Black Life Insurance Companies, Mortgages, and African American Homeownership before 1964

Life insurance companies, including those founded by African Americans, historically sought to invest their policyholders’ premiums in reliable securities, including mortgages. With fewer safe investment outlets after the Great Depression, government-backed mortgages resulting from New Deal housing market reforms attracted insurers seeking security, into the early 1950s. However, with the post-World War II economy on an upswing and growth-related inflation looking likely, the potential downsides of federally insured mortgages grew clearer. The Eisenhower administration (1953–1961) especially leaned on institutional investors to underwrite low-interest home loans backed by the Federal Housing Administration and Veterans Administration. However, Black-owned life insurance firms faced competitive disadvantages due to their small size, information asymmetries, and a postwar housing market characterized by pervasive racial discrimination, mounting civil rights gains notwithstanding. This situation put African American life insurers in a difficult position as they continued to function as a credit reserve for the Black middle class, while simultaneously trying to work with federal agencies and remain profitable despite their limited influence in the broader financial economy.