That seems to be the issue. Fox News is backtracking:
While the idea of using the 1967 borders as a starting point to negotiate land swaps for a final peace deal is not new, hearing an American president use those words sent chills through the Netanyahu government, which is loathe to even think the words “'67 borders.” …
While the current focus is on 1967 borders, Obama did follow that up with “land swaps,” which is diplomatic speak for allowing Israel to hold on to certain settlement blocks that have been built in the West Bank, while trading out other land.
By the way, Obama did not "follow up" 1967 with anything. It was in the same fricking sentence:
The borders of Israel and Palestine should be based on the 1967 lines with mutually agreed swaps, so that secure and recognized borders are established for both states.
But if it is true that an American president's even mentioning the 1967 borders as a basis for a peace settlement is deeply shocking to the Israelis, they really have misjudged where they are. Obama is as good as they are going to get if Israel really wants to end its accelerating slide toward self-destruction. No fanatical AIPAC-approved Republican is going to be able to deliver any kind of peace, given the remarkable democratic revolution in the Middle East. And if a democratic Egypt emerges to insist on the obvious contours of the two-state solution, and Israel still balks at even freezing its settlement activity, it seems to me that the US should side with a far more crucial ally in the region, Egypt, and withdraw its support from an essentially un-democratic Greater Israel, with a disenfranchised Arab majority in Judea and Samaria.