When Black homeowners fought back
In the 1960s, African American homeowners led a battle for the right to get a mortgage and secure their property.
IN THE spring of 1968, in Presentation Church on the West Side of Chicago, a Black woman named Ruth Wells became known as the "Rosa Parks of Lawndale."
Keeanga-Yamahtta Taylor is on the editorial board of the International Socialist Review. She is a frequent contributor on the subject of race and class and has written extensively on the struggle for housing justice. Her articles have also appeared on the Black Commentator, CounterPunch and Gaper's Block Web sites.
In a hastily organized meeting by Jesuit seminarians, Wells stood up and told of how she and her husband were being financially crushed under the burden of trying to keep up with monthly contract payments to pay off their house.
In Chicago, as a result of racism and redlining, it was virtually impossible for African Americans to get a standard mortgage with affordable interest rates. Instead, Blacks were often forced to purchase their homes "on contract"--the way one would buy a refrigerator or television. Unlike mortgage holders, who build equity in their homes, contract buyers were considered tenants. If they missed a payment, they could be evicted.
The result was that when it came to home ownership, African Americans were either shut out or ripped off. A report on the availability of mortgage funds for African Americans in Chicago found that in 1963, on average, Black homeowners paid 73 percent more for housing than whites, even though their median annual income was one half of what it was for whites.
At the same time, by 1960, more than 800,000 African Americans called Chicago home, and the city had the highest per capita income among Blacks in the U.S. outside of Detroit.
The pull of homeownership was strong. The possibility of owning one's own home meant leaving the cramped and overcrowded conditions of the poorest neighborhoods on the South Side of Chicago, where most Blacks had historically come when they first moved to the city.
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THE GROWTH of the Black population and the desire for better housing created the conditions for the exploitative practice of "block-busting," to which contract selling was inextricably linked.
Chicago's original Black Belt was surrounded by white neighborhoods, and as Blacks looked to move beyond the worst sections of their segregated neighborhoods, the only place to go was the white areas. Real estate speculators took advantage of this by convincing whites that their property values would plummet if Blacks moved into their neighborhoods, and that the whites should sell quickly before it happened. These blockbusters bought low from the whites and sold high to the Blacks.
One blockbuster described his method:
I specialize in locating blocks which I consider ripe for racial change. Then I "bust" them by buying properties from the white owners and selling them to Negroes--with the intent of breaking down the rest of the block for colored occupancy. Sometimes the groundwork--the initial blockbusting--has already been done by some other speculator by the time I arrive on the scene...
I make my money--and quite a lot of it incidentally--in three ways: 1) by beating down the prices I pay the white owners... 2) by selling to the eager Negroes at inflated prices; and 3) by financing these purchases at what amounts to a very high rate of interest...If anybody who is well established in this business doesn't earn $100,000 a year, [they are] loafing.
These were the conditions in 1966 when a Catholic priest, Father Jack Egan, began organizing on Chicago's West Side. Egan, who gained a national reputation as a civil rights fighter after marching on the front lines of the Selma Voting Rights March in 1965, had been banished to a shrinking West Side parish for his continued civil rights organizing and his vocal opposition to the demolition of Black neighborhoods by the University of Chicago on the city's South Side.
Said Egan, "I'm living with Black people for the first time in my life. Archbishop Cody couldn't have given me a greater gift. I don't think he thought of it that way. I think he thought he was getting rid of me."
Instead of disappearing, Egan, a protégé of community organizer Saul Alinsky, organized young seminarians to canvass the West Side neighborhood of North Lawndale to find out the main issues affecting the community. Father Egan called it "Operation Saturation." Steep contract payments came back as the predominate issue that people were concerned about.
The seminarians conducted research at the Chicago Title and Trust Company and discovered that half of the buildings in Lawndale were sold on contract to Blacks for up to $10,000 to $15,000 more than what they had been bought for--a huge sum at the time. They used this information to call a community meeting to discuss how Lawndale residents could fight this exploitative practice.
For weeks, the Jesuits had been having meetings in which Black residents would not speak. So when Ruth Wells spoke out in the spring of 1968, it opened the floodgates for most of the residents at the meeting. Everyone began sharing his or her stories about contract exploitation. Wells described how she and her husband signed a contract to buy their house for $23,000, while a Federal Housing Administration (FHA) appraisal found the house to only be worth only $14,750.
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FOR THE next two years, every Wednesday night at Egan's Presentation Church, between 200 and 400 African American contract buyers stuffed themselves into the basement to strategize on how to convert their contracts into mortgages. They called themselves the Contract Buyers League (CBL).
Their first public actions included picketing the offices of Chicago real estate companies and the Chicago office of the FHA. In March 1968, contract buyers got their first victory when an investment firm holding 300 contracts in Lawndale agreed to convert them into mortgages. A Chicago Sun-Times editorial described the success as having "national implications because of its potential for replacing ghetto despair with hope. It could defuse one of the many time bombs that threaten to bring new violence to America's inner cities."
Despite this victory, by the end of the year, other brokers weren't willing to compromise with the contract buyers. In response, frustrated CBL members organized a strike to withhold all contract payments until the sellers agreed to convert the contracts. On December 1, 1968, several hundred contract buyers stopped making payments. Within days, at least five real estate agents called to renegotiate the terms of at least 50 contracts.
The payment strike was extremely strategic, because contract buyers knew their monthly payments were not just going toward their principal balance, but also included payments for property taxes and, most importantly, insurance. In the wake of riots and general urban unrest, sellers were concerned about the safety of their property--and lapsed insurance payments could mean they would lose out if their houses and buildings were burned down.
Rather than make contract payments, league members collected money orders from the buyers and put them into an escrow account. West Side CBL members, most of whom had taken on tenants in their two-flat buildings, promised discounted rents if the tenants paid directly to the contract buyers and not the sellers.
Shortly after the strike began, contract sellers began to file cases to have the buyers evicted. Illinois law treated contract buyers like tenants, who had no defense against non-payment of rent. In 1968, more than 42,000 people in Chicago were evicted. If a tenant or contract buyer was evicted and wanted to appeal that decision, they had to post an appeal bond from anywhere between $4,000 and $7,500. The system was set up for tenants and contract buyers to accept, not contest, court decisions.
A community organizer, Jack Macnamara, sensing the threat of mass evictions, arranged for legal help with huge Chicago law firm, Jenner and Block, which agreed to take the case for free. The firm's leading partner, Albert Jenner, had been on the federal Kerner Commission that examined the causes of African American unrest, and understood the explosiveness of the housing issue.
In January 1969, the lawyers filed a class-action lawsuit on behalf of the CBL against more than 200 speculators, realty companies, commercial banks, individual contract sellers, and savings and loan associations for conspiring to segregate Blacks and restricting their access to the same services received by white homeowners.
Even the conservative Nixon administration recognized the significance of the case. The Justice Department went so far as to file an unprecedented amicus brief in support of the CBL lawsuit. According to the Chicago Defender, it was the first time the federal government had ever filed an amicus brief in a case at the trial level. U.S. Attorney General John Mitchell described the federal government support as "the first effort to break massive Northern housing segregation."
By the end of March 1969, close to 600 families had joined the strike, and the CBL had collectively withheld more than $250,000 from contract sellers. In response, contract sellers began filing eviction orders, and by the following December, the Cook County Sheriff's Department started evicting CBL members, beginning with a South Side mother of nine, Elizabeth Wood.
Nine days before Christmas, Wood came home to find her furniture and all of her belongings strewn across the snowy street. CBL members quickly showed up and began to move her belongings back into her house.
Arthur Greene of the South Side CBL claimed that the police were trying to make an example out of Wood. He said, "They want to hang a nigger on a tree to scare the rest, but we aren't going to take that crap."
And they didn't: South Side CBL members had contacts and even members within the Cook County Sheriff's office who gave advance warning of evictions. As a result, hundreds of CBL members and supporters waited for the sheriff's deputies to arrive, filling the streets and preventing them from getting through. Still others filled the home of whoever was being evicted, making it impossible for the deputies to carry out their job.
For the first three months of 1970, the eviction standoffs produced high drama in the city, and activists succeeded in forcing county officials to back off.
In late January, when 200 CBL members thwarted an eviction and private security hired by the contract sellers fired weapons, threatening to cause a melee, Cook County Sheriff Joseph Woods declared he would cease evictions pending a court decision on whether or not contract buyers could present defenses in an eviction case.
Said Woods: "There is no time limit on these evictions, and we won't evict anybody until the judges take action...The eviction today cost the county between $20,000 and $25,000 and tied up my manpower and equipment. We cannot go through this day after day."
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THE "BIG holdout"--the popular term for the contract-payment strike--galvanized Black Chicago. The Chicago Defender, the city's main Black newspaper, argued in an editorial:
These homebuyers are being evicted from their homes under contractual conditions that deserve the description of legalized fraud. Under these circumstances, we believe with the late Martin Luther King that an unjust law (or contract) should not be obeyed.
The court opinion in this case shows no concern for the struggling poor Blacks. It is this kind of class judgment that stirs emotional frenzy to the point of mass revolt. This may well be the turn of events, for the whole of the Black community is in deep sympathy with the cause of the defrauded members of the Contract Buyers League.
After weeks of delays to evictions, the sellers threatened the county with a multimillion-dollar lawsuit to force their resumption. The CBL won again as Cook County was unprepared for the repeated confrontations with well-organized CBL members. This changed, however, when Sheriff Woods changed strategy and didn't announce the next round of evictions targeting 115 CBL members.
Woods' surprise evictions produced the greatest standoff yet between the CBL and sheriff's deputies. Deputies arrived at 9 a.m., catching families off guard. Two hundred deputies in riot gear and brandishing shotguns lined one block. Army Lt. Col. Wesley Morris, a decorated war veteran, was evicted. He donned his military uniform for news cameras as he stood guard over his discarded property thrown about the streets.
Other families complained that deputies destroyed their property as well as the inside of the homes, apparently in the belief that this would prevent the families from moving back in or even wanting to return. This time, when the houses were cleared, the contract sellers paid to have armed security stand guard over the emptied houses to guarantee the contract buyers would not return.
The next day, when 12 more families were evicted, 27 people were arrested for disorderly conduct after attempting to overturn a police car and pelting the police with rocks and bottles. Arthur Williams, a steelworker and one of those evicted, voiced the sting of injustice felt by the contract buyers.
"Where to now? Maybe back to the ghetto," he said. "Nothing is expected of us there. As long as we were here, we were taxpayers and responsible citizens. We paid taxes...and now the tax money is paid to kick us out. It isn't right."
Bigger showdowns were in the offing. So within days, Mayor Richard J. Daley (the father of the current mayor) intervened and helped negotiate an agreement to stop the evictions until the courts made a ruling on whether or not contract buyers could be evicted like tenants. All sides agreed that the contract payments would go into escrow until the case was decided.
This deal alleviated most of the immediate tensions. But it didn't resolve the central question of converting contracts into mortgages.
By early 1971, most of the contract buyers had converted the contracts to mortgages, either on their own or with the help of CBL attorneys. Moreover, nearly 200 contract buyers had saved nearly $2 million based on renegotiated contracts. A Black mortgage broker, Dempsey Travis, helped negotiate settlements with several of the firms who held the contracts of the buyers. He also convinced Black firms to pledge money to cover the mortgages for CBL members who had already been evicted.
According to one author, by 1971, several changes in lending, as a result of the very public CBL struggle, had taken place. The First National Bank of Chicago began offering conventional mortgages to African American homeowners in Lawndale. Insurance companies, which had once refused to sell policies to Black homeowners, began underwriting insurance for their homes.
However, the CBL lawsuit didn't go to trial until the summer of 1975, when only seven of the original plaintiffs remained. Most others had already settled their contracts. The case became the third longest trial in the history of the U.S. District Court for Northern District of Illinois. Ultimately, the CBL lost the lawsuit when a mostly white jury decided that Black contract buyers were not the victims of racial discrimination. As one juror said, "it was economics, not civil rights in play."
Despite this, the CBL struggle made impressive gains, compelling sellers, banks and other lenders to offer conventional mortgages and legal home ownership to African Americans. And the publicity from the lawsuit--which lasted until 1982--highlighted the racism and discrimination in housing regularly faced by African Americans in cities around the country. Their struggle contributed to the political atmosphere that produced major housing reform in the 1970s.
Today, of course, African Americans and other minorities are bearing the brunt of the housing crisis and predatory lenders. The collective action of the Contract Buyers League provides inspiration and lessons for the victims of today's crisis.