LANDLORD IN DEFAULT

At this point I would talk with the bank. The landlord is probably out of the picture now. Look at the notice and read it carefully to see what it really says. If the notice is for a trustee sale then the bank is taking ownership. If it says something else, then check to see what the bank is doing. If the bank is kicking out the tenants, they most likely have ownership of the property.
Talk to the Bank:
Have your mortgage clients talk with the bank. They should be willing to let them know exactly what is going on. They will want to specifically determine whether the landlord has any ownership rights, of if the property is now in their (the banks) possession.
GET IT IN WRITING!
I’m sure you can respect this advice, since you are in the mortgage business… Once your clients figure out what is going on, I suggest they file a complaint with the RPA. http://www.rentalprotectionagency.com/complaint_center.php It will create a legal paper trail that will show what is happening. The Agent assigned to their complaint should be able to help them know what to do. Most likely, the landlord has breached his contract by defaulting to the bank. This breach of contract will be essential to applying next months rent to their down-payment.
Remember, if the landlord has defaulted on the loan– he is probably several months behind. He’s not exactly trustworthy.

This same thing has happened to me. I just got a notice from the bank that my landlord is in foreclosure. I can’t believe this jerk would not tell me about it. I’m glad I found this website, I’m filing a complaint right now. I hope it helps, and if not at least I will have done what can be done. Stupid landlord, he forclosed on his rental property then acts as though nothing is wrong.