Contract Buyers League

The Contract Buyers League was a grassroots organization made up of Black homeowners in Chicago who pushed back on the practice of contract home sales. These housing contracts—which often represented the only gateway to homeownership for minorities whose incomes were below the federal poverty threshold in the 1960s and ’70s—were typically sold by investment companies at prices significantly higher than the amounts that speculators paid for the properties.

The organizing efforts of residents on Chicago’s West and South Sides drew public attention to the issue of unfair real estate practices and helped bring about key federal housing reforms that largely ended the practice of redlining in urban areas.

Understanding the Contract Buyers League

Throughout the 1950s and ’60s, Northern cities like Chicago saw an influx of Black migrants from Southern states, representing a second phase of the Great Migration. At the time, the Federal Housing Administration (FHA) refused to provide mortgage insurance in urban neighborhoods with a sizable minority population. This resulted in a practice known as redlining, in which banks refused to provide home loans to Black applicants in those areas. 

The only path to homeownership for many minorities was to enter into a housing contract, typically with an investment company that owned the underlying mortgage. Many of these contracts were sold at vastly inflated prices, creating crippling monthly payments that working-class residents struggled to meet.

The agreements were written to specify that occupants had no claim on the home until they made their final payment. If they missed even a single installment, they could be subject to eviction, since they had no equity in the home.

The extent of this discriminatory practice was discovered with the help of John MacNamara, a Jesuit seminarian who, in the 1960s, worked as a community organizer in the North Lawndale neighborhood on Chicago’s West Side. Through his interaction with local residents, MacNamara began to realize that several of them had entered into a housing contract with conspicuously high monthly payments.

An exhaustive title search for properties in the neighborhood confirmed what MacNamara had already suspected: Contract buyers, most of them Black, were paying an average of $20,000 more (roughly $195,000 in 2022 dollars) than their White counterparts for similarly sized homes.

MacNamara began organizing meetings with Lawndale residents, which evolved into an organization called the Contract Buyers League. Within a few months, the group’s weekly events started to draw crowds estimated at 400 to 500 people.

Strategies Adopted by the Contract Buyers League

Initially, the Contract Buyers League tried to put pressure on the firms that sold these real estate contracts—including F&F Investment Co., Ames, Sureway, and Best—by picketing outside their offices. They even traveled to the investors’ homes in the Chicago suburbs in hopes that the negative publicity would force them to renegotiate on more equitable terms. 

Ultimately, picketing failed to generate the impact for which the league’s members had hoped. Instead, its members decided to band together and perform a “payment strike,” which it knew would create financial pain for the investors. Starting in 1968, roughly 595 families joined, putting their monthly payment in escrow rather than sending it to the investment companies.

After an initial flat-footed response to the strikes, investors eventually moved to evict many of the minority residents. The process of removing residents often created an ugly scene, with swarms of neighbors attempting to block police access to the affected families. Efforts to appeal the evictions drew support from an array of diverse parties, including the local Jesuit community, which raised money for legal fees, and the Jewish Council for Urban Affairs.

Legal Efforts of the Contract Buyers League

While the payment strikes were still taking place, the Contract Buyers League simultaneously attempted to persuade federal courts to punish the investment firms. Class-action lawsuits seeking recompense for the punitive contracts were filed by South Side residents and West Side residents, with the courts hearing cases in 1975 and 1979, respectively.

The league would lose both lawsuits, although the mortgage holders ended up settling with some of the residents in the process. According to the Loyola University of Chicago's Center for Urban Research and Learning, the CBL was able renegotiate 450 contracts, with the average family saving $13,500. 

The league won on other fronts as well. It brought lawsuits in Illinois courts that reversed the state’s eviction laws, allowing the subjects of an eviction to use their unreasonable housing contracts as part of their legal defense.

Long-Term Impact of the Contract Buyers League

In the decades since the inception of the Contract Buyers League, the devastating effects of redlining have been more clearly delineated. MacNamara, who served as a visiting scholar at Loyola University Chicago prior to his death in 2020, estimated that the often-usurious contracts cost Chicago’s minority residents more than $500 million—not adjusted for inflation—from 1940 to 1970. 

The efforts of the league in the late 1960s and the 1970s are widely seen as playing a key role in ending those practices. Its legal challenges not only led to Illinois amending its eviction laws but also changed urban housing policies across the country. 

The financial data that the league was able to collect in the process of filing state and federal lawsuits would eventually help garner support for the 1975 Home Mortgage Disclosure Act (HMDA) and the 1977 Community Reinvestment Act (CRA). While activists argue that discriminatory housing practices persist, those twin pieces of legislation served as the beginning of the end for one of the most pernicious policies: the redlining of minority neighborhoods. 

The group’s nonviolent civil disobedience also proved effective in bringing wider awareness to predatory inner-city housing practices. It managed to draw support from people of different racial backgrounds and faiths. Volunteers from the wealthier northern Chicago suburbs, for example, became regular attendees at the group’s meeting and even helped to staff its office.

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