A bill passed by the Legislature this session gives city governments the power to fix up foreclosed homes at the cost of the property’s owner.

House Bill 2662 prohibits the owner of a foreclosed home from letting it fall into disrepair while vacant.

Banks often take ownership of a property after it’s foreclosed. Some banks hire companies to check up on foreclosure properties. Others let the homes sit.

HB 2662 would give cities and counties the authority to fix up the homes and send the bank a bill through a lien on the property. It passed the House and Senate in late May, and Gov. John Kitzhaber intends to sign it, according to an aide.

It’s a step cities like Bend and Redmond have already taken, a response to the 2008 foreclosure crisis. HB 2662 gives to cities that have not enacted their own law a state mandate to employ.

More than 2,500 Central Oregon homes were foreclosed between 2008 and 2012, according to figures by the Oregon Department of Justice.

But local leaders and housing officials said the bill addresses a lingering issue in the region: long-vacant homes, falling into disrepair and becoming a blight for area residents and visitors.

“I followed the legislation closely. I’m excited,” said La Pine Mayor Ken Mulenex. Like the rest of Central Oregon, La Pine saw a building boom between 2003 and 2007, with several new subdivisions platted and home construction at a pace not seen in decades.

But starting in 2008, “we were faced with several developments that went under,” Mulenex said. More than 13 percent of the city’s 942 homes have gone into foreclosure since then.

“Some of the properties are sitting with mounds of dirt and weeds growing, all of that,” he said.

Foreclosures have slowed since the first few years of the crisis, but they’re still an issue, housing officials said.

A March study by the real estate research company RealtyTrac found more than 2,300 Oregon homes in active foreclosure proceedings. That number rose to 3,200 by April, said Darren Blomquist, RealtyTrac’s vice president.

Those numbers don’t include homes that have already been foreclosed but haven’t been resold yet.

Moving on

Of the 3,200 active foreclosure homes, about half of them have been abandoned by their owners, according to the RealtyTrac report.

“These are homeowners who, for whatever reason, decided they’re not going to try and save their property from foreclosure,” Blomquist said. “They’re moving on with their lives.”

But that decision affects other homeowners nearby. A foreclosure property can lower a nearby home’s value by about 1 percent, according to a 2010 Federal Reserve study. Each additional foreclosure poses an additional 1 percent hit, and that can increase if the foreclosure property falls into disrepair.

Long-vacant homes aren’t a huge issue in Bend, said Jim Long, the city’s affordable housing manager. Investors and new homebuyers snatch them up too quickly. Bend had one of the country’s hottest real estate markets during the boom years, and home sales picked up considerably starting last year.

It’s a different story across the region, where cities like Redmond face a glut of long-vacant homes.

In Redmond, “the lion’s share of (foreclosure) properties have been sitting vacant for two years,” said Bruce Dunlap, principal broker with Redmond-based Central Oregon Realty Group.

Redmond’s Community Development Department includes a code-enforcement division, which inspects properties across the city, said Heather Richards, the department director. The department has the authority to repair those homes and pass the cost on, just as HB 2662 does.

“But it’s good to see that policy reinforced at the state level,” Richards said.

For smaller towns like La Pine, without the backing of a full-fledged Community Development Department, the law could be an important tool.

“The truth of it is, people come to Central Oregon for tourism,” Mulenex said. “They come and look at the quality of life in towns. When they see some of these (vacant) properties, they’re put off by it.”

The new law “is a tool that we can maybe use to twist the arms of these property owners with a little more force.”