We completed a limited review of social security number validation procedures used by lenders to qualify single family loans for FHA mortgage insurance. Prior to 2005, the use of invalid or false social security numbers (SSNs) by borrowers and co-borrowers to obtain FHA insured mortgages was an issue. Effective June 2005, FHA required the lenders to validate borrowers social security numbers by matching their names and dates of birth through FHA Connection. The FHA outlined specific procedures for the lenders to follow.

The objectives of our review were to determine: whether lenders are using the social security number validation procedures, if the procedures are working, and how lenders resolve validation failures.

We determined that: 1) lenders were using the validation procedures and the procedures were working; 2) use of invalid SSNs and total loans originated by lenders, significantly decreased since HUD's implementation of the revised validation procedures; 3) the findings reported in the Quality Assurance Division's reviews of the mortgage companies on the use of invalid or false social security numbers has declined considerably; and 4) lenders properly resolved validation failures when the SSNs failed initial verification through FHA Connection.