You have not provided us with enough information to do anything but speculate about your position. You need to speak with a mortgage professional first to see if your are qualified to obtain a mortgage and for how much. Then you need an attorney to help preserve any legal rights you may have under the option.
If you don't qualify for a sufficient mortgage it is time to move on since the bank will not want to be your landlord.
Century21 Yve R. E.
Licensed R. E. Agent
NYS Certified Residential Appraiser
If the home is really foreclosed then your former landlord no longer owns it - you'll need to negotiate any rent with the new owner, the bank that held your former landlord's mortgage. If the bank agrees to this at all this would be short term at best because, as the others have pointed out, the bank wants to sell the home and not be a landlord.
Since you wanted to buy, your best option is to speak with a mortgage professional who can do business where you're looking to purchase (I'm able to finance in all 50 states.) Depending on the area and circumstances you may qualify for a 0% to 3.5% down payment and the seller may contribute toward your closing costs.
If you really want to continue to rent rather than purchase right now I would suggest looking for a different place right now.
I'm sorry if that's not what you wanted to hear. It's unfortunate that your plans had changed due to your landlord's situation but let's move on and see what works best for you now.
Exclusive Buyer's Broker/Mortgage Broker
Home Buyers' Resource Center/Mortgage 1,2,3
514 Merrick Rd
Baldwin, NY 11510
However, I understand where you're coming from. A strategy that might work is for an investor to buy the property, then rent it to you as a lease-option. The numbers have to work for the investor. He/she will have to have monthly payments low enough to cover either the mortgage payments or to provide a reasonable return on investment . . . so your lease-option payments will have to be high enough to cover that. But you're going to have to get a third party involved to buy the property and to lease-option it to you.
Hope that helps.
Certified Buyer Representative
Senior Real Estate Specialist
Century 21 Princeton Properties.