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Portland forecloses on first 'zombie homes' with unpaid liens
The abandoned house at 8515-8517 N. Portsmouth Ave. has sparked complaints from neighbors for 24 years. Its owner has violated multiple city codes over the past five years and racked up more than $66,000 in liens. But its days as a nuisance are coming to an end.
Last week, the Portland City Council unanimously voted to start foreclosing on five abandoned homes and approved new codes to make it easier to force sales of homes with mounting unpaid liens. The five that made the cut were considered the worst of the worst of the citys more than 400 abandoned homes, says Sarah Landis, the chief deputy city auditor.
Along with the Portsmouth house, the city plans to foreclose on homes at 4112-4118 S.E. 91st Ave., 15803 S.E. Powell Blvd., 7101 N.E. Prescott St. and 9120 N. Tioga St.
All five are part of the Bureau of Development Services Extremely Distressed Properties Enforcement Program. Together, these five properties carry a total of 37 liens worth $378,291, Landis says. Much of that owed money is the result of unpaid nuisance violations.
The code changes should help the city get a handle on a longstanding problem that has distressed neighbors and confounded city officials for years. Many owners are neglecting their homes, attracting squatters and other illegal activities, at a time when Portland faces a severe housing shortage. By using its powers of foreclosure, the city can sell the homes, earning funds to pay off unpaid liens and get the homes back into productive use.
The foreclosure process will not be a quick fix nor will it be appropriate for every blighted property with delinquent liens, Landis says.
However, its a start. The city has been reluctant to use the foreclosure process since the last foreclosure was bungled in 1965.
Its an outrage that houses are unoccupied and falling apart in a city where the housing prices went up faster than anywhere in the country last year 11 percent and where people are desperate to find housing, says Portland Mayor Charlie Hales.
Until now, city code allowed the property to be sold for no more than the total of liens and collection costs. That means a property potentially would sell for a tiny fraction of its value, Landis says. The new code allows the city to sell the home for its true market value.
A second code change will allow the city treasurer to recoup city costs of conducting the sale.
In order for a property to have these new laws applied, it will have to be vacant, abandoned and have a long list of violations and unresponsive owners, Hales says.
The City Auditors Office will select the homes for foreclosure. The list is then approved by the City Council and given to the city treasurer to start conducting a foreclosure sale.
Even after the foreclosure process has begun, property owners will have a grace period in which they can pay off their liens and reclaim their properties.
We want the property owners to get the message and fix them before we foreclose, Hales says.
Perhaps the most puzzling thing about these homes and their conditions has been the citys inability to deal with their owners.
Two of the five properties, on Portsmouth and Tioga, belong to Norman Tung Yee, who was highlighted in a recent Portland Tribune article.
Yee, who owns 12 properties in Portland, faces outstanding liens of more than half a million dollars. His properties have sparked 127 complaints, and the Bureau of Development Services has gone in 29 times to address nuisances, says Mike Liefeld, the agencys enforcement program manager.
Both of Yees properties designated for foreclosure are valued at more than $300,000 on Trulia, an online residential real estate site.
This despite the fact that the house on Portsmouth has structural damage due to a fire and the one on Tioga has a hole in the roof.
The fourplex on 91st Avenue has a long track record of complaints as well. Property owners Trang Nguyen, Trong Nguyen and Van Tran owe $105,000 in liens. There are 53 violations, including fire, life, safety and health sanitation violations that remain uncorrected, Liefeld says.
The city has not had contact with any of the three since 2011. Liefeld says the fourplex might be owned by a bank, but there has been no title transfer to indicate that the Nguyens and Tran are not the owners.
This property has been a home to squatters, and police officers have been called out repeatedly to remove them and secure the property. A 27-year-old woman reportedly died at the property from a heroin overdose, Hales says.
The Prescott house has the second-highest total of outstanding liens owed $99,000.
At the time the foreclosure list was prepared, the owner was listed as David Tifft LLC. Tifft is a real estate broker. Recently the ownership was changed to the Federal National Mortgage Association, Landis says.
This property had a swimming pool, which provided a unique set of problems. Liefeld says the pool was full of garbage and the city had to eventually pump out all the water, remove the garbage and board up the pool so it wouldnt happen again.
These homes are occupied without basic utilities, water and electricity, which causes significant hazards to occupants and surrounding property owners, Liefeld says.
The last property on the list, on Powell, actually was foreclosed on Feb. 1 by U.S. National Bank. But the propertys title has not yet been legally changed, so as of now the owner on file is Trevor Brown.
This property had a series of occupants. After removing nine squatters, BDS ordered repairs on the home because the health sanitation violations were considered a concern to neighbors.
We find, with many of these properties, after we secure it up, the problems dont go away, Liefeld says. It reoccurs and homes become attractive for folks because they know theres not a responsible party present.
Hales says new positions in BDS and in the City Attorneys Office have been funded to deal with the extremely distressed properties.
Plans also are in the works for weekly meetings about vacant properties between the auditors office, BDS and the city treasurer, Landis says. A Tribune series revealed that a lack of communication and cooperation between agencies was holding back action on the homes.
Hales says the city has the Oregon Bankers Association helping them hunt down the owners of a number of these vacant properties.
Abandoned properties to be sold off by city
Triplex at 8515-8517 N. Portsmouth Ave.: Twelve liens totaling $66,000, issued July 2009 to February 2016; estimated value $302,400.
4112-4118 S.E. 91st Ave.: Eight liens totaling $105,000, issued June 2011 to March 2016; 53 code violations cited; estimated value $334,000.
15803 S.E. Powell Blvd.: Eight liens totaling $96,241, issued December 2009 to June 2014; 34 code violations; estimated value $214,000.
7101 N.E. Prescott St.: Eight liens totaling $99,000 issued December 2012 to June 2015; over 75 code violations; estimated value is $348,000.
9120 N. Tioga St.: One lien in January 2014 for $11,000; estimated value $307,000.
Sources: Trulia, Portland Bureau of Development Services and City Auditor's Office