Why did my borrower's social security number fail on-line validation in FHA Connection?

The borrower's social security information is not validated in real time when a new case number assignment is requested in FHA Connection (FHAC). FHAC validates the prefix combination of the Social Security Number (SSN) and checks against the Social Security Administration's (SSA) Death Master File. FHAC validates SSNs using the borrower's name, SSN and birth date.

However, this validation process does not provide an acceptable confidence rating at the time of case number assignment. Instead, the case number will be issued to the lender while an overnight verification attempt with SSA takes place. Lenders are expected to view the Holds Tracking screen in FHAC the next business day (or the following business day after that for case numbers requested after 5:00PM Eastern Time) to verify the borrower's name and SSN passed validation with SSA.

Due to their business cycle, especially towards the end of the month, SSA has cautioned that it may not be able to provide an overnight validation when required but should do so within a few business days.

If the overnight matching with SSA fails, a Case Warning for SSN Validation will be placed on the case number. Lenders will have the opportunity to make the necessary corrections and a second attempt to validate with SSA will occur. If the revised data passed validation, the Case Warning for SSN Validation will be removed. If a case continues to fail SSA validation and the lender submits a request for insurance endorsement because it believes the SSA database is in error, the lender must provide conclusive documentation in the case binder supporting the validity of the SSN to the applicable Homeownership Center (HOC).

For the Lender Insurance program, the Case Warning for SSN Validation will require the lender to submit the case binder for endorsement along with conclusive documentation supporting the validity of the SSN. If upon review, the HOC staff believes the documentation to be valid and the loan meets all other FHA requirements, it will endorse the mortgage for insurance.

Any changes made to the borrower's name, birth date and SSN at any time prior to insurance endorsement will trigger a validation request with SSA.

SSA has limited tolerance for minor mistakes in names, birth dates and social security numbers, so lenders are reminded of the importance for accuracy in these three data elements when requesting a case number.

FHA provides SSN checks to help protect the insurance funds it manages, and that lenders are still responsible - not FHA - to verify each borrower's SSN, as well as the borrower's identity. This verification service, provided by FHA at no cost to its approved lenders, may only be used for processing loans for FHA insurance. Lenders are not to use this service to verify SSNs for other than FHA-insured mortgages.

For more information on case processing using FHA Connection go to the following HUD website: https://entp.hud.gov/qckstart/qckstrt.cfm or the FHA Connection User Guide located at:  https://entp.hud.gov/idapp/html/mrtg-pkg.cfm

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

Topic Number: KA-04813