Some of My Best Friends Are Black (21 page)

Although most parts of the Fair Housing Act did nothing, one part did do something, and did it horribly, horribly wrong. In an effort to remedy the drought of mortgage credit in black neighborhoods, under Section 235 of the act, the FHA was now required to guarantee any mortgage to any person in any neighborhood, with no regard for creditworthiness whatsoever. If the home owner defaulted, the government would insure the lender for all but 1 percent of the interest on the loan. If redlining a neighborhood was bad, some genius decided, the inverse of that must be good. The solution to the drought was a flood.

Denying someone a mortgage is unjust. Saddling him with a mortgage he can’t afford is worse, and that’s precisely what Section 235 loans did. Up to 1968, the pace of blockbusting had been held to the speed with
which brokers could find black applicants who at least had a down payment and maybe a first month’s note. Now, no credit? No problem. The federal government had given Bob Wood an unlimited pool of unregulated, risk-free capital.

An ambitious speculator might pick up a row of distressed properties at, say, $4,000 a piece, put $500 worth of cosmetic fixes into each, and then turn around and sell them to black families at $14,000 a piece. In extreme cases, some black owners moved in only to discover they’d purchased a home that had already been condemned. By the time blacks either defaulted on or abandoned these worthless properties, the brokers were long gone with their commissions, and whoever was holding the mortgage note (either the bank or often the broker himself) walked away with a reimbursement check from the FHA for the full value of the property. Blockbusting was suddenly more profitable than ever.

And because 235 loans allowed brokers to scrape the bottom of the socioeconomic barrel, they could go into the ghetto and come back to white neighborhoods with prospects (like Susan Kurtenbach’s new neighbors) who fulfilled all the worst stereotypes that white people already believed. Very soon, in places like Blue Hills, every black family that moved in was assumed to be “a 235er,” a harbinger of the urban blight that was sure to follow. And urban blight did follow, more often than not—not because of black people, but because blockbusters and school boards were tearing the social fabric of these communities to shreds. Federal housing policy was practically designed to create urban blight. Once a 235-financed house was foreclosed on and repossessed by the government, HUD guidelines mandated that the property remain vacant until the government decided what to do with it, a process that could take months or years. Abandoned homes began cropping up all over formerly vibrant communities. They quickly went to seed, attracting vagrancy and crime. Once a neighborhood began that slide, the rest was self-fulfilling. A study that later came out of Congress would describe the 235 program as a recipe for “instant slums.”

By the fall of 1972, Section 235 loans had infested Blue Hills top to bottom. In Troostwood and Troost Plateau, more than fifty homes had
already been sold under the program, with a foreclosure rate that was 20 percent and climbing. The 49/63 Coalition joined with Blue Hills and other neighborhood associations, and together they sued the city and federal housing authorities in an effort to shut the program down. That lawsuit was quickly rendered moot, however, as the 235 program proved to be so disastrous on a national scale that Washington pulled the plug on it anyway.
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Lending in black neighborhoods dried up again. The drought returned, leaving these new “instant slums” without the financing they needed to reverse the decline that blockbusting had begun.

By the early seventies, America’s inner cities had been gutted. In Kansas City, practically everything east of Troost was circling the drain—except for 49/63. In February 1973, after two years of sustained effort, the coalition newsletter reported that virtually all blockbusting activities in the neighborhood had ceased. More than thirty real estate agents had agreed to abide by the neighborhood’s fair-business regulations, and the number of
FOR SALE
signs east of Troost had dropped from ninety to fourteen. One of the most enthusiastic of these cooperators was Bob Wood. The man wasn’t stupid. If blockbusting no longer produced a profit, he wasn’t going to do it. So he changed his business model. He became a slumlord.

“During that time,” Gene Hardy says, “nearly every house that somebody moved out of east of Troost, Bob Wood went in and bought it. He wound up owning so many houses that when blacks did move in, he could charge them whatever rent he wanted and they’d pay it just to be there.”

Everything east of Troost had become prime territory for absentee landlords. A survey conducted by the coalition in the summer of 1972 found fifty abandoned properties on the eastern side of the neighborhood. So a new committee was formed and sent out to document every vacant property’s code violations, which were then reported to the housing
authority. Faced with the cost of bringing those houses up to code, the owners of most of them agreed to sell and move on. Responsible tenants were found through the coalition’s listing service. Then, in October of 1973, the coalition petitioned the city to pass a zoning ordinance that would keep houses in 49/63 zoned as single-family residences. With that policy in place, homes couldn’t be chopped up into efficiency units, and the slumlord trade got a lot less lucrative. The vigilance of the coalition made it harder and harder for real estate agents to do anything other than fair and legitimate business.

The final piece of the puzzle was the mortgage issue. Despite being “banned” by the Fair Housing Act, redlining was still standard practice because it couldn’t be effectively prosecuted; a single rejected loan application wasn’t proof of discrimination, as any number of factors could lead to an individual’s being turned down.
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Redlining, as most people understand it, is a byword for discrimination against blacks—and that was certainly the net effect in most cases. But much of the historical data actually shows a U-shaped pattern: high loan availability for whites on one side, lower availability for blacks on the other, but with the lowest availability coming in the middle, in transitional neighborhoods. Mortgage redlining hurt low-income blacks looking to buy in. Insurance redlining hurt existing white residents, who found their rates inexplicably jacked up. In fact, many of the middle-class whites who wound up in 49/63 initially came to the group because they’d been turned down for home owners’ insurance once black neighbors moved in. White families with good credit who wanted to move into Kansas City had their mortgage applications denied; like the Hoods, they were told to try Johnson County.

The FHA had yoked urban neighborhoods from one extreme to the other, either withholding credit or opening a floodgate of it. But one idea had actually never been tried: fair credit for qualified applicants. So
crazy, it just might work. The 49/63 Coalition got the opportunity to try it in April of 1974 with the arrival of Neighborhood Housing Services (NHS), which had started out as a pilot program in Pittsburgh; its founders came to 49/63 seeking a candidate for expansion. NHS was “a local, not-for-profit organization advocating affordable housing, safe living environments, and community revitalization through a variety of federal, state, and local resources.” Roughly translated, NHS was George Bailey’s Building and Loan Association from the fictional Bedford Falls of Frank Capra’s
It’s a Wonderful Life
; it provided low-interest, nondiscriminatory mortgage credit to the low-income and black applicants shut out by redlining.

Neighborhood Housing Services even had its own George Bailey: Joe Beckerman. Beckerman had moved to Kansas City from southern Missouri in 1972 to go to law school, and one of his professors, Ed Hood, roped him into serving on 49/63’s code violations committee, which eventually led to a job as president of NHS. Tall and lanky with an aw-shucks demeanor, Beckerman even has a Jimmy Stewart kind of way about him. (And for what it’s worth, J. C. Nichols looked a lot like Old Man Potter.)

“Neighborhood Housing Services is a partnership of all the people in that demographic area,” Beckerman explains. “It’s residents, city government, and all the businesses you can get. You bring those three diverse groups together and say, ‘Hey, we all have a vested interest here.’” By appealing to that vested interest, NHS raised a pool of operating capital from local businesses and lending institutions, and then assumed the risk of issuing mortgage loans. “We could do anything we wanted with our loans,” Beckerman says, “as long as it made sense.”

What made sense was to jettison the racist redlining standards and start lending in ways that didn’t further destabilize the urban infrastructure. Instead of investing only in “safe” neighborhoods, NHS used capital to make neighborhoods safe to invest in. Low-income prospects willing to take on a fixer-upper could get a flexible, minimal-interest mortgage, part of which could be worked off with sweat equity. Paint your house or resod your lawn, and the appraised value of the capital
improvement went to pay down the principal of your original loan. If you hit a rough patch, you went down and talked to Joe Beckerman and he’d work with you on it, person-to-person, to find a solution. Helping you stay and improve your home’s value enhanced the value of the house next door and so on down the block, which only brought more business to the area. “Basically, it’s the perfect program,” Beckerman says, “and that’s why it’s still around today.”

Neighborhood Housing Services worked because it wasn’t a bank. Its goal wasn’t to maximize the profit on each transaction, but to ensure the viability of the neighborhood, thus lowering the area’s overall risk and, ultimately, generating sustainable revenue. In its first year, NHS issued forty-six mortgage loans totaling $246,299, loans that would have been rejected by FHA standards as “high risk.” Nonetheless, coalition records show that after two years only five of those loans were thirty days in arrears. No resident was more than sixty days in arrears, and not a single NHS mortgage had resulted in foreclosure. Those same records show that in 1976 the average price of a three-bedroom home east of Troost was around $12,200. Since “the blacks” had moved in, property values had either held or gone up.

“It was so simple,” Beckerman says.

In the years that followed, 49/63 thrived. While banks were disinvesting from the city as fast as they could, the NHS program was so successful lending east of Troost that its operations soon expanded up to Thirty-ninth Street, and would later expand again. Through lobbying the city, the coalition had secured $60,000 to create a neighborhood park and over $800,000 for infrastructure improvements to curbs, streetlights, and sidewalks. More than five hundred delinquent properties were brought up to code, representing a private capital investment of over $680,000 in the neighborhood (about $2.3 million in today’s dollars). The results of this homegrown, seat-of-the-pants experiment took down every single myth on which white flight was based, including the big one. In 1976, the local police precinct reported that crime in the neighborhood, by every index, had gone down.

Gene Hardy still shakes his head about the fears of black crime. “Everyone was saying, ‘The blacks are coming in! You’re gonna have crime!’ Hell, we had less crime in that neighborhood than anywhere else in the city. We didn’t lock our doors. Never had any problems as an interracial couple, either. We’d walk down the street, and everybody knew everybody.”

If the archives of 49/63’s newsletter serve as any kind of barometer, by mid-decade the sense of fear and panic had widely subsided. The bold-type headlines on redlining and abandoned properties fell back to page three, and the front-page features focused on neighborhood arts festivals and Fourth of July barbecue tips. Expanding from its original goal of residential real estate protection, 49/63 launched an after-school tutoring program, a summer recreation program, and a Business Renewal and Redevelopment Corporation to maintain the commercial district on Troost. While the north end of the avenue had been long deserted, the stretch in 49/63 still had two grocery stores, a few drugstores, several college bars, a bowling alley, and a brand-new, black-owned Buick dealership.

In terms of policy, nothing 49/63 did was all that revolutionary. The only thing that set it apart was the willingness to do it. Coalition members made 49/63 their lives, putting in twenty to thirty hours a week, on top of their regular jobs and family duties. It was a grind. “But it was fun,” Ed Hood insists. “I liked it.” Rallying around the neighborhood had galvanized the group, created a real sense of community that spilled over from council meetings to late-night dinners or drinks at Mike’s Tavern, one of the local bars down on Troost. It was the opposite of the neighborhood associations in the Country Club District, which weren’t really “neighborhood” associations at all. Those were more like corporate subcommittees, established by J. C. Nichols to maintain the artificial stasis of race and class that would inflate his company’s land values. The 49/63 Coalition was everything that a J. C. Nichols subdivision was not. Yet it offered in reality what Nichols had sold as fantasy: a community that fostered strong moral character and desirable associations.