Predatory Contract-for-Deed Sales Cast a Long Shadow in Chicago

Picture featured in the December 1968 edition of the Jesuit Bulletin.

Picture featured in the December 1968 edition of the Jesuit Bulletin.

Chicago  Sometimes it felt like fifty years ago.

That’s only partially because sometimes the conversation would toggle back and forth to the work the Contract Buyers’ League did on Chicago’s West and South Sides decades ago from 1967 to 1972 or so, as strategies and tactics that would address the current, horrid, predatory comeback of contract-for-deed purchases were compared to the old campaign in a day long and continuing conversation between CBL veteran organizers and leaders, contemporary activists, and concerned community and clergy. It is also because we were literally sitting among the remaining survivors of the ghettoization and depopulation of North Lawndale and Austin as we met in beautifully paneled rooms in one rectory in Lawndale and slept in the former rooms of long reassigned priests in the empty floors of another rectory in Austin managed by one priest now, where eight had once lived.

Real estate manipulation, financial exploitation, and banking and institutional abandonment and racism built these 21st Century neighborhoods, even as we examined the great battles 50 years ago that were heroic without being a turning point and sat among the beautiful architectural and institutional ruins of that time. Contract-for-deed purchases are a way that a seller buys distressed property and then exploits a buyer, a family, almost invariably low-and-moderate income and too often minority, by flipping the property without making repairs while extracting predatory payments at huge premiums almost hoping for a default since there is no equity and a quick eviction process, since there was no actual property transfer, allowing the seller to sell again to another victim or another greedy seller, and keep the cycle going again.

The Contract Buyers League was a campaign, spearheaded by Jack Macnamara, a former Jesuit seminarian then, who sat with us today, and a steady stream of almost eighty college students who did stints in summers and school semesters off-and-on for years as volunteers to staff the research, hit the doors, and help the members put together the weekly Wednesday meetings and constant diet of pickets, actions, and events. Around the table were some of those former students, including by old friends and comrades-in-arms from ACORN, the SEIU, and AFL-CIO Mike Gallagher from Boston and Mark Splain from the Bay Area as well as Jim Devaney, a former volunteer from Cincinnati. A former Black Panther from those days and other community leaders now tried to puzzle out how, with the reemergence of contract-for-deed activity now in the wake of the foreclosure crisis and home lending desert for lower income and working families, we might be able to refashion a Contract Buyers campaign that could work and win now.

It goes without saying that today is different than 50 years ago. Rather than being concentrated in neighborhoods like Lawndale and Austin in Chicago and other cities with large minority populations then, today the victims are spread throughout the metropolitan area. We looked at a sample list of contract buyers acquired by two vulture hedge fund operators and there were few in Chicago itself compared to working class suburbs and developments like Homewood, Hoffman Estates, and Orland Hills. How would we get the density that put hundreds in a room on a weekly basis 50 years ago? Estimates are as high as 7 million families who are under contract-for-deed agreements now nationally, but putting them together wouldn’t be easy. We were all veteran door knockers, but we talked about how to use data files, voter lists, robo-dialers, social media, and other tools to flush out the victims and leverage the public policy and political space to create change.

There’s more work to be done in coming days, but two things kept returning us to the task of today. One was hearing our new friends from these communities where we were meeting talking about how their father’s and grandmothers had bought and raised their families in contract houses. Another woman speculated that the mystery of how her sister had lost her house might have been through a contract-for-deed rip-off, and she left at the end of the day to call her and finally ask. And, then there were the stories of the actions, lawsuits, and even some victories of 50 years ago to continue to remind us that we could only really lose, if we refused to fight this plague once again.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Realtors and Redlining Destroyed Neighborhoods – Was Alinsky a No-Show?

redliningNew Orleans   Looking into the rising return of the family crushing and neighborhood killing predation involved in contract-for-deed property transactions being revived by Wall Street veterans and facilitated by weak regulations and federal off-loading of foreclosure inventory from the real estate bubble of 2008, I stumbled onto an interesting book, Family Properties:  Race, Real Estate and the Exploitation of Black Urban America by Beryl Satter.  Published in 2009, Satter is not only a historian and chairperson of that department at Rutgers University, but has skin-in-the-game, since she was driven to the subject to understand the conflicting family story of her own father who died when she was a child and whether he was a crusading civil rights lawyer and advocate in Chicago or a slumlord himself.  

            Being only half through the book so far, I can’t definitively answer her question, nor have I arrived in my reading to the sections on the Contract Buyers’ League, which was central to my motivation in uploading the book to my Kindle.  On the other hand, I’m knee deep in an excellent, well-written, and researched history that puts race and real estate speculation squarely at the heart of urban neighborhood deterioration from the post-war decades until our current times.  In Little Rock, where I first ran into contract-for-deed exploitation, it was always clear that if there was a power structure anywhere in the city it was centered in the real estate interests, and from our 1972 campaign to “Save the City” forward, including forcibly confronting blockbusting in the Oak Forest neighborhood, they were our main opponents.  In that sense, Family Properties was a deep affirmation and an extension of the argument and those experiences across the urban battlefield of America.

            Somewhat unexpectedly though, I’ve found nothing subtle in Satter’s critique, and condemnation of Saul Alinsky and his community organizing in Chicago during those years.  She bells him repeatedly, beginning with his antipathy for organizing the poor, who were most exploited by all of these practices, and for his inability to strategically and tactically embrace the reality of race in his organizing and the practices of the organizations they built in Chicago.  She doesn’t argue so much that the problem was direct racism, as more fundamentally a weakness in the Alinsky organizing model itself, saying that

“…ineffectiveness of the OSC [Organization of the Southwest] and TWO [The Woodlawn Organization] highlighted the two major flaws of Alinsky’s model of organizing:  his insistence that organizing efforts be fully funded before they could be launched, which left him vulnerable to pressure by the wealthy donors, and perhaps more serious, his belief that they should tackle only issues that were ‘winnable.’”

Sharpening her point she argues that, “Unfortunately, Alinsky’s insistence on fighting only for winnable ends guaranteed that his organizations would never truly confront the powerful forces devastating racially changing and black neighborhoods.”  Ouch!

            She piles on evidence to the extent that her arguments are almost irresistible, include his scolding of his lieutenant, Nicholas von Hoffman and others, for getting too involved in real estate issues when he was in Europe, that he thought were jeopardizing organizational funding, his opposition to fighting black displacement in Hyde Park, and his view that fighting “racial discrimination that lay at the root of community decay…was ‘too complicated.’”  Satter adds that,

“Alinsky often cast urban renewal as an ‘unwinnable’ issue to be avoided.  TWO’s attitude toward housing was similarly confused.  The group apparently felt that the redlining policies that forced black Woodlawners to buy on contract were too complex for effective community mobilization.”

Satter even cites Alinsky’s own biographer in the claim that killing the Square Deal campaign was done on a totally transactional basis,

“According to Alinsky’s biographer, the Square Deal campaign was ‘intentionally terminated by Alinsky and von Hoffman’ because TWO wanted the financial support of merchants when it turned to ‘larger issues such as urban renewal.” 

Twisting the knife, she adds,

“The net result was that, instead of blazing a new path for community activism, TWO became yet another demonstration of the perils of reformers’ financial dependence on the very people they needed to challenge.”

            Adding insult to injury she argues that the creation of the West Side Organization and its achievements were “an overt challenge to Alinsky, who had warned him against organizing the very poor – an action that Alinsky believed would divide the larger community.”   During the Southern Christian Leadership Conference and Martin Luther King effort to take the civil rights movement north, she includes an assessment from one of the movement’s legendary organizers that was equally devastating, quoting…

“…James Bevell, a charismatic Mississippi-born African American who had participated in virtually all of the major Southern civil rights crusades.  In Bevel’s view, too, Alinsky ‘simply taught how to, within the context of power, grab and struggle to get your share.’”


            None of this is definitive, but it’s a critique that has weight and can’t be ignored.  Having organized and fought redlining, realtors, and neighborhood deterioration for decades, as organizers we may have to confront whether or not Saul Alinsky, as a primary architect of community organization, was not only a no-show when it mattered in Chicago, but abetted the problem by skirting the battlefields that counted, by not using issues to build power for the bigger fights, but instead running from the fights themselves.  If that’s the case, the legacy of that shadow could still be crippling the work that needs to be done in addition to the way the work is done.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Predatory Home Buying through Contract-for-Deed is Increasing

780c1b060773287590e252e572a03ba3New Orleans   Every report indicates that predatory practices are spreading when lower income families are trying to acquire homes in the current real estate market where banks have cut back on small loans, the subprime lending market has virtually disappeared, and vulture investors are trying to exploit the situation. The terrible result has been an increase in contract-for-deed purchases, if you call them that, of houses throughout the country.

RealtyTrac estimates that since 2009, there are at least 20,000 homes being purchased annually through contract-for-deed understandings and the number is rising. The National Consumer Law Center in a report published in July of this year called “Toxic Transactions,” estimates the number of contract-for-deed purchases at 3.5 million homes, but carefully argued that the number was likely much higher. Other experts have placed the figure higher than 4.1 million. This level of exploitation is a national crisis.

Several reports in the New York Times and the Washington Post have documented the increase of these kinds of transactions, particularly noting the fact that several hedge funds have swooped in to make bulk purchases of thousands of foreclosed homes in order to flip them into contract-for-deed agreements to drastically increase their return. Harbour Portfolio Advisors from Dallas was most notorious for purchasing 6700 homes from Fannie Mae in this way for an average of less than $10,000 per property and working with its servicer, National Asset Advisors of Columbia, South Carolina has been in the process of flipping them. The Consumer Finance Protection Bureau has reportedly stepped up its investigation of complaints on these home contracts, and not surprisingly both Harbour and National Asset have thus far refused to comply by providing documents. The NCLC report argues heavily for action by the CFPB to rein in the abuses common in contract purchases.

Contract-for-deed purchases have a sorry history that dates back to the racist government approved redlining of minority and low income neighborhoods before the passage of the Community Reinvestment Act in 1978. Little has changed though since many of these land installment purchases are opaque and outside of the reach of most federal protections currently and often totally unregulated in states as well.

The NCLC report is clear about why the odds are against the lower income buyer in every situation:

 

These land contracts are built to fail, as sellers make more money by finding a way to cancel the contract so as to churn many successive would-be homeowners through the property. Since sellers have an incentive to churn the properties, their interests are exactly opposite to those of the buyers. This is a significant difference from the mainstream home purchase market, where generally the buyer and the seller both have the incentive to see the transaction succeed.

I can remember meeting African-American families on the doors with ACORN in the early 1970s in Little Rock who had been paying on contracts for decades, even starting over in some cases and losing homes they had tried to buy this way. We keep thinking that we have cut the head off of these snakes, but somehow they reappear and victimize more millions.

Real estate, hedge funds, Wall Street, a property-mogul president, racial and income discrimination across the country in the wake of the real estate crisis to me all adds up to a campaign dying for action, and something that we could absolutely win, if we acted together and did so now.

***

Please enjoy Timothy B. Schmit’s Red Dirt Road. Thanks to KABF.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Crisis in Home Ownership for Working Families and Minorities

San Jose much for sale but few are being sold (Karl Mondon/Bay Area News Group)

Much for Sale in San Jose   (Karl Mondon/Bay Area News Group)

New Orleans   Something big is happening in housing. Maybe big and bad. Maybe big and unknown, but scary in its uncertainty for the future.

Here are the facts that frighten.

Home ownership dropped again in the last quarter of 2016 and when it did so, it fell below 63% to the lowest level in 50 years.

Mortgage loans to African-American families fell in the review period between 2004 and 2014 from 7% of total mortgages for blacks to only 5% of mortgages issued. Hispanic families budged up slightly from 7 to 8%, Asian families stayed at 5%, and mortgages to white families zoomed up from 58% to 69%.

This analysis of Home Mortgage Disclosure Act data was done by the National Association of Real Estate Brokers. They argue in their report that this drop has to do with a tightening of credit standards after the 2007 housing meltdown. Couple that information with another recent statistic that prices in the housing market now are only 2% lower than their historic highs achieved in 2006 before the bubble burst. For the real estate brokers, it is in their interest to have their cake and eat it, too. A return of high prices means happy days for them. Claiming the decrease in much of minority-based lending is based on a change of standards, rather than a clearer manifestation of discrimination is also squarely in their interest.

The Wall Street Journal reported that one of the reasons that minorities are getting a smaller share of loans is the return of the jumbo mortgages to “more affluent borrowers with loans exceeding $417,000.” Mumbo-jumbo. Report after report also indicates with this surge in pricing what used to be “jumbo,” is now just standard operating procedure. Average housing prices have now hit $1 million San Jose for example. Meanwhile other reports speak to housing and income growth in center cities around the country, including in areas like Detroit and Philadelphia and deterioration of income and housing prices and values in working class areas of cities, along with the paradox of millennials wanting to live downtown which is pushing the prices up now, while Pew Research surveys are also saying they are only committed to living downtown for five or ten years. What then?

Anyway we shake-and-bake these figures, it is hard to maintain a belief that that part of the American Dream that included home ownership is still alive. We can’t have both stagnant incomes and rising home prices with narrower lending parameters and believe that home ownership can increase among low-and-moderate income families. The conservative blame-game that tried to saddle the housing collapse not on Wall Street recklessness but on lax lending standards has mutated into a form of de facto national housing policy.

Does that mean there will be more affordability in the rental market? There’s no indication of any new trend there, and in fact market-rate construction for the millennials is still the driver. Meanwhile neither political candidate has a program around housing, much less affordable housing, and if values are falling in low-and-moderate income communities that are not on the gentrification list, that also means that citizen wealth will continue to drop like a rock.

Housing is now on the trajectory from problem to issue to crisis, and the silence around solutions is depressing and deafening.

***

Please enjoy East Coast Girl by Butch Walker. Thanks to KABF.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Milwaukee and Other Cities are Explosions Waiting to Happen

 An eviction in Milwaukee in December. Often, landlords turn to informal methods to get families to leave.Photograph by Philip Montgomery for The New Yorker

An eviction in Milwaukee in December. Often, landlords turn to informal methods to get families to leave. Photograph by Philip Montgomery for The New Yorker

New Orleans    For quite a while in these times of inequity and polarization around income, class, race, and so many other issues, there has seemed – at least to me – a fuse steadily and slowly burning towards an explosion in our cities. We are definitely seeing it now in Milwaukee, as the community rioted in destructive anger in reaction to a black policeman 24-years old killing a fleeing black man 23-years old, who was also armed.

The anger is erupting because it comes from an unrequited rage. Elements of the community are saying, essentially, “We don’t care about whether police say the killing was justified or not; the killing has to stop!” We can quibble and disagree about the facts, the tactics, and the collateral damage, but it is hard to argue that police occupation of lower income, largely minority communities is working to either stop crime or, even more importantly, to protect and secure the communities themselves or integrate them fully into the overall life of the city. People are drowning without lifelines or lifeboats in sight. No one could have read the book, Evicted¸ and its close, hard look at conditions in Milwaukee’s lower income neighborhoods around housing, which are little different than scores of other cities, without understanding that all of these situations are powder kegs waiting for matches.

But, as Milwaukee is demonstrating, to see the crisis as a simple matter of police-community relationships where strategy and tactics have gone terribly awry, is also a mistake. These issues and estrangements are bigger than that, and they are more comprehensive. The police are simply at the front of the line, but everyone else is still in the queue, equally responsible. There are few better examples that the surprise the press is finding in Milwaukee that they are also a target of protest and rage.

The police are the close-at-hand occupiers, while the press is now increasingly the far removed observers. As newspapers and other media outlets have drastically cut the staffing of their newsrooms in the technological crisis within their industry, the coverage of communities of class and color, which were never robust, are now even more drastically depleted. Any casual conversation with community organizers will quickly reveal how invisible the work has become and how increasingly shrouded their communities have become. Large protests and similar events go unreported. When covered, it’s often now a student intern or stringer or a photographer sent just to get a picture. We’re back in the 50’s again where the mainstream media largely depends on self-appointed or downtown-vetted community leaders rather than facts and forces on the ground, so who is surprised that when they show up in the community there’s something less than applause.

The New York Times quoted a community advocate in Milwaukee with a radio show saying, “Our stories get mixed.” At first I thought this might be a misquote and that he really said, “nixed,” but he was more likely saying that the stories suffer from too much two-handed coverage, where the voices of the community are muted and the issues, no matter how stark, are diluted.

Not to keep being the Cassandra here, but attention must be paid. As I keep arguing, for all the noise out there, this all seems like the fire this time, and there will be no excuse for policy makers, politicians, and other institutions, large and small, to act even remotely surprised when it breaks out everywhere.

Nothing is being done to solve these problems, so who would be surprised that people start expressing their anger in whatever ways are still available to them.

***

Please enjoy this version of The Midnight Special by Billy Bragg & Joe Henry. Thanks to KABF.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Class Conflict on the Creek?

one of the fishing buddies on the Creek

one of the fishing buddies on the Creek

Rock Creek, Montana   More is changing on the creek than the climate, it would seem. Having just finished Nancy Isenberg’s White Trash: The 400-Year Untold History of Class in America, I found her whispering in my ear as I tried to get my arms around the changing scene in this beautiful spot, where I’ve found so much peace in the past.

This is my seventh season on the creek, reading, fishing, writing, working, hiking, and visiting with family and friends. These have been special times that I associated with being a dozen miles off of paved road, off-the-grid, away from the rat race, and virtually in a parallel universe that rose and set with the sun and the rhythms of living with fish jumping, eagles and hawks soaring, deer running through camp, chipmunks bold and brassy, walking eye to eye with the occasional moose, and even new sign of bear. I had come to believe, even as jaded and cynical as I remain, that this was a place apart.

The son of a friend and comrade for decades commented to me as we leaned against my pickup that “gentrification is coming.” Visiting another friend who runs the local office of the National Wildlife Federation in Missoula, he commented that he had been around the area almost 40 years and remembered when people living up the creek were just seen as “white trash,” and now prices had skyrocketed along the paved road and were moving up the creek. Sure enough there were now For Sale signs posted all around the bridge gate. Last season we were surprised that a less-than-modern plywood cabin up the road was listed for over $120,000. Now it is just one of three houses for sale on our small island of sorts. Close by, a neighbor was trying to sell their place for $246,000.

Even here where we are planted, there have been improvements aplenty. In 2010 when the Silver Bullet arrived there was nothing but a shed and a tent pad. We were an upgrade. Now there are two tiny cabins and one two-story cabin, a washing area, a cooking area, art projects, talk of a well and a second outhouse, and at least at this moment still one tent pad and our Airstream. Even in the quiet, as we read in the trailer in the morning, we could hear someone passing by on the road repeating to someone else over and over that this whole property looked like a “Hooverville, a Hooverville, do you hear me?” Well, yes, I heard you. If this Shangri-La is now her idea of a “Hooverville,” what’s happening here, Mr. Jones, and does class have something to do with it?

This is Montana where the myth is that your land is your land and your business where you can do what you want, and privacy and respect is always warranted and expected. Much of this nose sniffing in the air and tongue wagging seems to have found a home to roost, focused on our trailer. Isenberg is brilliant in her book on trailers and we “trash” who embrace them. She sees them in the American “cultural imagination” as “a symbol of untethered freedom” on one hand and on the other as associated with “liberty’s dark side: deviant, dystopian wastelands set on the fringe of the metropolis.”

Isenberg dates much of this trailer antipathy to the war years when the sudden mobilization of available labor for production was magnetized into war centers without adequate housing and trailer parks in places like the shipyard of Pascagoula, Mississippi where 5000 were housed that way. Or she cites the building of a steel mill in Pennsylvania that provoked an outcry of fear that it would reduce “property values.” Isenberg writes, “The construction workers were deemed trash not because of their class background per se, but because they lived in trailers. It was their homes on wheels that carried the stigma.” Manufacturers tried to reduce the stigma by rebranding trailers as “bungalows-on-wheels” to erase how they were seen in the vestiges of the war years, but it never has quite taken.

Zoning restrictions and the fact that the FHA did not agree to insure mortgages on mobile homes until 1971, “proved difficult for the trailer to compete with the tract home.” Isenberg notes that by “the late fifties, more mobile homes were built than prefabricated homes, yet municipalities continued to look down on them,” including prohibiting them from many city limits. A jurist writing a dissent in a New Jersey case “exposed the dangerous implications of this decision: ‘Trailer dwellers’ had become a class of people, he explained, through which discrimination was tolerated under the vague language of protecting the ‘general welfare.’” She tells the story as well of a project to build a trailer park community in Yorba Linda, California, that was finally approved only after the developers “added one final touch: a five-foot high wall around the entire complex.” She goes on to report, “Another local resident, without any apparent shame, admitted, ‘we call them the ‘people inside the wall,’ and we’re ‘the people outside the wall.’” Finally, the historian in an editorial voice asks, “Was there any better symbol of an undisguised belief in class stratification than the construction of a wall?”

Where’s the space and place in America where class does not trump nature and the ability to live freely, even for only several weeks a year? I look forward to many more seasons on the Creek, but wonder if it becomes a matter of keeping up with all of these Joneses, whether I’m simply – and literally — outclassed and need to start looking for some other place to drop my line, read my books, write my words, and visit with friends and family?

DSCN1549

the fishing buddy who actually brings in the fish

Facebooktwittergoogle_plusredditpinterestlinkedinmail