Refinancing is a different situation. There are some companies that are buying the home short sale, holding the note and leasing the property back to the homeowner at a considerably less mortgage payment... BUT the investor holds the note... the investor owns the home... the investor is the landlord of your house and you are a renter.
If you want to Short Sale, you need a real estate agent who has lots of experience with short sales. These are very hard to close because the banks are not cooperative. A straight Refi is even harder right now. If you want to rent your own home from a note-holding investor, they're a dime a dozen. Keep asking questions, you'll find the right answer for you.
Also keep in mind that this isn't the only way for your friend to handle his/her transaction. There are other ways to structure this deal. However, one would have to know more to be able to advise him/her further.
Please feel free to drop me a line.