I posted about this before, but here is another article about renting your foreclosed home:
Fixing foreclosures with a right to rent - Money Features
So here's my take, if the NPV test favors foreclosure over loan modification, but then they say, "oh, but we don't want to take the chance on foreclosure and it will hurt neighboring home values, so what's the rent at fair market value?", then wouldn't it just make more sense to do the loan modification anyway? What they should do is calculate the rent at fair market value and weigh
that against the loan modification payments to determine which one is in the lender's best interest. If I was given the option to pay "X" dollars in rent and it was the same amount as my modified payment, wouldn't I want to take the modification and retain ownership status?