to the plan and is already benefiting from Brazil's lofty economic growth. A career civil servant who served as Lula's chief of staff, Rousseff is the public face of the housing program. Construction firms and property investors, both Brazilian and foreign, are also rubbing their hands at the huge injection of government spending into the real estate market. While Caixa Economica provides subsidies of up to 100 percent on a sliding scale depending on a family's income, the construction of apartments is carried out by private sector firms such as Cyrela Brazil Realty, Gafisa and Rossi Residencial. "Minha Casa, Minha Vida is providing enormous amounts of affordable housing to the lower income (segment) which previously in Brazil couldn't afford to buy houses," said Rupert Hayward, a director of London-based Salamanca Capital, which bought 50 percent of a Brazilian property firm at the height of the global financial crisis in late 2008. Salamanca's Brazilian partner Ecocil plans to build 25,000 units in the northeast, which accounts for about a third of Brazil's housing deficit, within the next five years. That should translate into about $1.5 billion in sales, and Salamanca is hoping for a profit of up to 25 percent on its investment. A VOTE WINNER? In Pernambuco, where Lula was born into poverty in 1945, Caixa Economica expects 44,000 homes to have been built by the end of 2011, equivalent to a fifth of the state's housing deficit. It granted about $250 million in mortgage financing in the first four months of 2010, up 157 percent from a year ago. "Economic stability has been the big generator of housing credit," said Pedro Santiago, the state superintendent for Caixa Economica, adding that low inflation and falling interest rates had been as important as the government subsidies. "There are more offers and more of them for less-favored economic classes. We have a big population that has always been cut off from housing." The program is not without its critics. Some worry the huge government funding is making homes less affordable for many by pushing prices higher. Only 3,000 apartments were completed in its first year, drawing accusations from the main opposition party that the plan is a marketing ploy to help Rousseff's election chances. Caixa Economica officials acknowledge the program has suffered from delays, partly due to the difficulty of finding affordable land in crowded cities. But it is picking up speed in the northeast, a long-impoverished region that is now undergoing an economic renaissance. In Oliveira's apartment complex, which includes a concrete soccer field and a small swimming pool, all 168 units were financed through the program. "I feel like I've achieved all my life's goals, I feel proud of myself," Oliveira said of her home purchase, sitting on a sofa in the compact apartment beside her taxi-driver husband. But while she says she is grateful to Lula, his ruling party does not have a guaranteed vote in her household.
