Prospective Tenant - Foreclosure Address

[Harry Metzinger]

Hi BP, tonight I had prospective tenants apply to my latest rental property.  On first glance, most of their application was devoid of red flags.  However, what caught my attention was they listed their current address but not a rent amount/monthly mortgage amount nor a landlord.  I did a little digging and uncovered their house was foreclosed on last summer.  (They disclosed that they had a foreclosure in another part of my application.)  I asked their agent to follow up with them and question whether the address listed was in fact their current address.  The prospective tenant responded that he negotiated an extended stay at the foreclosed property.  My B.S. detector won't shut off, but to cover my bases, I have to ask the BP community - has anyone ever heard of a bank allowing someone foreclosed on to live in the property after foreclosure? 

Any other feedback is welcome.  I will reject the application if the applicant is lying but want hard proof before proceeding with a formal decision.