Last year, we had a cash transaction on one of our listings with a buyer that had gone through foreclosure previously. A settlement from an insurance claim enabled them to buy a new home for cash. Much better option that renting, right?
What they didn't consider was that the deficiency judgment from their foreclosure would attach to their new home as a lien. They are, once again, under water and unable to sell their current home as the judgment is much larger than what their current home would sell for. Venturing a guess, the deficiency is so large, the lender would be stupid not to pursue it.
Yes, we did advise them to consult with an attorney in regards of how to take title of the new home (put it in your Mother's name or in a family trust etc.) but they decided against that.
If you have gone through foreclosure or have done a short sale and you happen upon a large sum of money that enables you to pay cash for a home, please consult with a real estate attorney before you go ahead with your purchase to make sure your previous foreclosure doesn't haunt your new home.