Report shows how mortgage firms stole black wealth in Chicago
Researchers from Duke University claim that African American homeowners in Chicago missed out on billions of dollars in wealth from 1950 to 1970, due to what it says were “racist real estate policies”.
Throughout that 20-year period, African Americans living in Chicago bought 60,100 homes, of which, around 70% were sold on contracts that enabled the seller to keep hold of the property deed until the buyer had repaid their loan. As a result, those buyers were unable to accumulate any equity while paying off their mortgages. The home prices were also marked up by an average of 84% during that time, according to the report from Duke University’s Samuel DuBois Cook Center on Social Equity.
In today’s money, those buyers paid an average $71,000 more than they would have if they’d signed a conventional mortgage agreement, the researchers said.
The report goes on to say that black Chicago homebuyers in the period lost a combined $3.2 billion in wealth they should have accumulated.
The researchers say this is the first study to fix a dollar amount to the predatory lending practices that were typically reserved for black buyers in the city, starting in the 1950s.
“These contracts offered black buyers the illusion of a mortgage, without the protections of a mortgage,” the researchers said.
They also noted that the homeownership gap between blacks and whites in Chicago is still wide today. As of this year, 39% of black households in the city own their homes, compared to 74% of white households, according to data from the Urban Institute.
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