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Derelict Inner Southeast house stuck in foreclosure limbo

by: Merry MacKinnon This empty house at 5345 S.E. Cesar Chavez Boulevard (39th) has deteriorated over the years, and is now considered a tear-down by the Oregon Department of Veterans' Affairs, which guaranteed the owners’ mortgage and took over the house when it went into foreclosure.

Since the year 2000, a dozen people have called the city to complain about an abandoned house at 5345 S.E. Cesar Chavez Boulevard (39th). The only run-down property on an otherwise well-maintained block, the house has been crumbling away for years.

Located on the border of Woodstock and Reed neighborhoods, and surrounded by tidy single-family homes, the modest 1952 ranch house has structural damage, broken windows, a rotting roof, and graffiti. A squatter could easily gain access, since some of the windows on the single story, three-bedroom house are uncovered and open.

Bureau of Development Services Mike Liefeld says the city is aware of the eyesore, and has been sending notifications, including fines, to owners Dan M. and Renee West, who still list their address at that property, even though they no longer live there.

'This is nothing new,' says Enforcement Program Manager Liefeld. 'We boarded up the house in 2010.'

But the fines, now $400-per-month liens, have gone unpaid, Liefeld adds.

'Our only recourse would be to go after these violations of property maintenance, and seek a demolition.' But that's not likely to happen. 'We haven't demolished a house in a decade,' he says. 'It's very expensive to do that.'

At this point, about all Liefeld says he can do is send a city worker to board up the open windows, 'which should have been boarded up the first time.'

Despite Liefeld's observation that the hundreds of similarly derelict properties in Portland are increasing, funding to deal with them is not keeping pace. Instead, his agency's budget has declined.

'Since 2009, we're operating at a reduced service level, with 60 percent less staff,' Liefeld explains. 'So we're not as timely as we used to be.'

Ironically, while city liens on this 956-square-foot house accumulate, the property taxes, which were $2,405 in 2010, have been paid regularly and on time since 1999, according to Multnomah County tax records. But, those records also show that the taxes have been paid not by the Wests, but by Oregon Department of Veterans' Affairs.

'We have foreclosed on the property,' reveals Steve Scholz, a foreclosure auditor for Oregon Department of Veterans' Affairs. 'The owners had a loan with us.' The VA was not the primary lender, but rather the VA guaranteed the loan, Scholz adds. Such loans, according to the Internet website www.valoans.com , can be guaranteed with no money down, and require no private mortgage insurance.

Although the property, which county records indicate was assessed in 2010 at $113,830, was listed for a foreclosure sale, nobody showed up to bid on it. Buyers were probably scared away by the liens, Scholz speculates. 'The home is worthless,' Scholz admits. 'At one time, a homeless man lived in a shed in the back, and we tore that down.'

Veterans Affairs wants to sell the property, but it must wait for the Wests' 'right of redemption' to expire - which will occur soon, according to Scholz.

'It's in limbo right now,' Scholz acknowledges. 'I don't think the Wests will re-acquire the property.'

While foreclosure wipes out some of the liens, Oregon Department of Veterans' Affairs is responsible for paying the remaining liens on the house, Scholz says. Those will be paid when the house is finally sold, he adds.

'It's a 'tear-down',' Schollz concludes. 'We'll unload it.'