Abstract

"'Strangles Every Effort of the Borrower to Breathe Equity into His Home...': Redlining and Second Mortgages in 1950s St. Louis"

Morris Speller, The Johns Hopkins University (mspelle2@jhu.edu)

In the 1950s the Committee on Banking and Currency of the U.S. House of Representatives investigated fears of a “revival” of second mortgages and land-contracts. Such instruments were blamed for the housing collapse during the Great Depression and, as the committee members explained, were supposed to have been done away with after the creation of the Federal Housing Administration. Historians have documented how real estate speculators took advantage of racially segregated housing markets in postwar Chicago and Detroit by dealing in predatory land-contracts. However, despite the deep concerns of congress about second deed or purchase-money mortgages in the 1950s, these instruments remain understudied by historians. These high-risk loans—also known as “seconds” by those who dealt in them—were a primary source of home finance for Black St. Louisans in the racially segregated lending climate of the 1950s. This case study of St. Louis, MO will explore the changing relationships between local mortgage brokers and the FHA over the course of the 1940s and 1950s. It will also illustrate the close allegiances between speculators in “seconds” and “slum” landlords in Black St. Louis neighborhoods.