Really? Can they?

[IOBA]

My friend contacted CCCT.   They verbally promised to help him with a mortgage modification, no cost to him.  They told him they are a non-profit credit counseling center and professionally trained.

1.  This is a debt management company.

2.  Their webpage clearly states there is a monthly fee that will be charged.  Period.  (It's on one of the pages.)

His debt -

1.  Car loan - current, per agreement.  Upside down on value/loan.   Several "lates".

2.  CC - charged off long ago.

3.  Mortgage - missed a payment last year or two, never caught up.  In addition to that, he hasn't made this month's payment and is not likely to do so.   (He missed many more payments last year, but borrowed the money to pay it.  Now he's technically 3 months arrears.)

4.  State taxes are in collections.

5.  IRS has a lien on the house.

6.  Is upside down on his house value/loan.

7.  Has been trying, without success, to modify his loan with his lender for nearly 2 years.

8.  Has been trying, without success, to modify his loan through a wide variety of "agencies" specifically set up to do this.   For a fee, of course.  

9.  Maybe laid off in less than 60 days.

10.  NO money in the bank.  Has borrowed from everyone to live his life.

11.  I talked to a mortgage broker.  He said given the then current information, no one would refi my friend.  He is now considered 17 months "late" on his mortgage.

My questions are -

1.  Can CCCT legally help him with a debt modification?

2.  Would they treat this debt (the mortgage) like they treat other debts (cc, auto loans, etc)?

3.  If the house is foreclosed on, what will the IRS likely do?

His disposable income after bills are paid (includes car payment and mortgage) is less than twenty  dollars per week.   

Thanks for you input.  

[Homebuyer24]

Wow.  Your friend is right to be skeptical as this company sounds like it is for profit--so not sure why they would do a loan mod for him for free.  My best friend went to a company to do a loan mod that she thought was free--they wanted $2600 and she asked if they offered a money back guarantee--they said they could not offer her that, so she declined using them. 

If your friend loses his job, he may qualify for a forebearance due to job loss for 3-6 months, but without a job, he will most likely not be able to do any kind of loan mod. 

[Lel]

Just for clarification - do you mean CCCS?

[IOBA]

My friend is over the top enthusiastic that this DM company can help him modify his mortgage, for free.  He's even willing to pay a fee for it.

I am the one with VERY strong doubts!   The company advertises on their website that they are non profit, etc.  But they have already misled him (either directly with false statements or by not correcting his wrong impression).  

I would like to know, can a debt management company really and truly do the government modification for a consumer, that is just coming to them for the mortgage? 

Knowing how MOST dm companies work, I understand that they collect money from the client and put it into a trust until they have enough to settle.  Well, in my friends case, the mortgage payments (as of today) are collectively 3 months in the arrears.  He doesn't have the time, or the money, to wait for a build up of cash for a settlement. 

How does the IRS play into this?  What happens if the house is foreclosed on?  The IRS has a current lien on the house -- do they get the house over the mortgage company?  Or do they get another judgment and try to garnish wages?

Thank you for all of your input!  

ps - it could be CCCS -- but he said ccct.  It's a consumer credit counseling service - debt management company.