how bad is it

[nwriterd]

What is the name of your state (only U.S. law)? New Jersey

we had an agreement with another individual, our name was used to get a house which he was to rent to buy.
the renter stopped paying rent and the house went into foreclosure
we can not afford to pay for two houses
how does this effect us now

[FlyingRon]

What do you mean "use your name?"
If you signed the lease-purchase agreement, even as a cosigner, you are liable for whatever breach occurs. They can come after you for a civil judgment and/or ruin your credit. If this was an attempt to defraud the seller there may even be criminal charges possible. Grab up all the paper you can and take it to a lawyer.