Lawndale Conversations Series: The Contract Buyers League

Thursday, January 31, 2013, 6pm

A panel discussion with Beryl Satter, author of "Family Properties" and History professor at Rutgers University, Clyde Ross, North Lawndale resident and former CBL co-chairman, and Jack Macnamara, community actvist and CBL organizer, discussing the efforts and legacy of the Contract Buyers League, a collective of black Chicago homeowners which originated in North Lawndale in the 1960s to protest exploitative contract selling.

Jane Addams Hull House  Museum
800 S Halsted Street
Chicago, IL 60607

Partners in this event include the North Lawndale Historical & Cultural Society, Neighborhood Housing Services of Chicago, the Jane Addams Hull House Museum, and the Jewish Council on Urban Affairs.

Emergence of Exploitative Contract Selling, Part 3: The Federal Housing Administration

The FHA was created in 1934 with the main objective of stabilizing the home mortgage industry after the Great Depression.  Subsequently, homeownership in America was encouraged by the availability of homes with low down payments and low interest rates through federally insured mortgages.  However, the framework for the “American Dream”, set forth by the newly created FHA, did not work in favor of all potential homeowners.  Part of the FHA’s evaluation process when considering the insurance of mortgages was based on “residential security maps” created by the federal entity the Home Owner’s Loan Corporation (HOLC) (though there were other private institutions that created their own maps).  These maps of specific metropolitan areas, produced at the request of the FHA, were coded to define the level of risk for insuring mortgages in certain areas of a city.

HOLC Map of Chicago 1939  (Source)

View of North Lawndale (Source)

Areas on the map would be coded as "A - First Grade" defined by green, "B - Second Grade" defined by blue, "C - Third Grade" defined by yellow, and "D - Fourth Grade" defined by red.  These “D - Fourth Grade” neighborhoods were most often inner city neighborhoods going through racial transition from white to black, and as such, an entire area or community could be "redlined" with the arrival of an African American family.  There were instances in which FHA would insure mortgages for African Americans moving into all-black communities.  In contrast, even if a bank or private lender was open to providing a mortgage to an African American family in a transitioning neighborhood, FHA would not insure that mortgage.1 

A particular idiosyncrasy of the effects of redlining, and one that conspired to unnerve white’s acceptance of the arrival of blacks into their neighborhoods, was that white homeowners also experienced great difficulty in obtaining credit in neighborhoods that had been redlined.  Whether whites were seeking a mortgage for purchasing a home or financing costly home repairs in a redlined neighborhood, if FHA would not insure mortgages in that geographical area banks would likely not provide them. 2

The situation was certainly not monolithic though.  When white real estate speculators started their dealings in transitioning neighborhoods, they had easier access to various sources of financing that eluded blacks.  That access to financing provided speculators with the cash flow to go in and buy from white homeowners before turning and re-selling those same properties on contract to blacks at a greatly increased price.3

Emergence of Exploitative Contract Selling, Part 1: An Introduction

Emergence of Exploitative Contract Selling, Part 2:  Restrictive Covenants and Real Estate Boards

Emergence of Exploitative Contract Selling, Part 4: The Fair Housing Act of 1968 and the Community Reinvestment Act of 1977

1  McPherson, “‘In My Father’s House There Are Many Mansions—and I’m Going to Get Me Some of Them Too’: The Story of the Contract Buyers League.” The Atlantic Monthly Apr. 1972: 54.
2   Satter, “Family Properties” 45.
3   McKnight. (Nov 7, 2012). personal interview.

Recommended Readings

Family Properties: Race, Real Estate, and the Exploitation of Black Urban America
By Beryl Satter

"In My Father's House There Are Many Mansions - And I'm Going To Get Me Some Of Them Too" The Story of the Contract Buyers League
By James Alan McPherson
The Atlantic Monthly, April 1972

An Alley in Chicago: The Life and Legacy of Monsignor Jack Egan
By Margery Frisbie
Chapter 18: "Very close to an economic miracle" 

Trial and Error: The Education of a Courtroom Lawyer
By John C. Tucker
Chapter 7: Losing-and Winning 

Discriminatory Housing Markets, Racial Unconscionability, and Section 1988: The Contract Buyers League Case
By Gregory L. Colvin
The Yale Law Journal, Volume 80 Number 3 January 1971 

The Contract Buyers League and the Courts: A Case Study of Poverty Litigation
Thesis by Jeffrey M. Fitzgerald
La Trobe University, Victoria, Australia
Law & Society Review, Vol. 9, No. 2, Litigation and Dispute Processing: Part Two (Winter, 1975) 

Dilemmas of Protest Strategy: A Case Study
Thesis by Pamela Browning
Master of Arts (Sociology) at the University of Wisconsin, 1970

Emergence of Exploitative Contract Selling, Part 2: Restrictive Covenants and Real Estate Boards

(image source)

 
Restrictive covenants for neighborhoods have been around for a long time in this country, and in fact, still exist today.  They are essentially rules put in place that are tied to the deed or title of a property so that a level of coherency within a neighborhood, subdivision, or street can be maintained.  The premise being that this approach preserves or increases property values for the individual homeowners.  Examples of covenants might be limits on the acceptable range of colors someone can paint their house, or whether a basketball hoop can be placed on a driveway.  However, restrictive covenants have not always been associated with such benign neighborhood preferences.  There was a time when restrictive covenants were commonly used to expressly deny certain racial or ethnic groups from living in certain neighborhoods.  The pervasiveness of this in Chicago was evident in the fact that by the 1940’s about half of the city’s neighborhoods had racial deed restrictions in place. 1

 The restrictive covenants adopted by various neighborhoods to keep blacks from moving in were also buttressed by local real estate boards.  The onset of World War I ushered in the Great Migration.  It was during this time that thousands of African Americans were moving to Chicago, as well as other northern industrial-based cities, from the rural south in search of labor opportunities.  In response to the housing pressures created by the huge influx of new residents to the city, the Chicago Real Estate Board (CREB) in 1917, appointed a Special Committee on Negro Housing to make recommendations.  What they came up with was “a policy of block-by-block racial segregation, carefully controlled so that ‘each block shall be filled solidly and. . . further expansion shall be confined to contiguous block.’” 2  

 Additionally, the National Association of Real Estate Board’s (NAREB) Code of Ethics, contained the following,  “A realtor should never be instrumental in introducing into a neighborhood. . .  members of any race or nationality or any individual whose presence would be clearly detrimental to property values in that neighborhood.” 3

 In 1948 the Supreme Court ruled on a case specific to racially-based restrictive covenants.  The court ruled in Shelley vs Kraemer that courts could not uphold those covenants because they violated the Fourteenth Amendment’s Equal Protection Clause.  In response to the court ruling, the  NAREB subsequently revised its Code of Ethics in 1950 to remove the reference to race or nationality,  “A realtor should not be instrumental in introducing into a neighborhood a character of property or use which will clearly be detrimental to property values in that neighborhood.”  This would seem to have set the stage for an opening up of the housing market to blacks, however, this token revision really only veiled the real estate industry’s inclination to continue business as usual.

Emergence of Exploitative Contract Selling, Part 1: An Introduction

Emergence of Exploitative Contract Selling, Part 3: The Federal Housing Administration

Emergence of Exploitative Contract Selling, Part 4: The Fair Housing Act of 1968 and the Community Reinvestment Act of 1977

1 Plotkin, “Deeds of Mistrust” 266-67. Also see Satter, “Family Properties” 40-41.
2 http://www.wikitree.com/articles/Daley/racism.htm 
3 McPherson, “‘In My Father’s House There Are Many Mansions—and I’m Going to Get Me Some of Them Too’: The Story of the Contract Buyers League.” The Atlantic Monthly Apr. 1972: 52.
 

3555 W Ogden Avenue: Paint City to NHS

NHS North Lawndale Offices, 3555 W Ogden Ave., photo taken Dec. 19, 2012

Several weeks ago, a client came to NHS whose mother was known as an activist in Lawndale.  We asked her questions about the Contract Buyers League and if she had any memories of how her parents bought their home.  When asked for proof of ownership for possible repair work on her home, the client presented a credit application her mother had applied for from Al Berland.  The application indicated that Berland sold the house to her mother on contract.  And one thing she did remember was going along with her mother to make her contract payments to Berland at Paint City, 3555 W Ogden Avenue. 

Like many others, the Berland family faced hard times living in Lawndale during the Great Depression.  But in 1936, at the urging of a family friend, Mr. P G Berland opened a paint store on Ogden Avenue, and it prospered.  After the Depression, many homes required maintenance that had been put off for so long, so they came to P G Berlands Paint City for paint and supplies.  Albert Berland worked at his father’s store after college and would go on to take over and expand the family business.  Through contacts from working at Paint City and influence from a longtime friend, Berland began to invest in real estate and became part of a small group of men that exploited the housing market on the West Side, though not the only group. 1

The building at 3555 W Ogden remained Paint City until 1982 when the chain was sold to Sherwin Williams. 2  In 1999 Neighborhood Housing Services opened their North Lawndale office within this very building, however, by that time the building’s past life as an office for contract selling had been forgotten.  It is ironic that today NHS is supporting homeownership and strengthening the community of North Lawndale in the same building as a contract seller’s business. 

P G Berland’s Paint & Wallpaper City commercial from 1982 3

1 Satter, "Family Properties". 32-34.

2 “Albert E. Berland Owner of Paint Stores.” Chicago Sun-Times 26 Jan. 1994, LATE SPORTS FINAL, NEWS: 69.

3  “Berlands Paint & Wallpaper City (Commercial, 1982).” YouTube.

Emergence of Exploitative Contract Selling, Part 1: An Introduction

If buying a house on contract was inherently disadvantageous to prospective home buyers, why was this method of home purchase so prevalent in North Lawndale in the 1950s and 60s?

It wasn’t merely a matter of choice for the buyers.  For the vast majority of African Americans looking to buy a home in Chicago in the 1950s and 60s, obtaining a home mortgage was next to impossible.  There were a multitude of contributing factors to this - federal housing policies, real estate board codes of ethics, restrictive covenants, the availability of credit, the availability of housing, individual acts of and institutional racism; the accumulative effect of which was a void of home purchasing options otherwise available to whites.  Contract selling emerged to fill that void for African Americans seeking the American Dream, but its roots meant that it was ripe for exploitation.

The relationship between the real estate industry, the banking industry,and federal departments such as the FHA was heavily interdependent at best, and conspiratorial at worst.  The practices and prevailing attitudes of the real estate industry manifested themselves at the neighborhood level in the adoption of racially restrictive covenants.  Those same attitudes that held that African Americans moving in would reduce the value of a neighborhood informed the creation of the “residential security maps”, which in turn drove the underwriting policies of the FHA.  And without FHA backing, local banks were even less inclined to make mortgages available.   

In the coming weeks, we will explore in further detail Restrictive Covenants and Real Estate Boards, the Federal Housing Administration, and the Fair Housing Act of 1968 and the Community Reinvestment Act of 1977 and their effects on the housing market.

Emergence of Exploitative Contract Selling, Part 2: Restrictive Covenants and Real Estate Boards

Emergence of Exploitative Contract Selling, Part 3: The Federal Housing Administration

Emergence of Exploitative Contract Selling, Part 4: The Fair Housing Act of 1968 and the Community Reinvestment Act of 1977

NHS of Chicago Recognizes Local Heroes for Strengthening Chicago's Neighborhoods

(L-R) Cornell D. Lurry, Vice President, Community Investment Relationship Representative, First Midwest Bank, Mary Morstadt, Vice President/CRA Manager, Mortgage Banking Standard Bank & Trust Company, Clyde Ross, 2012 North Lawndale Neighborhood Leadership Award Recipient, and Ed Jacob, Executive Director, Neighborhood Housing Services of Chicago

Nearly 300 partners, volunteers, city leaders, and residents attended Neighborhood Housing Services of Chicago’s (NHS) Annual Meeting and Neighborhood Leadership Awards, “Promoting Our Neighborhood Treasures” on Tuesday, October 16^th at the Garfield Park Conservatory.  The event was hosted by NHS’ Community Banks Partnership.  Members of the partnership donated items to the silent auction and raffle, which raised over $3,300 to support NHS’ programs.

At the event, seven community leaders, including North Lawndale’s, Clyde Ross, were honored with the 2012 Neighborhood Leadership Award for their dedication, commitment and inspiration in their communities.  Mr. Ross has been an activist on behalf of the North Lawndale community since the 1960s, when he was one of the organizers of the Contract Buyer’s League, a movement that fought against predatory lending to African Americans – and attracted Martin Luther King, Jr. to the neighborhood. His activism spread as far as the South Side of Chicago, and resulted in settlements for many of his neighbors and fellow homeowners on the 3300 block of West Flournoy. Half a century later, Clyde is still fighting for his community, even as he nears his 90th birthday. He continues to have a keen interest in protecting his block, one of the best-maintained blocks in North Lawndale and is a potential nominee to be included on the National Register of Historic Places.

The event also celebrated NHS’ work in seven target neighborhoods in Chicago.  In the past year, NHS served over 5,800 clients, loaned over $22 million, created 104 new home owners and worked with over 3,000 home owners at risk of foreclosure in the Chicago area.

Established in 1975, NHS of Chicago is the city’s largest nonprofit community development organization committed to providing Chicago and Elgin residents affordable resources so they can buy, fix, and keep their homes. Since its creation, NHS has created more than 3,880 new homeowners.  NHS also works to stimulate community reinvestment through a partnership of residents, businesses, and government.  With the help of these partners, NHS has leveraged investment of more than $1.1 billion in Chicago’s neighborhoods.

NHS Chicago is also part of the NeighborWorks® America network, which includes 235 independent, community-based nonprofit organizations serving more than 4,500 communities nationwide.  For more information on NHS, call (773) 329-4010 or visit www.nhschicago.org.

Jack Macnamara's Visit

Paul Norrington and Jack Macnamara

A special guest joined the NHS-North Lawndale Advisory Council at the December meeting.  John “Jack” Macnamara, the former Jesuit seminarian and community organizer, and a central figure in the formation of the CBL, provided the group with a first-hand account of his experience.  Despite his humility, Mr. Macnamara’s courage and conviction in empowering the members of the CBL to seek fair terms for their home purchases shone through as he spoke.  Mr. Paul Norrington, an advisory council member and current resident of the K-Town Historic District in North Lawndale, summed up his appreciation of Jack’s story and his efforts in North Lawndale with the following:

“I hope that we’ve all gained a new appreciation for the significance of where we live now and that we go back to whatever other organizations we belong to and fight that much harder for what we have and what’s been passed down to us through the hard efforts of those that have gone before us.”

We will be highlighting, exploring, and celebrating the role many individuals had in the success of the CBL throughout the course of this blog, including a more in depth look at Jack Macnamara’s work here. 

Ploys in the Hood

N.Y. Times book review by Raymond Arsenault of 'Family Properties,' by Beryl Satter.

March 19, 2009

Historians who write about close friends or relatives do so at their peril. Personal engagement, so essential to the memoir, can confound historical judgment and scholarly detachment, especially when family honor hangs in the balance. Beryl Satter, the chairwoman of the history department at Rutgers University in Newark and the proud daughter of one of the central characters in “Family Properties,” has taken the hard road to glory in her study of race and housing discrimination in Chicago during the 1950s and ’60s. Yet somehow she has managed to stay on course, using her considerable investigative skills and unwavering sense of fairness to write a revealing and instructive book.

Family Properties: Race, Real Estate, and the Exploitation of Black Urban America

by Beryl Satter

Macmillan, Mar 17, 2009 - 512 pages

Part family story and part urban history, a landmark investigation of segregation and urban decay in Chicago—and cities across the nation

The "promised land" for thousands of Southern blacks, postwar Chicago quickly became the most segregated city in the North, the site of the nation’s worst ghettos and the target of Martin Luther King Jr.’s first campaign beyond the South. In this powerful book, Beryl Satter identifies the true causes of the city’s black slums and the ruin of urban neighborhoods throughout the country: not, as some have argued, black pathology, the culture of poverty, or white flight, but a widespread and institutionalized system of legal and financial exploitation.

In Satter’s riveting account of a city in crisis, unscrupulous lawyers, slumlords, and speculators are pitched against religious reformers, community organizers, and an impassioned attorney who launched a crusade against the profiteers—the author’s father, Mark J. Satter. At the heart of the struggle stand the black migrants who, having left the South with its legacy of sharecropping, suddenly find themselves caught in a new kind of debt peonage. Satter shows the interlocking forces at work in their oppression: the discriminatory practices of the banking industry; the federal policies that created the country’s shameful "dual housing market"; the economic anxieties that fueled white violence; and the tempting profits to be made by preying on the city’s most vulnerable population.

A monumental work of history, this tale of racism and real estate, politics and finance, will forever change our understanding of the forces that transformed urban America.

The importance of the Contract Buyers League

The story of the Contract Buyers League has the power to promote the history of activism in Lawndale and the individuals who were instrumental in making change, raise awareness of recurrent housing issues by providing historical context, and empower individuals and the community in achieving stable homeownership and community development.