According to my doctor and more than one sports nutritionist I've visited, at least women's bodies, will turn everything possible into fat if it thinks lean times are coming. I've had long periods of time where I operated on quite restricted calories (900-1,000 calories a day), exercised my heart out 4 days a week, and not only did I not lose weight but my body fat percentage increased. This wasn't "my" logic - it never did make sense to me when my doctor, coach, and sports nutritionist all insisted the real problem wasn't enough calories and that my body wouldn't give up anything until I gave it more. It worked.
It is certainly possible that what was really going on was the process you described - the bod pod machine used to measure my composition will interpret everything that isn't lean muscle mass as fat - at least that is my understanding. My weight loss that came when I increased my caloric intake was not fast but took place over a 3-4 month period.