I haven't heard this one before, but it just happened to me.
I was about a month into a short sale with GMAC as the second. Wells Fargo was the first, but they would be made whole by the sale.
We had an offer, BPO was just ordered and then the Seller called me to tell me that she spoke with GMAC and they offered to settle for about a third LESS than what they would have gotten out of the short sale.
So, now her 2nd mortgage will go away and she can bring the first current and continue paying on that one.
I think the seller reached out to GMAC, but they accepted the settlement amount just like that!
The Seller said she will pay me for my time.
Interesting.
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I had that happen before. She must have been delinquent on the 2nd and the short sale must have put her off by more than 6 months of missed payments. From my understanding, banks have a certain amount of time to handle non-performing assets in order to write them off.