Portland to Foreclose on Abandoned Homes

As a Portland real estate agent, one of my favorite things is — you guessed it — seeing good homes go into the hands of good new home owners.

That’s why it’s so frustrating to drive by homes that have been abandoned and have nobody to live in them, maintain them, and enjoy them. It happens in every city though — the owners move on or refuse responsibility, and the city places liens against the property. That makes it even more difficult for any owner to recover the property, and the debt is passed along to anyone who might try to buy it.

That’s why I created a guide on Abandoned Homes in Portland, How to Report or Buy Them and I also write regular reports on the Portland foreclosure and short sale market. See all current Portland foreclosure and short sale and auction homes for sale on the public market here (there are more off the market if you check out the guide above).

Does the City of Portland address the issue of abandoned homes?

It did so in 2016 and back in 1965. Since 2016, there hasn’t been much cause for the City of Portland to act on abandoned homes as there have been so few during the hot real estate market that lasted here from 2016 to 2022. Check out our Portland foreclosure future forecasts here. Portland may once again (in the future) have to step in and assist with abandoned homes.

Work with an Experienced Distressed Properties Realtor

If you’re looking to purchase an abandoned home in Portland, Kami Price has been licensed since 2004 and has helped hundreds of home buyers purchase abandoned homes, foreclosures, short sales, auctioned homes, and properties of all types and styles. She is short sale and foreclosure certified. Give her team a call today at 503-773-0000 to setup a no obligation consult.

If you have a distressed property to sell, or need to recommend a Realtor to sell a distressed property in your neighborhood, Stephen FitzMaurice has been licensed since 2003 and has helped sell hundreds of vacant, abandoned homes, short sales, foreclosures, fixers, tear downs, inherited homes, and properties of all types and styles. He knows how to get distress properties sold for the best possible price for the current homeowner. Give his office a call today at 503-714-1111 to setup a no obligation consult.

Turning the Lights Back On (2016 Report)

Portland Mayor Charlie Hales definitely wants to turn over these so-called “zombie homes”.

“It’s fundamentally crazy that we have houses sitting empty in a market where a ‘For Sale’ or a ‘For Rent’ sign would cure that by tomorrow morning,” Hales was quoted as saying in the Oregonian. “We’ve got to light up every single one of these homes with people living in them.”

To light up those homes, the City of Portland will first have to foreclose on properties that have been unoccupied for years. If you think bank foreclosures are long and arduous, the City has such a hard time doing it that it hasn’t happened since 1965!

Actually, the true story is that back in the 60s, a single mother’s unpaid $28 fine resulted in a lien being placed on her home and it was eventually taken from her. She sued, and Portland has been foreclosure-shy ever since.

Four Hundred Vacant Portland Homes (2016 Report)

Now, according to the Portland Tribune, there are 430 abandoned residences in the city of Portland. Last month, City officials announced that they would begin the foreclosure process on five of those homes after much pressure from politicians and outraged homeowners. Are they moving quickly enough?

With Portland housing inventory at all-time lows — 1.4 months or less for the last three months, according to the RMLS report — it seems like we should be doing all we can to get new homes on the market.

It’s not just a moral problem in an age of rampant homelessness and unaffordable housing. It’s an aesthetic and safety problem too.

It doesn’t take long for squatters to move into abandoned homes. Then the city must come and board the place up, which never serves to beautify the neighborhood! Squatters eventually find their way back in anyway, and often there are fires that destroy parts of the home and threaten neighbors’ property.

Foreclosing on some of these properties will not just make more homes available to Portland buyers. It will also improve property values for the neighborhoods where these homes are located.

Bank vs. City Foreclosures, General Advice

For Portland home buyers discouraged by a lack of inventory, a city-foreclosed property may sound like a welcome opportunity. As a real estate agent, I advise you not to get your hopes up! When a bank forecloses on a property, it is usually not too long after a homeowner has stopped making payment on the loan – a year or so at the most. There may be some deferred maintenance but usually the owner is at least still living there. Bank foreclosures usually take three months to more than a year to complete, and the bank is then pretty quick to turn those properties around and resell them. That’s if the homeowner didn’t decide to prevent the foreclosure by either paying off more of their mortgage or selling through a short sale.

City foreclosures are bound to take a bit longer. In the first place, the city can’t do anything about an abandoned home until it generates some kind of fine. For instance, a code violation due to overgrown trees or obvious safety hazards. If the fine goes unpaid, the city will place a lien against the property.
Of the five homes now up for foreclosure, all have tens of thousands of dollars in unpaid liens, which will need to be paid by the new owners. Homeowners have a one-year grace period after the foreclosure process starts. If they pay their fines in full, they can retain ownership of their home. Despite the deferred maintenance and squatter damage, these homes do have some value. In fact, that value is what prompted the City to make the moves toward foreclosure in the first place!

New Faces, New Strategies (2016 Report)

Portland’s approach to putting foreclosure back into the list of options the City has for dealing with abandoned properties has been twofold: Add new positions that can coordinate between city agencies, and update the city code to allow properties to be sold for market value. Political gridlock had kept foreclosure off the table for years, according to the Portland Tribune. The Bureau of Development Services (BDS) could only take note of property violations and issue fines. The City Auditor’s office was in charge of collecting the money, but felt limited to creating payment plans for delinquent homeowners because of the foreclosure freeze. Nobody seemed to have the authority to actually start the foreclosure process.

In addition, says the Tribune, city code provided no financial incentive for the City of Portland to sell off homes that were abandoned. It limited the sale price to the total of liens and collection costs. In a city where property values are climbing daily, selling a home for just a few thousand dollars would have been ludicrous, no matter how distressed the property.

Now, new positions in BDS and in the City Attorney’s Office have been funded to deal with extremely distressed properties and get the ball rolling on foreclosure. New city code was recently passed that will allow them to sell those homes for their market value.

Occupied Homes are Safe from City Foreclosure Efforts (2016 Report)

Some Portland residents have expressed the concern that the city will use its new power to foreclose on homes that are still occupied, like the 1965 single mother’s!

They have no cause to worry (as of now). The City is only looking at homes that have been long abandoned and have racked up substantial fines to be foreclosed. Many of those 430 abandoned homes will not come up for foreclosure anytime soon. A long-term solution must still be worked out. In the meantime, I’ll be keeping my fingers crossed that the five homes now up for foreclosure will finally have the lights turned back on.