Tag Archives: Contract Buyers’ League

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!

 

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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.

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