Taylor - Race for profit: how banks and the real estate industry undermined Black homeownership

ON SEPTEMBER 18, 1970, Janice Johnson bought her first home in Philadelphia with a mortgage guaranteed by the Federal Housing Administration (FHA). In the now voluminous histories documenting the origins, policies, and practices of the FHA, Janice Johnson stands out as an atypical homebuyer.

All was not lost, however; the landlord suggested that instead of renting, Janice Johnson could buy the house at 2043 West Stella Street. Under the terms of a new program created by the Department of Housing and Urban Development (HUD), low-income and poor people were now able to purchase homes with a small down payment and a low-interest, government-insured mortgage backed by the FHA. Backing from the FHA removed the risk from banks and other lenders who for many decades claimed to avoid lending in areas like Janice Johnsons neighborhood because of the assumption of financial risk in doing so. Lenders could now dispense money freely, as the FHA promised that the federal government would repay all delinquent loans.

Janice Johnson met with the landlord-turned-real-estate-agent, a man recalled as Mr. Zade, to look at the house, and she liked it. Mr. Zade assured her that she was getting a good house because it had been approved by the FHA. Zade advised Johnson to contact her welfare caseworker because she would need to complete some paperwork to verify her eligibility for the program. Just weeks before Janice Johnson was to move into her new home, however, Zade called to inform her that the floor of the house had collapsed and she would no longer be able to buy it, but he had another house at 2013 West Stella that was even better. Johnson was concerned, but by the end of August she was facing eviction proceedings from her condemned apartment. Johnson, with her young son to care for, was desperate. Within two weeks the transaction was complete. Zade had contacted a mortgage banking company called Security Mortgage Services, and the company approved Johnson for an FHA-backed loan in the amount of $5,800.

The widespread access to homeownership across the United States in the aftermath of World War II cemented it as a fundamental feature of the cultural conceptions of citizenship and belonging. This was especially true for African Americans. Indeed, the very first civil rights bill to be enacted in 1866 tethered the right to purchase property to freedom and citizenship: All persons born in the United States without regard to any previous condition of slavery or involuntary servitude shall have the same right, in every State and Territory in the United States, to make and enforce contracts, to sue, be parties, and give evidence, to inherit, purchase, lease, sell, hold, and convey real and personal property, as is enjoyed by white citizens.

Despite the insistence on the rights of property ownership as integral to citizenship, African Americans faced numerous obstacles in their efforts to secure homeownership. But in the ascendant and optimistic rhetoric of the postwar period, Black citizens expected to finally be able to share in those rights enjoyed by whites. Not only were these expectations shaped by the growing prominence of homeownership as symbolic of the good life in the United States, but they were amplified through the exhortations of U.S. presidents, including Harry S. Truman, who declared a decent home Neither president was referencing homeownership in particular, but certainly by the 1950s, it had become the preferred means of shelter in both public tastes and public policy.