I think Obama signed into law this year 2009 that they can't evict tenants after foreclosure with them having a lease prior to the foreclosure.
Not quite sure what state you are living in, however, this has happened to my family and I twice now - California. Both home owners were already in default when we entered into the lease agreement. The first time we found out about the foreclosure was when the auction notice was placed on our door. We had three days to move! The second time we knew something was up because we kept receiving mail for the owner from mortgage companies and various banks, etc. Sure enough, one quick query on the Internet showed the home also in default - headed for foreclosure. Unfortunately, there is no recourse and nothing that you can do. Renters basically have no rights in this state when it comes to situations like this. If the owner has received a notice of default, then the lease agreement is still active and you must honor it. You still must pay your rent even though you know they are just pocketing the money and not putting it towards their mortgage. Only when the home is deemed to be in foreclosure do the lease agreements become void. I would not wait around to look for a new place. You should be actively looking for a new home. In California you will be given only a three-day notice to leave the premises. After the three days, a sheriff will come to the property and lock it down - even with your belongings in it. This will then start the eviction process against you! If you decide to stay and not leave, then the eviction process begins. This will only give you about 30-days to vacate the premises, however, it will negatively impact your credit and make it extremely difficult for you to rent again. You may even have to pay a fine/fee(s). It isn't fair, especially to those of us who are great renters to have who pay on time and keep the home(s) emasculate. With the market as bad as it is, have you thought about purchasing? My husband and I, ironically, are buying the first home we rented that was foreclosed on. The owner foreclosed with $397,000.00 owing and we just bought it for $225,000.00!! His loss is our gain. For the one and one half years that he took my money and never paid his mortgage - I now own his house!!! And it is our first home purchase and we absolutely love it. The deal of the century! I would look into purchasing if you are able, if not, good luck to you. Hopefully there will come a time when good renters have some backing in this state to assist them during times like this.