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A small group of people associated with Restitution Homes presented a plan at Sheil Catholic Center on Nov. 6 to provide restitution to Chicago’s African American community for discriminatory housing practices that took place between 1950 and 1970.

Alfonso Vaca-Loyola summarized the practice in which real estate speculators sold homes to black households on contract at excessive prices and on oppressive terms during that era. Using data gathered from the court files of the Contract Buyers League case in Chicago, together with further analysis, Mr. Vaca-Loyola said the average price mark up on homes sold on contract to black homeowners in Chicago during that period was 84%. For example, homes in racially changing neighborhoods were purchased by a white real estate speculator for about $12,000 and sold on contract to a black household a few weeks later for about $22,000.

Under the contracts, a buyer had no equity and no title to the home, until they made their final payment. If they missed a single payment, they could be evicted and lose everything.

The real estate speculators were able to charge these excessive prices and impose oppressive terms due to a segregated housing market in Chicago, where there was a limited supply of housing available to black people, and there was a lack of conventional financing available in black and racially changing areas. From its inception in the mid-1930s, the Federal Housing Administration promoted segregated housing, and it redlined black and racially changing areas which led to these market conditions. Real estate brokers and lending institutions were major culprits as well. 

Restitution Homes says the total damages due to these practices in Chicago exceeds $1 billion, adjusted for inflation. Amber Hendley summarized a plan outlined in more detail in a paper prepared by Jack Macnamara, an organizer of the Contract Buyers League.

Ms. Hendley said they plan to create a Restitution Fund and raise more than $1 billion in voluntary contributions from individuals, corporations, foundations and religious organizations, and to obtain commitments from banks to provide mortgages at below market interest rates.

Restitution Homes plans to use the funds to make restitution to Chicago’s black communities and others who have been taken advantage of through contract selling and to revitalize the community areas where contract selling occurred, including by selling livable houses at below market values to “plundered and oppressed” families of any origin; financing these homes at below market interest rates; providing newly constructed and affordable restoration of older homes; providing Restitution Vouchers to families to keep the homes “affordable,” defined as keeping monthly payments for housing at or below 25% of the buyer’s gross monthly income; and providing restitution for descendants of contract buyers.

The plan is also to attempt to develop significantly more integrated communities.

Mr. Macnamara said it was appropriate to use the term restitution, rather than reparations, because restitution conveys the concept of repaying a debt. He adds, “We must accept the responsibility of our collective shortcomings, even if we are not personally responsible for them.”