First of all, ask your friend to ensure they did not take out Mortgage Payment Protection Insurance (MPPI) when they took out their mortgage. A lot of people agree to this insurance when they take out their mortgage, then forget about it, or do not understand what it is for.
Most people who get income support or jobseeker's allowance can get help from the Social Security Agency to pay their mortgage interest. It is known as income support mortgage interest (ISMI). You won't get any money to pay off the original amount you borrowed (capital) or any investment linked to your mortgage (like an endowment policy or ISA). Tell your friend to ask their lender for a statement showing how much actual interest they pay each month.
Where a mortgage is taken out partly for another purpose such as buying a car or providing a business loan, the Income Support scheme will only pay interest on the part of the loan associated with the house purchase or repairs.
Also there is a limit of £100,000 on the amount of capital that Income Support can help with the interest on. This means that if the outstanding capital on your loan, or loans, is more than £100,000 then only the interest on £100,000 can be met through Income Support help with the mortgage interest payments.
To try and answer to your specific questions;
1. As long as your friend is receiving benefit they are in with a fairly good chance.
2. In the first instance appeal directly with the office where the original claim was made.
3. Not sure about this one - sorry
4. Personally I would check to ensure they have received the application, then let them get on with it.
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