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I would stay there until the cops with riot gear come to move him.
In my experience, folks are still waiting for those cops to show up, a year or two later.

Short sales will take at least three months to finalize.
Just stay put, but be packed and ready to go on a 24 hour whim. But save up all the money he can in the meantime. It just as well may take 6 months to complete the short sale.

One thing for sure at this point, nobody in the story yet would be capable to throw you out. If he tried to take you to court, it would probably expose them to fraud, and lies they've told the mortgage company. For not turning your rent money over in the form of rent.

You can be forced out by one of two ways. They foreclose and the bank comes and pad locks the doors, or the house sells, and the new owner can get you out.

This current guy is screwed, but he's screwed him self. You've paid him rent what he did with it, is his business. But I don't think he will want to take the legal route and expose him self to fraud.

Call the asshole and tell him he's staying at least for the amount of time it would take to recoup his deposit in the form of rent. Tell him if he doesn't like it, have the bank call your brother. I bet he blinks.

The bank angle is good advice. Unfortunately for my bro and his family (2 kids + dog) stability and staying at the same school probably make living there too stressful. I've told him he should not pay his last months rent and get out asap. But he's concerned that may ding his credit.

I'll tell him to try and find out who owns the mortgage. Thanks.

rowemoore says

I've told him he should not pay his last months rent and get out asap. But he's concerned that may ding his credit.
I'll tell him to try and find out who owns the mortgage. Thanks.

I would not pay the last month's rent if you are worried about getting the security deposit back.

I might also consider tendering any remaining rent to the bank, although it sounds like the only rent left is December's? This is probably difficult though, because you'd have to find some human at the bank to whom you can explain what you're doing.

rowemoore says

Along with the serious hassle of agents and their clients tromping through their home

I would tell the landlord that no one is allowed to parade through the house. The tenant has this right.

rowemoore says

But he's concerned that may ding his credit.

It could, but you could also write a strongly worded letter to the landlord asserting your rights and threatening the landlord with some sort of FDCPA violation if he reports anything to a credit bureau. Is the property in any minimal way inhabitable? Is there anything dangerous about the property? Is there any repair the landlord hasn't made? Any of these can be the basis for a strongly worded letter.