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!