I'm very sorry to hear about your friend's circumstance. It almost seems as if banks are reluctant to help homeowners in need. They make you go through the motions only to be denied. What ever there reason for the denial, It can be disputed within 30 days. My recommendation would be to request that they reconsider based on some concrete proof that by the bank offering some assistance your friend will be able to get back into their good graces payment wise.
In most cases banks or mortgage servicing companies deny homeowners when they lack proof that they will be able to stay current on their payments if the loan is modified. Also, In many cases they deny modification requests if they determine, there really isn't a hardship at all.
Please refer your friend to the site below. I've been informed that they are very helpful and get results.
They may also want to try
I hope this is helpful.
Licensed Real Estate Salesperson
Charles Rutenberg Realty, Inc.
255 Executive Drive ~ Suite 208
Plainview, New York 11803