I ran across this video and it's pretty scary! The person that is interviewed used to work for EMC, a loan servicing company, and she states that there was more of an incentive to keep a loan in a default state and ultimately foreclose rather than attempt to work on other options such as a short sale.
I do not begin to understand all of the underlying mechanisms involved in relationships between lenders, servicing companies, investors and the government and this video certainly adds to the confusion. I've always wondered why certain companies seem to take forever to process a short sale. I've also wondered why a number of lenders have offered my short sale clients the option of attempting a deed in lieu only to deny it after a number of months and immediately foreclose.
As bad as it may sound, this video may shed some light on that!