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                           DEPARTMENT OF DEFENSE   
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
 --------------------------- )     ISCR Case No. 09-02352
SSN: ------------------- )
)
Applicant for Security Clearance )
Appearances
For Government: Gina L. Marine, Esquire, Department Counsel
For Applicant: Pro se
______________
Decision
______________
MATCHINSKI, Elizabeth M., Administrative Judge:
In 2005, Applicant defaulted on her $416,000 mortgage and a $49,998 home
equity loan taken out to finish the construction and make repairs to her house after her
builder refused to meet the terms of his warranty. The home equity loan was paid off in
a foreclosure sale of the property to the holder of the primary mortgage, who has not
pursued Applicant for the deficiency balance. Applicant also defaulted on about $11,000
in student loan debt that came out of deferment around the same time. She has been
making payments on her student loan debt since August 2007 and is incurring no new
delinquencies. Clearance granted.          
Statement of the Case
On August 28, 2009, the Defense Office of Hearings and Appeals (DOHA) issued
to Applicant a statement of reasons (SOR) detailing the security concerns under
Guideline F, Financial Considerations, that provided the basis for its preliminary
decision to deny her a security clearance and to refer the matter to an administrative
judge. The action was taken under Executive Order 10865, Safeguarding Classified
Information within Industry (February 20, 1960), as amended; Department of Defense
On her July 1999 security clearance application (Ex. 2), Applicant indicated that while she was on1
temporary duty overseas, “bills were paid but were not applied as requested to creditors.” W hen she returned
from deployment, she was informed that she was six months behind when she had paid “minimum payments
in advance for 6 months.” At her hearing, she testified that in November 1996, she sent 12 checks to each of
her creditors and discovered that all those payments had been applied to a single month so she was 11
payments behind. (Tr. 71.)  W hether she made six or 12 months of payments, there is no indication that the
delinquent debts listed on her September 1999 credit report were among those included in the bankruptcy.
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Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program
(January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG)
effective within the Department of Defense on September 1, 2006.
On October 8, 2009, Applicant answered the SOR and requested a hearing. On
January 7, 2010, the case was assigned to me to conduct a hearing and to determine
whether it is clearly consistent with the national interest to grant or continue a security
clearance for her. On January 8, 2010, I scheduled a hearing for February 3, 2010.
I convened the hearing as scheduled. Eight Government exhibits (Ex. 1-8) and
six Applicant exhibits (Ex. A-F) were admitted into evidence without objection. Applicant
testified, as reflected in a transcript (Tr.) received on February 16, 2010.
I held the record open for two weeks after the hearing for Applicant to submit
additional documents. On February 17, 2010, Applicant timely submitted one document,
which was entered without objection as Exhibit G.
Findings of Fact
The SOR alleged under Guideline F, Financial Considerations, that Applicant
filed for a Chapter 13 bankruptcy that was dismissed around November 2005 (SOR
1.a), and that she owed two delinquent consumer credit debts totaling $1,110 (SOR 1.b
and 1.f), $3,374 on a student loan account in collection (SOR 1.c), and $465,954 in
mortgage debt (SOR 1.d and 1.e). Applicant admitted the bankruptcy filing, which was
dismissed at her request, but she denied the alleged debts. After considering the
pleadings, exhibits, and transcript, I make the following  factual findings.
Applicant is a 55-year-old senior training/curriculum development engineer, who
has worked for her present employer since October 2008. She served honorably in the
United States military for 21 years, retiring in December 1998 at the rank of lead chief
petty officer. Applicant held a top-secret security clearance with special access while
she was in the military. (Ex. 1, 2, Tr. 26.) She seeks a secret level security clearance for
her present duties with a defense contractor. (Tr. 35.)
Toward the end of her military service, Applicant had some financial problems,
related in part to an overseas deployment. Before she left in November 1996, she sent
separate checks to her creditors, one for each month of her absence. Apparently, some
creditors applied them as a single payment.  Her credit report of September 1999 (Ex.1
5.) includes several past due debts with no clear evidence that they have been satisfied.
A telephone company charged off a $171 debt balance around February 1997. A credit
Applicant testified that she took out first and second mortgage loans at the time of purchase. Her2
credit reports do not show a second mortgage of around $50,000 before the home was refinanced in late
2002.
As detailed by the attorney who handled her closing, the construction was clearly substandard. (Ex.3
G.) Applicant could have delayed the closing but she relied to her detriment on the builder’s warranty.
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card account was charged off in the amount of $4,473 in March 1997. A power
company placed a $104 debt for collection in October 1997. An installment loan was
charged off with $122 past due in August 1998. Three revolving charge accounts with
balances of $519, $1,409, and $991 were charged off after there had been no activity
since the October/November 2006 time frame. (Ex. 5.) Because the creditors would not
work with her, she felt she had no alternative than to file a bankruptcy. In August 1998,
she filed for a Chapter 7 bankruptcy, listing $25,000 in debt. (Ex. 2, Tr. 72.) Presumably,
she was granted a discharge, although the records of the bankruptcy were not
presented for my review.
After she retired from the military, Applicant began working in April 1999 as a
systems analyst for a defense contractor supporting a special operations command.
She held a top-secret security clearance for her duties, and her job performance
exceeded her employer’s expectations in reliability and productivity. (Ex. 2, A, Tr. 28-
29.) Applicant pursued a certification in information technology. (Tr. 89.) She paid for
her classes through student loans totaling $10,125 taken out between March 2000 and
July 2000 (SOR 1.c). (Ex. 2, 6, 7, 8.)
In June 2000, Applicant began working as a project manager for a commercial
company. She did not require a security clearance for that position. (Tr. 29.) Applicant
was subsequently relocated by her employer to her present locale. She earned about
$140,000 in her first year on the job due to overtime. (Tr. 61.) Around April 2001, she
purchased a new construction house, taking on a mortgage loan of $259,500.  (Ex. 6,2
G.) The price included a one-year warranty that covered repair and labor of any
structural or cosmetic imperfections. The builder refused to perform under the terms of
the warranty and eventually filed for bankruptcy. Applicant was forced to pay out-of-
pocket for landscaping, tree removal, moving utility wiring, removal of construction
debris, car damage because of an unpaved, unpacked driveway, drainage pipe
installation, roof and deck replacement, and other exterior repairs. Inside the house,
Applicant incurred costs to install dryer and microwave exhaust vents, new boards in
the living room floor, telephone jacks, window screens, bathroom mirrors, a new shower
door that fit, sump pumps in the basement, french drains, sliding glass doors and
windows that could be locked, and a water heater that did not leak.  (Ex. G, Tr. 93-94,3
97-98.) 
In December 2001, Applicant was laid off from her employment in a corporate
downsizing. (Tr. 29.) Applicant had problems finding employment because she did not
have a degree, so she returned to school. She supported herself on her military
retirement and unemployment. She also started her own consulting business and took
odd jobs to meet her financial obligations. (Ex. 1, Tr. 29-30, 57.) In November 2002, she
Applicant admitted that while she fell ill again, in 2006, she was able to work in the mornings. Her4
illness did not affect her income because of paid sick leave. (Tr. 55.) 
As of November 2009, the home equity lender had not filed a release of the debt with the court. (Ex.5
F.) Consequently, Equifax was still reporting that debt as $49,000 past due. (Ex. 8.)
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refinanced her mortgage through a new $311,250 loan. In January 2003, she acquired a
home equity loan of $49,998 (SOR 1.d). (Ex. 6, 8.) She used all her savings, about
$50,000, and about $40,000 of the equity in the home to make the needed repairs and
improvements to her house. (Tr. 63, 93, 97-98.)
In May 2003, Applicant was awarded her bachelor of science degree. (Ex. 1, Tr.
41.) Apart from some consulting and part-time hours as a security guard on the
weekends, she was unemployed for the next two years. (Ex. 1, 3, Tr. 31, 64.) In the fall
of 2003, she began taking classes at night toward her master’s degree. Between
October 2003 and February 2005, she obtained additional student loans totaling about
$24,560. (Ex. 6.) Available credit reports show other student loans opened in November
2005 totaling $8,690 (Ex. 6, 7.). She testified that she earned her master’s degree in
2005 (Tr. 42.), so it is unclear whether the $8,690 represents additional student loans or
rather a transfer of account balances. The only graduate degree listed on her e-QIP is
an M.S. in information technology expected in May 2010. (Ex. 1.)
Applicant was unable to work at times in 2004 due to illness. (Tr. 31, 53.) She
began having problems making her mortgage payment. In February 2005, Applicant
refinanced her primary mortgage with the lender in SOR 1.e, taking on a loan of
$416,000 to finish the home repairs so that she could list the property for sale. (Ex. D,
Tr. 97.) Although she had been employed since June 2005 as a director of an
information technology program at $49,500 per year (Ex. 1, Tr. 61.), and had borrowed
money from her family, she defaulted on the mortgage and home equity loan.  (Tr. 32-4
33.) Around October 2005, the mortgagee identified in SOR 1.e initiated foreclosure
proceedings (Ex. 3.), and transferred the $416,000 loan balance to a loan servicer
(company X). On the advice of an attorney, Applicant sought bankruptcy protection in a
Chapter 13 filing (SOR 1.a) to give herself time to remove her belongings from the
house. (Tr. 32, 66.) She had her bankruptcy case dismissed in November 2005. (Ex. 8.)
In October 2006, the property was sold for $399,500 at a foreclosure auction to
company X through a real estate liquidation company. (Ex. D.) With the legal transfer of
the property in December 2006, the home equity loan identified in SOR 1.d was
satisfied after it had been charged off.  (Ex. C, F.)5
From February to July 2007, Applicant was employed in information technology
technical support for a security company. Her earnings were based on an annual salary
in the $70,000s. (Ex. 1, Tr. 60.) She worked on a short-term contract as a project
manager from July 2007 until September 2007, when she was again unemployed. (Ex.
1.) 
In August 2007, Applicant consolidated her student loans for her graduate study
with bank Y, who opened two accounts of $28,841 and $9,166. Also around August
2007, Applicant was informed that her student loans from 2000, which had come out of
Applicant testified that the loans came off deferment in 2005 or 2006 (Tr. 41.), but also that she did6
not know that she owed on the loans before 2007 because she thought the VA had paid the $11,000 directly
to the school. (Tr. 43.) Her testimony makes sense only if I assume that she was made aware by the collection
agency when contacted in 2007 that the loans had been deferred through 2005 or 2006. If she received a
receipt for the payment from the VA after she had taken out loans, then one has to question her judgment in
not checking with the school to ensure that payment was received, and then in not receiving reimbursement
from the school for any monies paid by her or by her student loan lender.
Applicant testified at her hearing that she began repaying her consolidated student loans at $400 to7
$500 per month at that time. (Tr. 45.) There is no evidence of any progress made at that point to repay her
loans for her master’s degree, which remain deferred. If she was referring to the defaulted student loans from
2000, she indicated in February 2009 (Ex. 3), and again in May 2009 (Ex. 4.), that she was repaying the loans
at $200 per month.
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deferment in 2005 or 2006 (tr. 41.), were considered to be in default.  (Ex. 6, Tr. 44.)6
Applicant testified that she believed the Veteran’s Administration (VA) had paid $11,000
to the school on her behalf. (Tr. 43.) But since she could not produce the receipt to
substantiate her dispute (Tr. 50.), she elected to pay the loans. She paid $250 per
month to rehabilitate those loans while she was unemployed from September 2007 to
February 2008 (Tr. 49.), although the student loans were still on her credit record as
collection debts as of January 2009. (Ex. 7.)
In February 2008, Applicant began working in state government as a manager of
information systems at $75,000 per year. (Tr. 59.) In May 2008, she was forced to
resign due to illness. (Ex. 1, Tr. 55.) Applicant supported herself on her military disability
retirement pay of $2,400 per month. (Tr. 56, 59.) 
In October 2008, Applicant began working for her current employer at an annual
salary of $75,400. (Tr. 58.) When she applied for her security clearance on November
25, 2008, Applicant listed the foreclosure of her home in October 2005 but no other
financial problems. (Ex. 1.) A check of Applicant’s credit in December 2008 revealed the
Chapter 13 bankruptcy filing in 2005 that had been dismissed, the student loan debt in
collection, and two other delinquent debts (SOR 1.b and 1.f) that were in dispute. Also
listed on the credit report as delinquent as of August and October 2008 were the
primary mortgage of $416,000 (SOR 1.e) and the home equity loan (SOR 1.d). (Ex. 6.)
In November 2008, Applicant opened a credit card account with a $300 limit. She
also financed the purchase of a new vehicle through a loan of $23,000, to be repaid at
$576 per month. As of September 2009, she owed $21,000 on the vehicle and was
current in her payments. She had a zero balance on the credit card account. (Ex. 8, Tr.
77.)  
On February 2, 2009, Applicant explained to a Government investigator that the
mortgage and home equity loans were now closed following the foreclosure of her
house in October 2005. She indicated that she was paying $200 per month on her
student loans from 2000, and expected to have them satisfied by January 2010.  She7
described her financial situation as improving with her full-time employment. (Ex. 3.)
As of October 2009, Equifax listed three debts of $3,374 with the same collection agency. It is unclear8
whether all three entries pertain to the same debt, or three separate debts of the same amount. The
Government alleged only one $3,374 debt owed the collection agency (SOR 1.c), which would be consistent
with Applicant’s testimony that she had been making payments. However, neither the Government nor the
Applicant presented documentation of repayment.
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At DOHA’s request, Applicant completed a personal financial statement in May
2009. She estimated that with her military retirement pay and her employment income,
she had discretionary funds of $3,567.17 each month after paying her expenses and
two debts: $600 on her car loan and $200 on the student loan debt of $11,000 from
2000. (Ex. 4.)
As of October 2009, her consolidated student loans with bank Y were deferred
with reported balances of $32,000 and $9,586. Included on her credit report was a new
$10,000 student loan opened in July 2009. (Ex. 8.) Applicant did not take out additional
student loan debt (Tr.86), but she had consolidated her student loans from 2000 within
the past year. (Tr. 80.) In September 2009, Trans Union deleted the line items for the
student loans that had previously been in default (Ex. F.), although Applicant admits that
she still owes a debt balance of $3,000.  Applicant testified that the outstanding balance8
of all her student loans was only about $22,000 (Tr. 46.), although her credit report does
not corroborate her claimed payments. 
Equifax also continued to report that Applicant owes a past due balance on the
primary mortgage of $416,000 (SOR 1.e). (Ex. 6, 7, 8.) As of February 2010, Applicant
had not been notified that she owed a deficiency balance between what she owed on
the primary mortgage and the sale price. When she contacted company X, she was told
that her account had been closed (Tr. 69.), but she has received no release from
company X.
As of December 2008, the credit bureaus were also reporting that Applicant
owed consumer collection balances of $254 from February 2003 (SOR 1.b), and $856
from September 2007 (SOR 1.f). (Ex. 6.) Applicant successfully disputed the $254 debt
listing based on fraud, and it was removed from her credit file. (Ex. 4, 8, E, F.) As of
February 2010, she was still disputing the $856 collection debt (Tr. 81.), which was not
on her October 2009 credit report. (Ex. 8.)
Applicant rents an apartment at $1,100 per month. She had a little more than
$1,000 in savings and about $3,000 in checking account deposits as of February 2010.
She owes family members about $15,000 for personal loans that she has been repaying
at $400 to $500 per month for the last six months. (Tr. 73, 85.) She files her income tax
returns every two years (e.g., for 2006 and 2007 in 2008) because she receives refunds
every year. (Tr. 74-75.)
Applicant is highly regarded by a retired lieutenant commander for whom she
worked in 2000. He continued to maintain contact with her after she left his company.
He considers her to be a person of high personal integrity and trustworthiness. (Ex. A.)
A friend of Applicant’s for the past 34 years, who also served in the military although not
in the same command, is aware that Applicant has held high levels of security clearance
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in the past. In her experience, Applicant has always exhibited leadership and reliability
and she can be trusted with classified information. (Ex. B.)
Policies
The U.S. Supreme Court has recognized the substantial discretion the Executive
Branch has in regulating access to information pertaining to national security,
emphasizing that “no one has a ‘right’ to a security clearance.” Department of the Navy
v. Egan, 484 U.S. 518, 528 (1988). When evaluating an applicant’s suitability for a
security clearance, the administrative judge must consider the adjudicative guidelines
(AG). In addition to brief introductory explanations for each guideline, the adjudicative
guidelines list potentially disqualifying conditions and mitigating conditions, which are
required to be considered in evaluating an applicant’s eligibility for access to classified
information. These guidelines are not inflexible rules of law. Instead, recognizing the
complexities of human behavior, these guidelines are applied in conjunction with the
factors listed in the adjudicative process. The administrative judge’s overarching
adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶
2(c), the entire process is a conscientious scrutiny of a number of variables known as
the “whole-person concept.” The administrative judge must consider all available,
reliable information about the person, past and present, favorable and unfavorable, in
making a decision.
The protection of the national security is the paramount consideration. AG ¶ 2(b)
requires that “[a]ny doubt concerning personnel being considered for access to
classified information will be resolved in favor of national security.” In reaching this
decision, I have drawn only those conclusions that are reasonable, logical, and based
on the evidence contained in the record. Under Directive ¶ E3.1.14, the government
must present evidence to establish controverted facts alleged in the SOR. Under
Directive ¶ E3.1.15, the applicant is responsible for presenting “witnesses and other
evidence to rebut, explain, extenuate, or mitigate facts admitted by applicant or proven
by Department Counsel. . . .” The applicant has the ultimate burden of persuasion to
obtain a favorable security decision.
A person who seeks access to classified information enters into a fiduciary
relationship with the government predicated upon trust and confidence. This relationship
transcends normal duty hours and endures throughout off-duty hours. The government
reposes a high degree of trust and confidence in individuals to whom it grants access to
classified information. Decisions include, by necessity, consideration of the possible risk
that the applicant may deliberately or inadvertently fail to safeguard classified
information. Such decisions entail a certain degree of legally permissible extrapolation
about potential, rather than actual, risk of compromise of classified information. Section
7 of Executive Order 10865 provides that decisions shall be “in terms of the national
interest and shall in no sense be a determination as to the loyalty of the applicant
concerned.” See also EO 12968, Section 3.1(b) (listing multiple prerequisites for access
to classified or sensitive information).
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Analysis
Guideline F, Financial Considerations
The security concern about finances is set out in AG ¶ 18:
Failure or inability to live within one’s means, satisfy debts, and meet
financial obligations may indicate poor self-control, lack of judgment, or
unwillingness to abide by rules and regulations, all of which can raise
questions about an individual’s reliability, trustworthiness and ability to
protect classified information. An individual who is financially overextended
is at risk of having to engage in illegal acts to generate funds.
Applicant has had a history of financial problems starting when she was in the
military. Before she retired, she filed for discharge in bankruptcy of some $25,000 in
unsecured debt. Applicant’s September 1999 credit report did not include the
bankruptcy, and the bankruptcy records were not made available for my review. But
none of the debts on her September 1999 credit report appear on the more recent credit
reports in evidence. So, presumably she was discharged of her liability for those
obligations. During the 2000/01 time frame, when her annual earnings were about
$140,000, Applicant bought a new construction house in her present locale. She was
laid off later that year, in December 2001. While working part-time and living primarily
off her military retirement, she spent $40,000 of a home equity loan and exhausted her
personal savings to repair and finish the construction of her home with the intent of
selling it. In February 2005, she refinanced her primary mortgage through a $416,000
loan when she did not have a full-time job. Not  surprisingly, she could not afford the
$3,815 monthly payment. She defaulted on both her mortgage and her home equity
loan, and lost the house to foreclosure. She filed for Chapter 13 bankruptcy in October
2005, but it was solely to buy time to move out of the home. She defaulted on her
student loans from 2000, although she claims not to have known about the loans until
about August 2007. Disqualifying conditions AG ¶ 19(c), “a history of not meeting
financial obligations,” and AG ¶ 19(a), “inability or unwillingness to satisfy debts,” apply
to the mortgage and student loan defaults.
Applicant defaulted on the mortgage (SOR 1.e), home equity (SOR 1.d), and
student loans (SOR 1.c) about four years ago. However, I cannot apply AG ¶ 20(a), “the
behavior happened so long ago, was so infrequent, or occurred under such
circumstances that it is unlikely to recur and does not cast doubt on the individual’s
current reliability, trustworthiness, or good judgment.” While the home equity loan was
paid off in the foreclosure sale, the primary mortgage was transferred in October 2005
to the loan servicer (company X) who bought the property one year later for $399,500,
$16,500 less than the principal balance of Applicant’s loan. It may be unlikely that
company X will pursue Applicant for the balance, given the lack of any effort to do so by
February 2010, although certainly it is possible. As for the student loan debt from 2000,
Applicant had the opportunity to substantiate her claim that the VA paid the school
$11,000, and she failed to do so. Applicant still owes at least $3,000 on the student loan
debt identified in SOR 1.c.
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AG ¶ 20(b), “the conditions that resulted in the financial problem were largely
beyond the person’s control (e.g., loss of employment, a business downturn,
unexpected medical emergency, or a death, divorce or separation), and the individual
acted responsibly under the circumstances,” is implicated. An unforeseen job layoff from
her well-paying job in December 2001 left her without steady income when she had to
pay for necessary repairs to her home. While some of the fixes could have been put off
(e.g., removal of 13 large trees, installation of an irrigation system, installation of
telephone jacks throughout the house, light kits in ceiling fans), other expenditures were
necessary to avoid risk of fire (e.g., an exhaust vent for the dryer) and further water
damage to the premises (e.g., a new roof). Applicant’s bouts of illness also left her
unable to work at times, although she had her military retirement income and should
have budgeted accordingly. But AG ¶ 20(b) does not mitigate Applicant’s questionable
financial judgment in taking on a sizeable mortgage of $416,000 in February 2005, or in
failing to ensure that she had no repayment obligation for the loans from 2000,
assuming that the VA had paid the school directly. 
AG ¶ 20(c),  “the person has received or is receiving counseling for the problem
and/or there are clear indications that the problem is being resolved or is under control,”
applies. As reflected in Exhibit C, the home equity loan in SOR ¶ 1.d was satisfied.
Equifax’s listing of the debt as still delinquent with a balance of $49,000 as of
September 2009 (Ex. 8) is likely attributable to the lender’s failure to record a release of
the debt with the court. (Ex. C.) Company X, to whom the primary mortgage was
transferred in October 2005, took possession of the house following the foreclosure.
Unlike the home equity loan, there is no document in the record that releases Applicant
from any further liability on the loan identified in SOR 1.e. But Applicant has also not
been pursued for the debt, and she was told that her account was closed. Concerning
the defaulted student loans, Trans Union had deleted the line items from her credit file
as of September 2009. (Ex. F.) While Applicant did not produce the documents of
repayment or consolidation, I accept her testimony that she has been making payments
on the debt and is likely to continue to do so. AG ¶ 20(d), “the individual initiated a good-
faith effort to repay overdue creditors or otherwise resolve debts,” applies to the limited
extent that she has continued to make payments on her student loan debt from 2000.
Resolution of a mortgage debt through foreclosure eliminates financial pressure, but it
is entitled to less weight in reform than a track record of payment to rehabilitate a loan.
AG ¶ 20(e), “the individual has a reasonable basis to dispute the legitimacy of the
past-due debt which is the cause of the problem and provides documented proof to
substantiate the basis of the dispute or provides evidence of actions to resolve the
issue,” is pertinent. Applicant disputed the validity of the debts alleged in SOR 1.b and
1.f. The creditor identified in SOR 1.b determined that the debt was fraudulently placed
in her name. (Ex. E.) As for the collection debt in SOR 1.f, Applicant had not received
any response to her verification request as of February 2010. As of October 2009, the
debt was not on her credit report. The evidence falls short of establishing that she owes
a delinquent balance to the creditor identified in SOR 1.f.
The adjudicative factors under AG ¶ 2(a) are as follows:9
(1) the nature, extent, and seriousness of the conduct; (2) the circumstances surrounding the
conduct, to include knowledgeable participation; (3) the frequency and recency of the
conduct; (4) the individual’s age and maturity at the time of the conduct; (5) the extent to
which participation is voluntary; (6) the presence or absence of rehabilitation and other
permanent behavioral changes; (7) the motivation for the conduct; (8) the potential for
pressure, coercion, exploitation, or duress; and (9) the likelihood of continuation or
recurrence.
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Whole-Person Concept
Under the whole-person concept, the administrative judge must evaluate an
applicant’s eligibility for a security clearance by considering the totality of the conduct
and all the relevant circumstances in light of the nine adjudicative process factors listed
at AG ¶ 2(a).  Applicant has not always handled her personal finances as responsibly as9
one would expect from a retired chief petty officer. She filed for bankruptcy in 1998
listing $25,000 in delinquent debt, at least in part because creditors had not properly
applied some of her payments. That experience should have led to increased vigilance
about her finances. Instead, while not to diminish the fault of the contractor who built her
home, Applicant chose to close in April 2001 on a new construction home that had
structural as well as cosmetic problems. When the builder refused to meet the terms of
the warranty, she exhausted her savings and most of the equity in the house to address
not only safety and habitability concerns, but also some landscaping and interior fixes
that could probably have waited until she had steady employment income. With the
refinancing of her primary mortgage in February 2005, she took on a mortgage
obligation beyond what she could reasonably afford. Concerning her student loans from
2000, even assuming she had a receipt showing the VA had paid $11,000 to the school,
she would have had to have signed for the student loans for them to be in her name.
She exhibited poor financial judgment in not following up with the school, the VA, or the
student loan lender to determine the extent of her liability on the loans.  Furthermore,
although not alleged as a concern by the Government, her pattern of filing her income
tax returns every other year is not in compliance with her filing obligations, which are
based on income levels and not on whether the taxpayer is entitled to refunds.
That said, Applicant paid a high price for her poor financial judgment in that she
lost her house to foreclosure. To a large extent, the financial pressures have been
mitigated by that foreclosure and sale of the home. While she owes sizeable student
loan debt that is currently in deferment, her $75,000 salary and $2,400 monthly military
retirement would appear to be enough to make her monthly payments on the student
loans now held by bank Y. Applicant pays her day-to-day living expenses on time, and
she is not continuing to incur any delinquent debt. She has only one active credit card
account on which she owed no balance as of September 2009. (Ex. 8.) Applicant’s
financial situation since the 2005/06 time frame has sufficiently improved to minimize
the risk of future financial problems. Furthermore, although certainly not determinative
of her present security worthiness, Applicant held high levels of clearances without any
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adverse incidents in the past.  Based on the circumstances of record, I conclude that it
is clearly consistent with the national interest to grant Applicant a security clearance.
Formal Findings
Formal findings for or against Applicant on the allegations set forth in the SOR,
as required by section E3.1.25 of Enclosure 3 of the Directive, are:
Paragraph 1, Guideline F: FOR APPLICANT
Subparagraph 1.a: For Applicant
Subparagraph 1.b: For Applicant
Subparagraph 1.c: For Applicant
Subparagraph 1.d: For Applicant
Subparagraph 1.e: For Applicant
Subparagraph 1.f: For Applicant
Conclusion
In light of the record in this case, it is clearly consistent with the national interest
to grant Applicant eligibility for a security clearance. Eligibility for access to classified
information is granted.
Elizabeth M. Matchinski
Administrative Judge