My mom is now not able to take care of her finances. She is 65 yrs old. She rents an apt in Ottawa, IL and I just found out the property has been sold back to the bank and the foreclsure proceedings are being finalized on Jan 22, 2008.
Q: Does she have to pay the rent or can she use it to get to assisted living? She is on a month by month lease.

Legally yes she is suppose to pay rent. But then if she does not, what is the worst they can do, evict her ? She will be evicted anyway as soon as it is foreclosed.

Did she pay the January rent yet? How did you find out about the foreclosure?

An insurance agent from the bank went to the house to take pictures and asked my sister lots of questions about who was living there. They made it very clear the house was in jeopardy of being sold. The landlord did not tell my mother anything.
No we have not paid the jan rent yet... she has to get into assisted living now due to her health and needs all the money she can muster

You need to find out the exact status of the foreclosure. Until the foreclosure is finalized she owes rent to the original owner. However, I agree with Chuck, if you are moving her into an assisted living center very soon, then don't pay and let the landlord try to sue.