Yes, I have the same problem with Scenario 3). TurboTax actually calculates the limited deductible interest ($18,462 in your scenario) correctly in the worksheets, but then it does not transfer that amount to Schedule A, as the worksheet says it should. Looks like a coding error to me, and I have not found a way to override it.
A follow-up question: Under scenario 3, if John chose to not deduct the interest he paid on Mortgage B, then he could deduct the full $20k he paid on Mortgage A. That is, he gets penalized for having the second mortgage. This seems to be a perverse consequence of that worksheet in Pub 936. So, if John paid interest on two mortgages, can he selectively deduct one and not declare the other? I cannot find any information on that.
