When banks want to get rid of houses, they put them up in foreclosure sales. If they're not paying property taxes, then they have essentially given the homes over to the city.

So, what we're talking about here then is banks giving homes over to the city. Unless we're talking about totally worthless homes, any city would be glad to take over a home. Even in distressed areas, you can sell a foreclosed home for $100k.

The reason why banks aren't getting rid of homes in auctions is because they don't want to totally crater the market. A city wouldn't have the same concerns.