the Contract Buyers League: Contract Selling Diagrams

Thursday, July 9, 2015

Contract Selling Diagrams

Some diagrams outlining the exploitative contract selling process that occurred. A preview of the upcoming exhibit, opening at the Homan Square Community Center next Thursday at 5pm.

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Background Information

Historic Lawndale

North Lawndale, having transitioned from a largely Italian and Irish based population at its inception in the mid 1800s, emerged as a community largely dominated by a Bohemian and, nominally, Catholic population, particularly in the south end of the neighborhood. In the early 1900s, Lawndale transitioned again, rapidly becoming the third largest Jewish community in the world after Warsaw, Poland and New York City.

The strong Jewish presence began to animate much of the personality and architectural character of the neighborhood, with residents as notable as Golda Meir and Benny Goodman, and an architectural landscape with the largest concentrations of synagogues in the country and some of the first large theaters in the country. The industrial infrastructure was second-to-none and included Sears Roebuck and Co. and Western Electric. Following World War II, the neighborhood began a slow, then rapid transition to become the first African-American community on Chicago's west side. Notable residents included Dinah Washington and Dr. Martin Luther King, Jr.

Homebuyers

The Contract Buyers League consisted of working class African Americans who had arrived to Lawndale from the overpopulated black-belt on Chicago's south side in search of available housing. These same families had previously arrived to the south side from the segregated American South after World War I in search of industrial labor opportunities.

Exploitative Contract Selling

In racially changing neighborhoods across America, federally insured mortgages were unavailable, which left no other option than contract buying as a home purchasing method. The speculative sellers preyed on white homeowner's fears of plummeting real estate values associated with racially changing neighborhoods. The sellers bought homes from those white residents for well below-market value, and in turn sold those homes on contract to black homebuyers at highly inflated values. The terms of these contracts included maximum interest rates, all maintenance responsibilities, and the eviction of homeowners with total loss of investment for failure to pay at any time. Essentially, these contracts denied buyers the benefits traditionally associated with home ownership.

Collective Protest

When the contract buyers realized the unfairness of their home purchase, they attempted to renegotiate with their seller. This was essentially a case-by-case scenario. However, when only a few of these attempts resulted in re-negotiation, the CBL formed and began to picket the offices and homes of sellers, handed out pamphlets and flyers to the neighbors of sellers, filed a series of class-action lawsuits, collectively withheld payments, and resisted and dismissed eviction efforts.

CBL Legacy

The effects of the CBL had and continues to have both local and national implications. Nationally, these efforts gained an audience beyond North Lawndale and were a major contributing factor to national structural changes. This activity was one of several factors in Congress passing the Community Reinvestment Act, the FHA changing its underwriting policy, and the formation of the Gamaliel Foundation as well as the Jewish Council on Urban Affairs. Locally, one of three lawsuits filed on behalf of the CBL led to changes in the Illinois Forcible Entry and Detainer Law to allow for a broader defense in eviction cases. The two additional lawsuits filed by the CBL against the sellers lost in court, but led to contract sellers agreeing to renegotiate all of their contracts according to the CBL formula. While achieving renegotiation at a fair price was the main goal, quite possibly the greatest result of the CBL was the unification and empowerment of the community, and the lifelong impact that had on individuals involved in the CBL.