Contract Buying Robbed Black Families In Chicago Of Billions

#housing

According to a report by the Samuel DuBois Cook Center on Social Equity at Duke University and the Nathalie P. Voorhees Center at the University of Illinois-Chicago, black families in Chicago lost between $3 billion and $4 billion in wealth due to predatory housing contracts during the 1950s and 1960s.

The contracts worked like this: a buyer put down a large down payment for a home and made monthly installments at high interest rates. But the buyer never gained ownership until the contract was paid in full and all conditions were met. Meanwhile, the contract seller held the deed and could evict the buyer. Contract buyers also accumulated no equity in their homes. No laws or regulations protected them. Source

Between 75% and 95% of homes sold to black families during the 1950s and 1960s were sold on contract, with an 84% markup on homes sold on contract 1. African Americans who bought on contract paid, on average, an additional $587 (in current dollars) more a month than if they had a conventional mortgage. Source

The report concluded that home contract sales were a ruthlessly exploitative means of extracting capital from African Americans with no better alternatives in their pursuit of homeownership. The report is titled “The Plunder of Black Wealth in Chicago: New Findings on the Lasting Toll of Predatory Housing Contracts”. Source