A central tenet of Ta-Nehisi Coates’ much-talked about new article in The Atlantic, “The Case for Reparations,” is the widespread practice of mortgage discrimination from the 1930s to the 1960s. At the time, black people were largely cut off from legitimate home mortgages due to the government’s practice of redlining. The Federal Housing Administration, which provided insurance on private mortgages at the time, used red ink to mark neighborhoods where black people lived, meaning they were usually considered ineligible for FHA backing, regardless of their earnings or standing in the community.
“In Chicago and across the country, whites looking to achieve the American dream could rely on a legitimate credit system backed by the government. Blacks were herded into the sights of unscrupulous lenders who took them for money and for sport,” Coates writes.
In this clip from his conversation with Bill, Coates explains how the only real option available to most African-Americans were illegitimate home loans made available from “contract sellers.” These sellers offered eager, desperate black families an opportunity to “purchase” a home under onerous terms, which ultimately led most of them to be evicted. Coates focuses on the Chicago neighborhood of North Lawndale, where the cycle started with a scam phone call to a white homeowner that relied on fear and intimidation.
“Contract sellers in Chicago, what they would effectively do is they would cycle African-American families through these homes. So you’d come in and you’d put down your down payment for $2,000 or so. You may be able to make the payments for a year, two years, what have you. But the minute you missed a payment, I throw you out. I keep your down payment. I keep all the payments you’ve made, at that point. And then I rinse and repeat, over and over and over and over again.”
In the end, as Coates puts it: “Contract sellers became rich. North Lawndale became a ghetto.” And it still is today.