The downside of the "blogosphere" is that myth and reality are tough to separate.  I remember hearing about walk-a-ways in California last winter...a borrower buying a new and bigger house, offsetting their old mortgage payment with a flimsy lease agreement and then defaulting on the mortgage of their old primary residence.  It turned out to be "reality" as we have seen lenders and fannie/freddie put equity requirements in place for being able to count lease agreements when the old primary residence is retained as a rental. 

Earlier this summer when I was helping a a couple of homeowners seek loan modification agreements I was surprised that one of the homeowners that I was assisting got a seemingly "great" deal on a loan modification while two of the other homeowners were getting stonewalled by their loan servicers.  Why I wondered.

The "great deal" that was obtained by one couple was a great short term deal, but did nothing to help their long term situation in terms of actually putting them in a situation to reduce their loan balance.  The rate, the term adjustment, didn't seem to make sense from a sound lending perspective.

Over the last few weeks, I have come across a few blogs that might point to the answer.  Lenders / loan servicers in it for the long haul are looking for ways to push out their losses further in the future.  They will eventually get hit with a huge loss, but in the short term they can work on minimizing the impact on their quarterly financial reports.  It all seems to be a shell game.  I don't know how widespread this is, but as regulators and auditors begin to sift through the mountains of info over the next 3 years, the truth of this particular urban legend will be born out.