Plundering Black Wealth with Predatory Land Installment Contracts

Columbus        An analyst for the Federal Reserve Bank in St. Louis on a panel with us at the Benjamin Hooks Institute at the University of Memphis listened to our remarks about the devastating impact of hedge funds and land installment contract companies in Memphis, and asked me if I had seen the study by the Samuel Dubois Cook Center on Social Equity at Duke University entitled, “The Plunder of Black Wealth in Chicago:  New Findings on the Lasting Toll of Predatory Housing Contracts.”  I hadn’t then, but I have now, and it’s a punch in the gut and a slap against the head for anyone who needs a wakeup about the devastating impact of these predatory rip-offs more than fifty years later which are making a comeback now.

Before I knock you out of your socks too, let me brace you a bit so that you’re sitting down when it comes.  This report is not a rhetorical polemic.  It is based on the Center and its collaborators going through 50,000 land records in Chicago in minute detail including court records and the whole shebang.  The report authors are careful to point out that there conclusions, even after this Herculean effort, are conservative.  In short, what I’m going to share is no back of the envelope baloney to make you hoot and holler with ACORN’s Home Savers’ Campaign for more reform, but hard, cold facts that cannot be contested, but must be addressed.

Here’s what the found in a nutshell:

  • Between 75 and 95% of the homes sold to black families in Chicago in the 1950s and 1960s were sold on contract.
  • On average, the price markup on homes sold on contract was 84%.
  • On average, African-American families paid an additional $587 (in 2019 dollars) more each month than they would have paid with a fair price and an FHA backed mortgage.
  • The average buyer paid several more points of interest on their loan compared to the average white buyer.
  • Over the two decades studied, the amount of wealth land installment contracts expropriated from Chicago’s black community was between $3.2 and $4 billion.

And, don’t forget, these were installment contracts where a missed payment could – and often did – lead to eviction, so that many of these families, paying a premium and being fleeced from start to finish, never ended up with the wealth that home ownership might have brought them even as they paid the price!  Oh, and this is just the numbers on Chicago, multiply that in urban areas across the Midwest and anywhere in the South and the rest of the country until the FHA stopped redlining in the mid-1970s.

Any doubts about the impact and injustice left or the need still to make families whole to start to close the wealth gap between black and white families in the United States?

I hope not, but here’s one more Gold Seal of approval supporting the truth of these numbers:  one of the collaborators was Jack Macnamara.  They list his name as being connected with Loyola University in Chicago, but that’s window dressing.  Macnamara was the lead organizer of the Contract Buyers’ League in Chicago which turned Chicago upside down around this issue in the late 60s and early 70s.

If Jack says these numbers are right, that’s enough for me.  You can put them on a picket sign and go to the bank with them!



Liberal Affordable Housing Conundrums

New Orleans   Just maybe there is beginning to be an emerging consensus in the United States, joining many other countries around the world, that there is in fact an affordable housing crisis in the country.   Perhaps I should clarify this quickly.  Let’s say that among liberals there is a growing agreement when it comes to the pricing barriers to homeownership in cities of choice.  We still seem to be miles away from any shared understanding about the crisis in rents and evictions, but that’s another matter it seems.

We can see this in the recent actions of the tech behemoths in the greater Bay Area encompassing Silicon Valley and northern California.  Google and Facebook both committed a billion a piece and now Apple, with a $100 billion plus horde in the bank, says it is good for $2.5 billion all in the name ostensibly of providing affordable housing in the area to keep it “livable” and of course for the public relations value.  Make no mistake though, this is not a philanthropic gift, but all the libertarian techies are clear they see this as a way to make money.

Does it add up?  Well, as one reporter at the New York Times noted, at $450,000 average home price that might be 10,000 houses, maybe more since in some cases the companies have already paid for the land.  Once again, the calculation is based on home purchase prices, rather than the cost or units available in larger multi-family, multi-unit schemes.

Others have argued that California alone needs some 3.5 million units of new housing by 2025, making this a drop in the bucket.  The Bay Area gained 676,000 people in recent years with 176,000 units of new housing.  Most experts believe that you need to build one new unit for every 1.5 new residents to meet housing needs.  All of this means they are falling behind as fast as they are claiming to be trying to respond and catch up.

Mother Jones made the case with detailed data that nationally housing prices are about where they have always been with the exception of handful of places –including New York and the Bay Area. Minneapolis has pushed ahead around the issue of single family zoning to allow more multi-unit construction.  Meanwhile essayists for the New Yorker try to dismiss rent control as if it were a recurring strain of Ebola in West Africa.

Why isn’t more of the conversation about density, rebuilding in existing communities with more four and eight-unit building?  Condo owners seem to like high-rise buildings, why aren’t we talking about more multi-story apartment buildings with affordable units?  In New Orleans we see one office building after another being converted to apartment units, but instead of discovering more affordable housing, we wake up later to see that these are faux-hotels with zoning allowances so that can offer the majority of units for short-term rental.  Meanwhile every effort to build or rebuild more public housing unleashes a storm of controversy with the NIMBY folks, talking out of both sides of their mouths.

We need to move past the homeownership obsession and start talking about mass housing programs for the millions of families desperate for affordable housing anywhere and any place they can find it.


Ukrainian Phone Call by Robert Sarazin Blake

Thanks to KABF.