If a consumer is denied credit based on "red flags" from credit reporting agency (such as SSN reported deceased or never issued, true fraud, etc.) what adverse action reason should be given to the applicant if you determine or strongly suspect it is identity theft?

Yes - Could not verify identification information presented.

We have send an adverse action notice to a loan applicant
for non verifible information. Customer admitted during the loan process that the SSNs do not belong to him and are not in his name. Can we file a SAIR? Please advise what procedures, if any we need in place for loan applications?

I have experienced this, even back several years ago coming through a broker channel, and it is occurring more and more as the depths of the mortgage issues are coming to light.

You definitely must file an SAR - you have a potential identity theft situation, definitely attempted mortgage fraud.

Do you have a CIP process to help identify these situations before booking loans? That is what you need to think about - how to protect the bank against fraud.

I am struggling with the fact this the potential borrower is not a "Customer" per FACTA, since he is only seeking a home loan. He has no other relationships with the bank.