Bad parser?

Today someone I've known for a long time -- a former physicist who develops software in Silicon Valley -- mentioned to me that he has trouble parsing human speech. That is, there are times in normal conversation when his brain fails to recognize the specific words the other person is saying, even when he has no trouble hearing the actual sounds. I'm not sure whether this should be characterized as a problem with parsing (which is how he refers to it) rather than something like speech recognition, but it's not something I've ever encountered. My friend claims this condition made dating very difficult, and also makes social interactions difficult. Even physics talks were hard to understand; equations on the board made much more sense than what the speaker said out loud. Note it's different from autism or Asperger's syndrome. My friend has plenty of insight into human psychology and a good sense of humor -- he just can't tell what other people are saying some of the time! (Actually he's a bit on the geeky side but not autistic ;-)

Do any readers have this problem, or know someone who does? It reminds me a bit of prosopagnosia, or face blindness. I suspect both speech and face recognition utilize special modules in the brain, which could be subject to mild dysfunction.

A reader writes:

Saw your blog, I have that problem too - it usually happens to me when 1) tired, like at the end of an observing night or 2) at a party or dinner with lots of conversation around me.

The experience for me is that I hear the words clearly, but they don't connect to a symbol in my brain - someone will say, "would you like a roll" and I literally cannot place an image of what the sound "roll" is - this may happen more often than I realize for I know I have developed protocols to deal with the environment (like say no to all requests or limit the field of view)

From the comments: the condition is known as Auditory Processing Disorder (APD).