The Negro in Chicago: A Study of Race Relations and a Race Riot

by Chicago Commission on Race Relations

The Chicago Trust Company answered that the same requirements were made of white and Negro; the range was from $2,000 to $6,000, limited to 50 per cent of conservative valuation, and five years.

In general it was found that property values in the districts where Negroes usually buy are affected by more factors than is the property in districts where whites usually buy. Where Negroes are buying the majority of white people are renting.

It was sought to find out whether Negroes ask for renewals more often than do white borrowers; whether there was any marked difference between Negroes and other racial groups in the promptness of making payments, in asking for additional time, in the difficulty of collections, and in compelling foreclosure. Comparison of Negroes and whites was found to be difficult because of differences between various nationalities as to repaying loans. The Poles pay promptly when dealing through loan companies or banks conducted by Poles. The Italians are eager to get their property cleared. Jews are likely to ask for renewals and to expect the property to pay the mortgage out of earnings. The Negroes pay if they can, but sometimes have difficulty because they have arranged heavy payments on their contracts; during the period of high wages there has been little trouble, but the feeling was that as yet there had been no real test. Speaking generally, a representative of Yondorf & Company said it was estimated that only about 25 per cent of working people are thrifty and save anything; 75 per cent save nothing; and that proportion holds true of the Negroes.

Firms that deal with Negroes ask for no larger reduction when a Negro renews his loan, they say, than when a white person renews if the character of the property is the same. The facts as to the reliability, character, and standing of the borrower are established when the loan is first made. Negroes buy old properties where deterioration is rapid, and when the renewal is asked the value of the property has fallen in proportion. White persons do not buy the same class of property. So it is necessary to ask the Negro to reduce his mortgage considerably, except when his property is in a location of newer houses, such as Morgan Park or Woodlawn.

Difficulty is experienced by mortgage bankers and brokers in selling Negro mortgages to white clients. Yondorf & Company declared that while their old clients would buy regardless of the color of the borrower, others had to be convinced of the value of the property and of the earning power and stability of the Negro borrower. The Negro mortgages are usually for smaller amounts and hence within the reach of small investors. When white investors find that Negroes' loans are promptly paid they continue to buy such securities.

Lionel Bell reported some difficulty in selling Negro mortgages to white clients, though he generally succeeded, by showing their value and by inspection, that the Negroes were keeping their houses in good condition as to both sanitation and repair.

E. A. Cummings & Company have difficulty in selling such mortgages because many of their clients are out-of-town buyers who are suspicious of Negro property.

E. and S. Lowenstein find no market for such loans; non-resident buyers and even local buyers fight shy of Negro property in particular, and property in general that is undesirable because of overcrowding and consequent hard usage.

In general, the refusals to buy Negro loans are due to feeling against the Negro, a disbelief in the Negro's ability to pay them, and distrust of the old properties which Negroes commonly buy. The opinion was general that anything which would tend to stabilize values on the South Side, especially in the lower part of the district occupied by Negroes, would be desirable; that improvements such as the widening of South Park Avenue would aid materially.

Real estate men who have Negroes for clients are finding it advantageous to educate them in the meaning of mortgages, in the method of issuing and renewing them, and in what is expected of the mortgagor and what the mortgagor may expect. When the Negro is carefully informed of the processes involved in financing the purchase of a home, and the terms are thoroughly understood, there is much less likelihood of losing his property. Friendly real estate men are constantly helping Negroes to carry their mortgages and to find means of renewing when that contingency arises. It is helpful also to remind Negroes of the necessity of paying their taxes and meeting other obligations promptly, and of keeping their property in good condition. Some firms stated that the "natural honesty of the Negro and his love of home life" have been fostered by thoughtful friends and leaders, as well as by those who have business transactions with him. This pays dividends in better citizenship.