The Color Tax: Resources

While the white middle class was rapidly expanding and benefiting from federal policies that promoted their home equity, Black families were forced to purchase residences via contract sales, which required them to pay premiums for homes that they could lose after missing just a single payment. This episode explores the devastating impact that these contracts had on Black wealth-building and racial comity in Chicago, and the role these contracts played in jumpstarting a wealth gap that continued to widen as white affluence grew.

What does it mean to say a home was bought “on contract?”

African American families who hoped to buy into the American Dream and own a home in the mid 20th century often faced barriers caused by discriminatory lending practices and what later became known as redlining. Predatory contract buying became the only way Blacks could “buy” into the real estate market, even though, as many found out later, they were not actually homeowners with equity and the other benefits of homeownership.

Under these schemes, unsuspecting buyers made regular payments directly to the seller instead of to banks. But the terms of these contracts were often highly exploitative. These contracts often included high interest rates, excessive down payments and little or no legal protections for the buyers. In addition, many of the homes had been bought by speculators for well below the price they were later sold to African Americans. The entire scheme left many Black families susceptible to extreme exploitation and at risk of losing their homes and investments.

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The Contract Buyers League

The Contract Buyers League (CBL) was a grassroots organization formed in 1968 by residents of North Lawndale, a neighborhood on the Westside of Chicago. After Black residents in the neighborhood realized that many of them had been steered into rent to own housing schemes– and were not actually homeowners accumulating equity as they had been led to believe– they banded together to fight the exploitative practices of the predatory sellers. These contract home sales were typically sold by investment companies at prices significantly higher than white residents paid for similar properties. The Black working class leaders of the CBL were assisted by a coalition of college students, a Jesuit Seminarian named Jack Macnamara and others who raised awareness about how hundreds, if not thousands, of Black families in Chicago had been preyed upon by unscrupulous realtors, banks and other speculators. The tenants then set out to have their contracts renegotiated.

CBL activists tried a number of tactics as they sought justice. They started by confronting the sellers with the hopes of renegotiating the original contracts. When that didn’t work, they turned their sights on financial institutions that supported the realtors. Those companies included: Sureway, F&F Investment Co and Ames. In some cases, according to reports in the Chicago Tribune, CBL activists showed up at the homes of owners of these companies believing media reports would push the companies to renegotiate the inequitable terms. CBL members also staged demonstrations that mirrored the efforts of civil rights activists in the south who were fighting Jim Crow discrimination.

When these efforts didn’t work, the CBL organized what they called a “payment strike”: Hundreds of families who had been sold the rent-to-own contracts banded together and put their monthly payments in escrow rather than paying them to the contract owners.

The strike led to tense confrontations with law enforcement in the early 1970s, but largely accomplished its stated goal: hundreds of Black buyers in Chicago had their contracts renegotiated to fairer terms.

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What does it mean to say a home was bought “on contract?”

African American families who hoped to buy into the American Dream and own a home in the mid 20th century often faced barriers caused by discriminatory lending practices and what later became known as redlining. Predatory contract buying became the only way Blacks could “buy” into the real estate market, even though, as many found out later, they were not actually homeowners with equity and the other benefits of homeownership.

Under these schemes, unsuspecting buyers made regular payments directly to the seller instead of to banks. But the terms of these contracts were often highly exploitative. These contracts often included high interest rates, excessive down payments and little or no legal protections for the buyers. In addition, many of the homes had been bought by speculators for well below the price they were later sold to African Americans. The entire scheme left many Black families susceptible to extreme exploitation and at risk of losing their homes and investments.

Read More:

The Plunder of Black Wealth in Chicago

When The Color Tax was completed in 2019 it came with a report, quantifying the scope of the plunder of African Americans through land contracts. 

Family Properties

The Color Tax is based on Beryl Satter’s book which has been described as “part family story and part urban history —a landmark investigation of segregation and urban decay in Chicago” — and cities across the nation.

The Women of the Contract Buyers League

The Contract Buyers League was a multi-racial group made up of men and women who were determined to unwind years of exploitation at the hands of contract sellers. But it’s possible that the group may never have gotten off the ground if not for the community’s Black women. As Rutgers historian Beryl Satter points out in The Color Tax, at a North Lawndale community meeting in the late 1960s Ruth Wells was the first person to publicly acknowledge that she was living on contract, expressing not only anger but weariness over how hard she had to work in order to keep up with her bills. Jack Macnamara, the Jesuit Seminarian who helped found the CBL describes Wells as a brave woman who never backed down from the fight. In a 2016 interview with The Chicago Reporter, Jack Macnamara recounts a confrontation with her contract seller, Moe Forman in 1967. “Ruth had to do all the talking,” he said. “She went to challenge him and she was just ruthless. He was an idiot himself. During the course of the meeting, his hand was shaking. So, she took that as a sign from God. When he wouldn’t renegotiate according to the formula, we started picketing his office.”

In addition, women like Ethel Weatherspoon, Emma May and many others went door to door to recruit other contract buyers to join the effort, organized phone drives and directly confronted the contract sellers in their offices.

Who was Mark Satter?

In many ways, the history of the fight against contract selling in Chicago is the ultimate story of “allyship”. Working class Black Chicagoans came together with white seminarians, white college students, the local chapter of the Black Panther Party and others to fight against speculators and predatory lenders. Perhaps the first of these allies was Mark Satter, a trailblazing civil-rights attorney who on his own, helped bring attention to the practice of contract buying and its pernicious effects on the Black families it victimized. The Chicago Daily News wrote in its obituary of Satter:  “Satter was the kind of man who made enemies —  big and comfortable ones, not poor and weak ones.” Another  local paper called him the “Clarence Darrow of the Bankrupt.”

Satter knew how to rattle sabres and attract attention from the highest reaches of America’s mid-20th century surveillance apparatus. As his daughter, Beryl Satter, writes in her book, Family Properties: “My father himself was the subject of an FBI investigation. They noted his height (5’6″), weight (150 lbs.), hair color (black), eye color (green), and complexion (“sallow”). They listed every apartment he’d inhabited and every school he’d attended since kindergarten. They noted that he had been in the Communist Party in 1945 but had ‘fallen out of favor with the Party because of insisting upon following his own dictates in handling cases.’”

The Contract Sellers

Moe Forman

The Chicago Tribune wrote in 1973: “If there has been a Mr. Big in Chicago’s West Side slum operation, it has been Moe Forman. Forman apparently used his intimate knowledge of Lawndale and its financial institutions to help build the biggest individual slum empire in the city’s history.”

Lou Wolf

Once called Chicago’s “worst landlord,” Wolf gained infamy for his two stints behind bars — first for torching an occupied tenement in order to claim insurance money, and then for skipping out on more than $550,000 in property taxes.

Al Berland

Childhood friend of Lou Wolf. Berland, Wolf, Forman and others —controlled up to two thousand buildings in Lawndale

Lou Fushanis

“Fushanis, a former used car salesman, a tavern owner, and a restaurant owner, turned his attention to real estate, opening the Friendly Loan Corporation, and, along with Berland and Wolf, was buying up properties in Lawndale in the 1950s,” writes Beryl Satter in her groundbreaking book, Family Properties.

Contract Selling in Other American Cities

While Chicago in many ways was the epicenter of contract selling in the US during the middle of the 20th century, it wasn’t the only place this practice thrived. Click the resources below for more information about the experiences of African Americans living under the stranglehold of contract selling in other Northern locales.

Land Contracts In the 21st Century

The contract buying that was rampant in the mid 20th century in Chicago has reemerged into contemporary real estate transactions in cities across the country.