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Mission Matters - October 2022

Why do White Americans have on average 13 times more wealth than African Americans? There have been government policies since the Civil War that have led to this disparity. Bread for the World has documented some of these policies. Here is their Policy # 3 contributing to the gap.

Minding the Gap: Policy #3 The National Housing Act of 1934, Part 2

Since this legislation prevented blacks from receiving federally-backed home mortgages, whites usually purchased homes in black neighborhoods and then sold “housing contracts” to blacks who wanted to become homeowners, often for two or three times the amount of the mortgage. These contracts only guaranteed black families the rights to the house AFTER all the payments were complete. Missing even one payment, or being late, would result in the black family losing their house immediately.

How does inequality in access to home loans contribute to the racial hunger, income, and wealth gaps?

Under the terms of a contract loan, the purchaser had no equity in the home until all installment payments had been made. If a purchaser was unable to make a payment or pay for required repairs, the family could be quickly evicted and forced to forfeit all previous payments. In many cases, the real estate speculator then went on to make the same agreement, on the same house, with another family hoping to buy a home. If the second purchaser also missed any payments, this family too could be evicted and their previous payments pocketed by the speculator.

Predatory contract lending in the form of housing contracts lasted for two generations. It stripped wealth from African Americans through both inflated house prices and monthly mortgages, and months or years of lost equity if families ever missed an installment payment. The Center for Urban Research and Learning at Loyola University calculated that African Americans in Chicago, for example, lost more than $500,000 in costs associated with mortgage contracts from 1940 to 1970. Adjusted for inflation, this would be about $3.2 million in 2018 dollars. Since other U.S. cities followed the same

practices, it is safe to say that African Americans lost hundreds of millions of dollars across the nation because of contract lending—money that could instead have been used to build economic security in the African American community.

Mending the Gap: Where can I get more information?

“The Story of the Contract Buyers League.” The Atlantic. 2014.

“Decades later, black homebuyers’ battle for justice back in spotlight.” Chicago Tribune.

Coates, Ta-Nehisi. The Case for Reparations. June 2014.

Minding and Mending the Gap

In 1979, a class-action suit was filed in Houston, Texas. A landfill was planned for a middle class Black community. Research showed that although Black people made up just 25% of the population, all five of the city’s garbage dumps, six out of eight incinerators, and three of its four privately owned landfills, were in Black neighborhoods. The case dragged on for eight years, and in 1987 the landfill was approved. Other industrial sites followed, and the wealth accumulated by those people melted away.

Fast forward to 2021. A Black neighborhood in south Memphis stood up to two oil and gas companies and kept a pipeline from running through their community. The rejoicing didn’t last long, however. Two weeks later, the Tennessee Valley Authority announced plans to truck millions of tons of contaminated coal ash through south Memphis for nearly 10 years and dump it in a landfill there. And residents would have nothing to say about it. Diesel trucks, emitting a complex mixture of air pollutants, including both gaseous and solid material, will make 240 trips per day through the community hauling the waste laced with mercury, arsenic and other contaminants. The Memphis city government joined the fight, so the Tennessee legislature passed legislation to ban municipalities from blocking oil and gas infrastructure. The city continues to explore ways to fight, and we can only hope and pray that they are successful.


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