Under the laws passed last year, you have the right to continue the rental for the length of your contract OR 90 days after the foreclosure if you have just been paying month to month. You are under no obligation to move out for an auction.

Your friend sounds embarrassed to find herself in this mess. That is understandable. If you can find a new place to live, it might be in the best interest of your friendship to do just that. If you can't find a new place immediately, call the bank and let them know that you are tenants.

Neat trick. I'm a private lender and I've seen this before. The "owner" doesn't pay mortgage, taxes or insurance but continues to take rent from a "tenant".

Here, in Ontario, Canada, the "tenant" still has rights and can only be evicted with an order from the Landlord and Tenant Board and an order of possession from the Court. If the tenant is in possession under a long term lease, the tenant has the right to stay until the end of their lease. And the mortgagee usually has the right to have those rents paid to it.

Although tenant's rights vary here from state to state, worthy's comments are pretty much how I understand how things work in the US.

Personally, if you are in a forclosure situation, I'd get out. you don't have to, but I would.

yes, you could string along until someone triees to evict you, and fight it, as you have the right to notice etc. but if you have money, enough to pay rent, find another place on your own terms and get out of the drama.

"worthy's comments are pretty much how I understand how things work in the US."

Not for foreclosures, that is why the new federal law was just passed giving the tenants time to move it.
previously they could be evicted very quickly by the foreclosing lender.

If the owner sells a property the leases continue, but foreclosure is not a 'willing' transfer of assets.