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Upcoming foreclosure sale part of process approved by City Council last year to force action on abandoned properties

PORTLAND TRIBUNE: JONATHAN HOUSE - This zombie house at 15803 S.E. Powell Blvd. is up for auction for the second time on July 17.For only the second time in 40 years, the city of Portland has scheduled a property foreclosure auction, now set for Monday.

The first was held on April 17. Both are the result of a crackdown on abandoned "zombie" homes approved by the City Council last June.

When the crackdown was first approved, officials said the council would be asked to approve new lists of abandoned properties for auction three or four times a year.

But the city is not meeting all of its stated goals for eliminating zombie homes. No new list has been presented to the council for approval so far in 2017.

Sarah Landis, the chief deputy city auditor in charge of preparing the lists for council approval, says Portland is still increasing the pressure on the owners of such properties. As a result, she says, dozens of the abandoned properties have either sold or owners have taken responsibility for them after being notified the foreclosure process was starting.

"The foreclosure vote by City Council is not the primary objective of the increased effort on these properties; resolution of the property violations is," Landis said in an email to the Portland Tribune. "If resolution can happen prior to council vote, it represents a better, more efficient outcome as fewer resources were needed and resolution of the property issues is more certain."

Council not receiving lists

The Bureau of Development Services, which submits the preliminary lists to the auditor's office for foreclosure, is also expecting to submit a new list this month. The last one was submitted to the auditor's office in February, five months ago, but none of the properties on the list has been submitted to the city council yet.

The number of properties submitted to the council had been dropping even before the end of last year. The council approved five homes for foreclosure on June 15, 2016, and another five on June 29. The number dropped to four on Sept. 28. And only one was submitted for approval on Dec. 22, the last time the council was presented with a new list.

The bureau has many properties to choose from. It maintains a list of thousands of extremely distressed properties throughout the city that are causing problems for their neighbors. Although some are simply eyesores, others attract transients who disrupt daily life and occasionally start fires that threaten nearby homes. Although BDS has fined the owners for code violations, many don't respond until their properties are forwarded to the auditor's office for the first step in the foreclosure process.

Though the council has not received a new list of properties this year as promised, more has been done to reduce the number of zombie homes in the past 12 months than in a long time. Since former Mayor Charlie Hales first prioritized cracking down on them them last July, BDS has submitted 57 properties to the auditor's office. According to Landis, 26 — or 46 percent — have been resolved, with the city recovering $2.6 million in fees and fines.

"The properties being prioritized for foreclosure by BDS and forwarded to us are flagged because they are vacant and distressed, are a drain on livability, and are a magnet for crime, not because collection efforts have been exhausted. These properties meet the profile of the prior mayor's 'zombie house' focus," Landis says.

PORTLAND TRIBUNE: JONATHAN HOUSE - The City Council voted to foreclose on this abandoned house after previous owners did not pay off numerous fines for code violations.Of the remaining 31 properties, Landis says most are seeing progress. Some mortgage holders have put them up for sale. Some are working to bring them into compliance with city code, and some are being foreclosed on by financial institutions. A few have been put on hold because of serious issues facing the owners, and the rest are being vetted for future lists to be submitted to the council for foreclosure.

Action is currently underway on the majority of properties on these lists, Landis says. "This is a sign of success. The pressure we have brought to bear through this effort has caused a great many of the owners, whether banks or individuals, to bring some resolution."

Landis notes the council did not increase funding for the foreclosure process after the crackdown.

The crackdown came after a Portland Tribune series that found the city had not foreclosed on a problem property since 1965. The city had stopped foreclosing on problem properties 52 years ago because of bad publicity when a 44-year-old single mother lost her home after failing to pay a $28 sidewalk assessment. The city sold the home for $229.44. Later it awarded her $18,000 after she sued the city in federal court.

At Hales' insistence, the council updated the collection and foreclosure provisions of the city code on June 15 of last year to restart the foreclosure process. The council also approved the first five properties for foreclosure that day.

Bureau shuffle caused delays

The process was complicated this year by Mayor Ted Wheeler's decision to assign all city bureaus to himself during the budget process. Until then, the Bureau of Development Services had been assigned to Commissioner Chloe Eudaly, who had begun the process of replacing the BDS director. Although Wheeler reassigned her the bureau on June 15, it had been in transition between the two of them since he first took it on April 27.

Under the foreclosure policy, once the council approves a property for auction, the least that it can be bought for is 75 percent of its assessed value or the total amount of liens and other penalties against it, whichever is greater.

Only one property was scheduled for the first auction, a small, boarded-up house at 15803 S.E. Powell Blvd. It is owned by US Bank and did not sell then, but has been rescheduled for the July 17 auction. The city has assessed $111,916 in liens and other fees against it. That is greater than 75 percent of its assessed value of $116,200.

Only one other property is scheduled for the upcoming auction. It is a boarded-up house at 13409 S.E. Harold St. It has $37,627 in liens and other penalties against it. But the minimum bid is $136,508, which is 75 percent of its assessed value.

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