How do I acquire a house that has been "tagged" by the City for Health Violations?

[Tino Julian]

Ok BP Community, I am brand new to the world of Real Estate Investing (and I need some advice).  I recently became aware of a house near my work that MIGHT be acquired at a significant discount.  Because the owner of the house has let the place go a little bit (due to a recent meth addiction), the city has “yellow-tagged” her home for health reasons and she was forced to move-out approx. 3 months ago.

My questions are these: 

1)   How do I gain an interest in this property BEFORE it goes into foreclosure?  I have been trying to track down the owner but so far have not been successful). Any advice on tracking her down (last I heard she was living with friends)?

2)   Because of the “yellow-tagged” status do I approach the city first to see what can be done (after signing a contract with the owner) or go directly to the mortgage company who by now is moving ahead with the foreclosure process?

Any advice would be greatly appreciated.  Thank you!