We have a kease until Nov. 2008 and were just served with foreclosure papers. Our concerns are that we will lose our last month rent and security deposit, which is what we need to move elsewhere. Do we have a right to break the lease and begin the process of looking for a new place. Do we need to pay the rent since it is obvious the monies we send have not been going toward satisfying the mortgage?

Just because it is starting into foreclosure, does not mean it will, so legally you are still locked into your lease.
And if you are living there of course legally the rent is due and you can be evicted for not paying. Also where in your lease does it say that the landlord has to use that money to pay the mortgage? Sorry it does not, what he does with the money is not legally any of your business.
Not what you want to hear but in court just the way it is.

Now you can call the landlord, ask him if it is going to be foreclosed and when. Ask him if you can live their free or at reduced rent till then.

As for you deposit money, if these people don't have the money to pay their bills and will lose their house, do you think they have the money to pay you back any deposit? Opinion, most likely you will never see that money.

You can sue for your deposit/etc in a small claims court. You must sue original landlord, not the new buyer.