Inside the Contract Buyers League’s fight against housing discrimination

Clyde Ross "bought" his North Lawndale home on contract in 1961. He was able to keep it after joining the Contract Buyers League, which fought for legitimate mortgages by staging a payment strike.

Photo by Sophia Nahli Allison

Clyde Ross "bought" his North Lawndale home on contract in 1961. He was able to keep it after joining the Contract Buyers League, which fought for legitimate mortgages by staging a payment strike.

(Editor’s note: This year marks the 50th anniversary of the Chicago Freedom Movement, an open housing and racial justice campaign that brought the Southern civil rights movement to Chicago, where the Rev. Martin Luther King Jr. lived for a time in a tenement in North Lawndale. Through the eyes of scholars and participants, “The Chicago Freedom Movement: Martin Luther King Jr. and Civil Rights Activism in the North” explores a historic campaign that some people have dismissed as a political failure, and argues that the efforts had a lasting impact in the city and the nation. Here is an excerpt from the book, which will be published in April. )

In January 1966, the same month Martin Luther King moved into his slum apartment in Lawndale, Monsignor John J. Egan was appointed priest of Presentation Parish in that community. As head of the Catholic Diocese’s Office of Urban Affairs, Monsignor Egan had been training community organizers to work in church communities across the city. After being exiled from his downtown post by a new archbishop and sent to the West Side, he settled into the community and brought in Jesuit seminarians to do neighborhood organizing with his parishioners and their neighbors. One day in July 1967, one of those seminarians, Jack Macnamara, learned from a recently widowed woman in the parish that she had bought her house on contract at a drastically inflated price. He reported his discovery to Monsignor Egan.

As [John] McKnight explained: “Monsignor Egan knew that I knew about this. So he put together in his mind what Jack [Macnamara] was talking about and what I had been talking about. He sent Jack down to talk with me, and I spent a lot of time with Jack. He was the first person that I had run into who was on the ground floor and who said, ‘This is something I need to pursue.’”

This was the beginning. Macnamara, along with some fellow seminarians and students he had recruited, learned to research property records: to track down how the homes had changed hands, how much the white families had sold them for, how much the black families had paid, and who was involved as the middleman in these transactions. It was an arduous task, given the obscurity of the records. But the results were stunning. They were able to document what many people already knew: both white and black families had been seriously cheated, with black families sometimes paying twice what the white families had received. It was a lucrative business. The panic peddlers made large sums on these transactions, and they sometimes sold the contracts to other investors protected by blind trusts set up in local banks, giving many Chicago investors a stake in this system of exploitation. Some believed that many powerful people in the Democratic machine also benefited.

Ruth Wells was one of the first to confront her contract seller, Moe Forman at the F&F Investment Company. In December 1967 Macnamara, Monsignor Egan, and two others accompanied her to the downtown office of the investment company. Macnamara tells the story: “Ruth had to do all the talking. She went to challenge him and she was just ruthless. He was an idiot himself. She tells this story: When she was leaving home in the morning she prayed to God that she would have a sign that she was doing the right thing. 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.”

Shortly thereafter, in January 1968, the first community meeting of contract buyers was held in Lawndale. At the second community meeting, Ruth Wells told her story and then asked whether anyone else was in the same situation. Beryl Satter describes the response this way: “The effect was electric. Practically every hand in the room shot up. Wells encouraged the people gathered there to ‘tell your family and your friends, your neighbors and the people you work with, if they bought on contract, they should come out.’ At the next meeting approximately two-dozen contract buyers decided to form an organization, the Contract Buyers of Lawndale. Within months attendance at the CBL’s Wednesday night meetings had snowballed. … The group expanded so quickly in part because it had a perfect target for its anger—Moe Forman.”

The goal was to get the blockbusters to renegotiate the contracts down to more reasonable prices. The rest of 1968 was devoted to picketing contract sellers at their offices and at their homes when they refused to negotiate. Picketers confronted Ames, Sureway, Best, and F&F Investments, among others. By the summer of 1968, word of the Contract Buyers of Lawndale had spread to the South Side, where another group was formed to focus on homes bought from the housing developer Universal Builders. But Jack Macnamara realized that another strategy was needed: I remember coming back from a CBL meeting one night, and things weren’t going as well. I walked into the apartment and said to a couple of the college students, ‘I think we need a payment strike. … These guys know how to handle picketing and bad publicity. What they won’t know how to handle is something that hits their pocketbook.’ We brought it up to the leaders and they thought it was a good idea. They said, ‘We have nothing to lose.’ I knew I’d succeeded when one woman one night said, ‘Well I know Mr. Macnamara doesn’t want us to do this payment strike, but I think we should do it anyway.’”

The families put their payments in escrow, for future payment to the sellers after the contracts had been renegotiated. The payment strike went on for many months, sometimes years, between 1968 and the early 1970s, with about 500 families participating. For their own reasons, the contract sellers did not move quickly to evict the nonpaying families, but eventually, when the evictions began, crowds of CBL members and their allies gathered at the homes to move the evicted families back in. For many months, the sheriff and his deputies backed off when confronted with hundreds of neighborhood residents determined to halt the evictions. These dramatic confrontations brought a lot of public attention to the whole issue of contract buying.

As the public became more aware of how the contract sales process drastically exploited both black and white homeowners, support came from unexpected places. Volunteers, mostly women, came into Lawndale from the northern suburbs to attend meetings and work in the CBL office. Rabbi Robert Marx from the Jewish Council for Urban Affairs was an important ally; his presence and the additional support he mobilized were critical to broadening the group’s base. At one point, the Contract Buyers League was raising money for a bond fund to appeal evictions; each appeal cost $3,000 to $5,000, far beyond the means of most families. The Chicago Province of the Jesuits agreed to put up $100,000 for the bond fund, and other Jesuit provinces collectively came up with another $150,000. “I thought I’d died and gone to heaven,” Jack Macnamara said upon hearing this news. Macnamara also raised funds from allies on the wealthy North Shore and from supporters such as Tom Foran, a US attorney, and Gordon Sherman, founder of Midas Muffler.

Thirty attorneys from prominent Chicago law firms offered pro bono legal services to the families facing eviction due to the payment strike. Chief among these firms was the well known Jenner and Block. Other Chicago attorneys, including Marshall Patner, Tom Sullivan, and Bob Ming, also provided critical support.

Paralleling the payment strikes were class-action lawsuits seeking legal redress for the exploitative contracts. The battle through the courts was long and arduous. The West Side case first went to court in November 1975, and the South Side case began in 1979. In the end, both cases were lost, and the last appeal was rejected in 1983.

Despite these losses, a second set of lawsuits challenging the Forcible Detainer and Entry Act—the Illinois law governing evictions—went to the Illinois Supreme Court. In Rosewood v. Fisher, the court ruled in 1970 that the nature of the contracts—whether fraudulent or usurious or otherwise irregular—could be raised as a defense in an eviction case, giving contract buyers a chance to tell their stories. In a second case, the Durhams, a family from the South Side, argued that the eviction law discriminated against the poor because it required the posting of a large bond—several thousand dollars—to file an appeal to an eviction order. In 1972 the Illinois Supreme Court ruled in their favor, declaring invalid the part of the law requiring large bonds before filing an appeal.

By July 1971, 155 contracts had been renegotiated, with an average saving of $14,000 (about half the purchase price for a house). Other families were finally able to obtain regular mortgages; the FHA had changed its policies and was beginning to make mortgage insurance—and thus mortgages—available in black communities on a limited basis. Moved by the sight of families being evicted in January’s cold, powerhouse black real estate developer Dempsey Travis found mortgage funds through black-owned insurers for one group of buyers.

Eventually, the sheriff and the Chicago police devised a method to conduct evictions without interference: by having the city police cordon off the street so that supporters could not reach the house. Approximately seventy families permanently lost their homes. By the time these evictions happened, however, at least some families had saved sufficient funds in the escrow accounts to buy other homes.

Some of the contract buyers described another, more personal, kind of victory. Macnamara explains: “It’s the individual victories that people had. One of the stories I like to tell is about Mrs. Johnson, whose Realtor would not renegotiate her contract. … She got up at a meeting and said, ‘He won’t renegotiate my contract, but that’s fine with me because I’m a leader. I’ve got this much out of it. No man’s gonna get his hand in my pocket again.’ So you know, she didn’t feel like she was a loser, and she wasn’t.”

Growing publicity and public support suggest that the Contract Buyers League had a substantial effect on attitudes in the larger community. James Bevel had often explained that in nonviolent direct action campaigns, the goal is to bring the oppression out into the open; when many people see the injustice, and see it as a violation of their own values, they will support the movement’s goals and call for change. Satter describes this shift in public opinion as one of the consequences of this movement.

At a January 2013 event at the Hull House Museum in Chicago honoring the CBL’s work, I asked Clyde Ross, vice president of the Contract Buyers League and now in his nineties, if he saw a link between the Contract Buyers League and Dr. King’s work in the North Lawndale neighborhood two years earlier. “We were definitely inspired by Dr. King,” he said. “He gave us courage.”