If the lender that pre-approved you knows you are or the deed but not the mortgage and note, and still issued a pre-approval, you may be okay. I say "may" be okay because details of pre-approvals vary and some are better than others.
Non-disclosure creates big problems for everyone, and my concern would be that you are asking the question here, rather than looking your loan officer in the eye and asking this question. It gives the impression you either haven't told your new lender, or if you have you don't trust them to give you an accurate/reliable response (a clear sign you've chosen the wrong lender).
I suggest you find a lender you trust. Disclose everything. Then get a conditional approval, not just the pre-approaval the automated underwriting system spits out of the computer, but one that was actually documented and reviewed by a human underwriter, and is conditioned upon finding an acceptable property. At that point you can go out and find a new home with a higher degree of confidence that you will actually get to the closing.
I know our economy is in recovery, but it's still a tough time out there for many people. Sorry you're having to go through this.
All of my good colleagues here are correct, you may/may not have a problem with this scenario. Does your lender already know about this?? The key is transparency. If there are no surprises, it's much less likely you'll end up with a disaster at the last minute.
There used to be propaganda that "buy and bail" was illegal, but it is not, as long as it's disclosed. If it's not, your previous lender could still have some legal recourse and your current lender could claim mortgage fraud.
You will probably be fine and I have had several people do this and it worked out fine. I also have heard of people that this did not work out for. I just feel you should be planning properly and I hate to see people in a hardship if things go wrong.
If you have any questions or need any help please do not hesitate to get in touch with me.
Since you are not on the mortgage of your current home, your credit will not be negatively affected by the foreclosure. And, since you are already pre-approved for another mortgage, you should be fine. The only person negatively affected by the foreclosure is the person on the mortgage of the foreclosing property (your husband). It does not matter that you are on the Deed.
Greater Midwest Realty