Foreclosure owners would not qualify because they have 'owned within 3 years', which was the criterion you mentioned.
The issue is that this is a tax CREDIT. Lets say I am married and my household AGI is $58,000 and I owe $8000 in taxes. If I bought an $80,000 house I should indeed get an $8000 credit and end up owing $0 taxes. But lets say that our AGI is only $48,000. That would indicate we owed only $6400 in taxes. We buy that $80,000 house but our real net credit would only be the $6400 in taxes we owe. A credit has to be used in the year it was 'earned', so we just lost $1600 of our 'gift'.
We ran into this when Bert bought his hybrid car. He got this swell tax CREDIT, but by the time you factored in his loss carryforwards from his father's estate and a few other things, his taxable income was well below the amount of the credit, so most of the credit was lost.
Then you have a further issue. Salaries are relatively low in my area while housing has been fairly high because of fixed income retirees buying into the area. Someone likely to have an AGI of $58,000 would not be buying an $80,000 house because it would be an old, small dump. And even the old 3X annual income criteria for buying houses would indicate they would be looking at a $210,000 and up house where a 10% downpayment would be running $21,000. The $8000 credit could be helpful, but probably not up front in purchasing the house.
So overall I'm not too sure who this helps. Folks who are in the income category to maximize use of a 10% credit likely have their house already and are trying to hang onto it. Folks in lower income brackets may be eligible for the credit but are unlikely to get it in full simply because they aren't paying $8000 in taxes to have forgiven with the credit.