Here are the pros:
(1) You might get a better rent.
Here are the cons:
(1) When the bank or new owner aquires the home at the end of the foreclosure period, you will need to move. (When was the notice of default filed? You have approx 111 days from that date.)
(2) While you are living there a lot of people will come knock on your door trying to find the owner, hoping to get a deal on the property or get the listing.
(3) Your mail box will be full of solicitations to the homeowner from mortgage companies, foreclosure companies and realtors.
(4) 21 days before the Trustee Sale, you will come home to a legal notice posted on your front door or gate (must be clearly visible from the street) telling you that the home will be sold on a date certain on the courthouse steps.
(5) The new owner (after the Trustee Sale) will not be holding your security deposit, so unless you can collect it from the guy who, by the way was not paying his mortgage, you can consider it a donation to the prior home owner.
(6) Oh, and if you get a phone number that is listed, you will get calls at all hours of the day and night from the same types of people who are knocking on your door and stuffing your mailbox.
There are probably more cons that I am not thinking of right now. So, unless you are doing this because it is a great home for the summer and you don't mind moving again, or you are helping out a friend, or you just can't find anything else to rent, I don't know why you would want to put yourself into this position.
Good luck on finding the perfect home to rent and Dare to Dream.
Real Estate Consultant
RE/MAX Palos Verdes Realty
The bank might actually benefit from you staying there as the value of the property will probably hold better with a home that is lived in instead of sitting vacant and falling into disrepair.
Why get caught in the middle of this bad situation. If it's in pre-foreclosure and is listed for sale, you'll have to deal with prospective buyers and their agents who would want to see the property. Your quiet enjoyment of your home will be disrupted by such showings. Who needs the aggravation?
For your own peace of mind, find a regular rental that is not in danger of being foreclosed.