Mortgage

Oregon town considers seizing abandoned foreclosures to fight blight

Would use state law to take back properties that threaten public health

An Oregon town is considering a unique method to flight blight by using a “little-known” state law that would allow the city to seize abandoned foreclosures that the city deems a threat to public health.

Oregon’s Mail Tribune has the story of Medford, Oregon, which is discussing the use of a stipulation of Oregon state law that would allow it to take back some of the 415 vacant properties that reside within the city limits.

From MailTribune.com:

City officials have tried, sometimes for years, to get owners of abandoned properties to rehabilitate them. Now officials are considering adding a new weapon to their blight-fighting arsenal: a little-known, 1989 state law that allows cities to foreclose on properties that have become a threat to the health and safety of a community.

“It’s a very powerful tool,” Deputy City Attorney Kevin McConnell says. “It’s also meant to go after slumlords.”

Under the law, the city or another agency can initiate a receivership action against a problem property. Once the city gains control, it can begin to rehabilitate it, potentially qualifying for grants and other federal programs.

According to the article, the city hopes that the threat of losing the property completely will also drive some of the property owners, whether they are banks or nonbanks, to rehab the properties themselves.

Again from MailTribune.com:

McConnell says under the 1989 law, the city could take receivership action against substandard housing that plagues certain areas of Medford. He says the program also could be used to rehabilitate houses that could become temporary residences for homeless families so they don’t have to live on the street.

The article states that the city may partner with local organizations like Jackson County Housing Authority to rehab or raze the abandoned houses.

Perhaps the city could make use of the more than $94 million that was given to the state by the Department of the Treasury in its latest round of funding for the Hardest Hit Fund, which was created in 2010 to help state’s Housing Finance Agencies assist “struggling homeowners” and help stabilize neighborhoods in many of the nation’s hardest hit communities.

The Treasury recently announced two rounds of funding for the Hardest Hit Fund.

In the first round of funding, Oregon received $36.43 million. In the second round of funding, Oregon received $58.1 million.

And if Medford goes through with this plan, it may be putting some of that federal money to use.

(Image above courtesy of James R. Martin / Shutterstock.com)

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