Jennifer, I was just reading the Fannie Mae announcement 08-16 , Bankruptcy, foreclosure, and pre-forclosure sale policy changes. It stated that, ...
"A preforeclosure sale involves the sale of the property by the borrower to a third party for less than the amount owed to satisfy the mortgage, as agreed to by the lender, investor, and mortgage insurer. Due to increased incidence of preforeclosure sales, Fannie Mae is extablishing a 2-year elapsed time period for reestablishing credit following completion of the action"
This meand above the hit you will take to you credit score. You will not be able to buy a Fannie Mae backed home for at least two years. I would amost guarentee that other secondary market lenders will follow suit.