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                              DEPARTMENT OF DEFENSE
               DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)       ISCR Case No. 09-05403
)
)
Applicant for Security Clearance )
Appearances
For Government: Fahryn E. Hoffman, Esquire, Department Counsel
For Applicant: Krystal M. Limon, Esquire
______________
Decision
______________
WHITE, David M., Administrative Judge:
Applicant and his wife bought a home in March 2006, while both were employed.
His wife suffered a series of medical and employment setbacks, resulting in the SOR-
listed delinquencies. They paid one minor debt, and made good-faith efforts to negotiate
resolution of the other three. Each has now been resolved or is being repaid under
agreements entered in 2009. He has both the means and every intention to remain
solvent in the future. He is a responsible and trustworthy individual, and met his burden
to mitigate security concerns arising from his financial situation. Based upon a review of
the case file, pleadings, exhibits, and testimony, eligibility for access to classified
information is granted. 
Applicant submitted a security clearance application (SF 86) on February 2,
2009. On March 17, 2010, the Defense Office of Hearings and Appeals (DOHA) issued
a Statement of Reasons (SOR) to Applicant, detailing security concerns under
Guideline F (Financial Considerations). The action was taken under Executive Order
10865, Safeguarding Classified Information within Industry (February 20, 1960), as
amended; Department of Defense Directive 5220.6, Defense Industrial Personnel
Security Clearance Review Program (January 2, 1992), as amended (Directive); and the
GE 1; AE G; Tr.29-30, 106-111; 148-149.1
AR.2
GE 2.3
2
Adjudicative Guidelines for Determining Eligibility for Access to Classified Information
that went into effect within the Department of Defense on September 1, 2006. 
Applicant answered the SOR in writing (AR) on April 26, 2010, and requested a
hearing before an administrative judge. Department Counsel was prepared to proceed
on May 19, 2010, and the case was assigned to me on May 27, 2010. DOHA issued a
Notice of Hearing on July 9, 2010, and I convened the hearing as scheduled on August
17, 2010. The Government offered exhibits (GE) 1 through 4, which were admitted
without objection. Applicant offered exhibits (AE) A through M, which were admitted
without objection, and testified on his own behalf. His wife also testified. I granted
Applicant’s request to leave the record open until September 7, 2010, for submission of
additional evidence. DOHA received the transcript of the hearing (Tr.) on September 8,
2010. Applicant timely submitted AE N through U, which were admitted into evidence
without objection, and the record was closed. 
Findings of Fact
Applicant is a 29-year-old employee of a defense contractor, where he has
worked, under various management arrangements, since January 2006. Before that, he
was unemployed for nine months after being medically discharged, under honorable
conditions, from the Navy in March 2005. He enlisted in August 1999, and served as a
submarine missile technician with a Top Secret clearance, reaching pay grade E-5. He
has never been involved in a security violation or adverse security incident. He has a
30% disability rating from the Veteran’s Administration, for which he receives disability
compensation. He and his wife have two children, ages 16 and 6.  In his response to1
the SOR, Applicant denied the factual allegations in SOR ¶¶ 1.a through 1.c, and
admitted the allegation in SOR ¶ 1.d, with explanations to clarify each response.2
Applicant’s explanations and admissions, including his statements in response to DOHA
interrogatories,  are incorporated in the following findings.3
In early 2006, Applicant had secured his current employment and his wife was
working for a real estate broker as a commission-based closing specialist. She began
that job in July 2005, and was earning a steady income of about $1,000 per month. Real
estate prices were still booming, and they wanted to buy a house within the limits of the
city school district because the special education program in which their daughter
participated was not available in outlying school districts. It seemed that such housing
was rapidly becoming unavailable at a price they could afford. They bought a modest
home for $155,000 during March 2006. Although they had specified that they wanted to
make mortgage payments of $1,000 per month, they learned at closing that the total
payment would actually be $1,200 per month. They considered not following through on
the purchase, but were advised that all contractual terms had been met and they could
GE 1 at 47; Tr. 30-31, 60-63, 101-103.4
GE 1 at 47; Tr. 61-63.5
GE 4; Tr. 63-64.6
GE 1 at 47; Tr. 32-35.7
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not legally opt out without paying damages or other consequences. They did not inquire,
and were not informed of the specific penalties that would apply, but decided to go
ahead with the house purchase and save money elsewhere to make ends meet.4
Within a couple months after their home purchase, the local real estate market
began to dry up. By about June 2006, Appellant’s wife’s commission income was down
from $1,000 to $400 per month. She responded by performing closings for up to four
additional agents in her office, and by opening a side business cleaning the empty
houses listed through their office. Over the next year, she was able to slowly restore her
monthly earnings to the $800 to $1,000 level.  5
Appellant and his wife were able to make all mortgage payments during this
period, but fell behind on a couple of credit card debts. The two debts alleged in SOR ¶¶
1.b and 1.c became delinquent in March 2007, and showed balances due of $5,759,
and $5,026, respectively on his credit report from February 2009.  Their problems were6
exacerbated by a series of unanticipated medical problems beginning in early 2006.
Their younger daughter was diagnosed with asthma, and their older daughter was
diagnosed with migraine headaches and ADHD. Appellant’s wife underwent two
surgeries during 2006, one of which involved a four-day hospital stay. Due to insurance
exclusions and co-pays, the resulting medical expenses were about $2,000 more than
they had anticipated. In January 2008, Appellant’s wife started experiencing a persistent
numbness in her hand. She underwent a series of therapies and tests, including two
MRI examinations. In March 2008, she was diagnosed with multiple sclerosis (MS), and
began taking medicine for it. Resulting medical costs from January to March 2008 that
were not covered by insurance exceeded $1,500. Her initial medication for the MS cost
them about $200 per month out of pocket. After a good initial reaction to treatment, they
were able to reduce the monthly costs for medicine to about $90, with one annual MRI
for which they pay $1,200. She was advised by her neurologist to stop working in her
cleaning business because the chemicals could worsen her condition and symptoms.   7
In June 2008, Appellant’s wife was laid off from her real estate job due to lack of
available work. A longtime friend of her mother’s offered to, and did, lend them $2,400
to cover their June and July mortgage payments while she looked for other work. Those
payments were made to the creditor by the friend on her credit card. When the friend
returned from a trip in August 2008, and saw $2,400 in charges against her credit card
by the lender on her August account statement, she mistakenly concluded that she had
 Tr. 35-36, 63-71.8
Tr. 35, 50. 9
Tr. 35-37, 65-72.10
GE 3; AE E; AE F; AE R; AE U; Tr. 36-45, 67-73.11
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been charged twice for these payments. She called her bank and cancelled the
charges, without contacting or informing Appellant or his wife.  8
Appellant’s wife obtained a temporary position in August 2008, in which she
worked between 20 and 40 hours a week. This job was converted to a full-time,
permanent position for her in October 2009. The job paid only once per month, at the
end of the month, so her first paycheck was not received until August 31, 2008.  The9
plan was to pay the August mortgage payment in early September, and remain one-
month delinquent on the mortgage until she resumed full-time work in October 2008.
During mid-August, the mortgage lender sent a letter informing them that their June and
July payments had been cancelled and they were now three months behind on the
mortgage. They contacted the friend, who apologized for the mistake and sent them a
check for the $2,400 to use in bringing the payments current. They immediately
contacted the lender to try to reinstate the June and July payments, but were informed
that once a loan was more than three months past due, no partial payments could be
accepted. Only a payment bringing the loan completely up to date would be accepted.
They did not yet have the funds to make such a payment.10
The mortgage lender advised Applicant and his wife to stop making payments
toward the loan and to apply for a loan modification. They initially did so in September
2008, and began saving between $1,000 and $1,200 per month in an account so they
would have funds to execute the modified agreement when the bank approved it.
Without belaboring the point, they were very proactive in applying for and pursuing a
loan modification agreement through several unsuccessful iterations. They also
unsuccessfully sought assistance from a foreclosure prevention specialist at their state
housing department. Finally, on May 15, 2010, the home was sold at a foreclosure sale,
even though their loan modification application remained open and pending approval.
The outstanding balance on the loan was $152,000, and Fannie Mae purchased the
home for $143,000. They re-listed it for sale at $87,000. Applicant and his wife received
a relocation assistance offer on May 25, 2010, under which Fannie Mae agreed to pay
them $1,400 if they voluntarily vacated the property on or before May 30, 2010, and left
it in good and broom-clean condition. They accepted this offer and moved into rental
lodgings.    11
The foreclosure laws of the state where Applicant resides provide for two
procedures. The mortgage lender employed Non-Judicial Foreclosure procedures,
which give the lender only 90 days after the sale to file a deficiency action against the
borrower to recover the difference between the mortgage debt and the amount obtained
at the sale. Applicant’s lender did not file a deficiency action during the 90-day post-sale
AE R; AE S; Tr. 46, 98-100.12
AR; AE B; Tr. 55.13
GE 3; GE 4. 14
GE 2; AE C; AE T; Tr. 50-53, 76-88, 90. AE T confirms that this collection account and SOR ¶ 1.b reflect15
the same debt. Applicant and his wife are also current on a $207 per month repayment agreement with the
collection agent for another delinquent credit card  from the same original creditor which began on Dec. 9,
2009. GE 2 at 19; Tr. 83-85. 
GE 2 at 20; AE D; Tr. 53-55, 88-90. 16
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period. Accordingly, the $9,000 deficiency claim has been abandoned by the lender,
and it may no longer be asserted against Applicant.   12
The $37 debt alleged in SOR ¶ 1.a was for Applicant’s co-pay for a doctor’s visit
by his youngest daughter on February 26, 2008. Applicant and his wife were unaware of
the outstanding charge until notified of it by the collection agency to whom it was
referred for collection on February 18, 2009. Once made aware of the debt, they
promptly paid it on May 11, 2009. This was simply an oversight.13
As noted above, the credit card debt alleged in SOR ¶ 1.b was delinquent in the
amount of $5,759 on Applicant’s February 2009 credit report. On his February 2010
credit report, the balance due was down to $3,698.  During December 2008, Applicant14
and his wife entered into and agreement with the predecessor collection agency holding
this debt to pay $200 per month until the balance was paid in full. The agency agreed
not to charge further interest as long as the payments were made on time. All payments
have been timely made since then, resulting in a balance due of $2,026.71 on April 26,
2010, and $1,281 on August 23, 2010. Applicant has sufficient funds to continue and
complete these payments as agreed.      15
The $4,626 delinquent debt alleged in SOR ¶ 1.c involves a credit card issued to
Applicant by their original home lender in connection with his mortgage loan. For a time,
the bills were not delivered due to a lender error on the account address. Once they
were financially able to do so during December 2009, they entered into an agreement to
repay the balance in full at a rate of $200 per month. The creditor has accepted this,
and accepts six months worth of post-dated checks at a time to ensure payment without
adding further interest to the debt. All payments pursuant to this agreement have been
timely made, and sufficient funds are available to continue doing so.    16
While waiting for the bank to foreclose on their home, Applicant and his wife
saved from $1,000 to $1,200 each month that would otherwise have gone toward the
mortgage, as described above. They saved around $18,000 to $19,000 in order to have
funds to finance their loan modification, if and when it was approved. They stopped
making these deposits in May 2010, when they began having to pay rent. They have
since had to use around $4,000 of those savings for various necessities, but still
showed an account balance of $15,500 as of August 2010. These funds are not
GE 2; AE O; AE P; AE Q; Tr. 57-58, 71-73, 95-96, 100-101. 17
AE A; AE H through J; AE N.18
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encumbered, and are available to pay off the remaining debts discussed above.
However, they made a responsible and well-reasoned decision to await a favorable
outcome of Applicant’s security clearance determination, because he will lose his
employment if his clearance is denied. He and his wife also have about $6,000 in
retirement savings accounts, toward which they contribute monthly. Their combined
monthly incomes, and his VA disability pay, provide a monthly surplus of income over
expenses ranging from a positive $585 to a slightly negative number when they choose
to make additional discretionary expenses. Appellant’s wife handles the family finances
on a day to day basis, and she exhibited an excellent understanding of their financial
situation and a determination to bring all debts current as soon as she can safely do so.
She is also owed $244 per month in child support from the father of their elder daughter.
He last made a small payment toward this obligation in September 2005. Applicant’s
wife has not pursued the arrearage because her former husband cannot litigate custody
issues while in such debt, and he is having trouble paying child support to the unwed
and unemployed mother of his other child.          17
Applicant’s resume and performance assessments reflect his excellent
performance of increasingly responsible duties. His supervisor for many years wrote
glowingly of his character, responsibility, dedication to mission accomplishment, and
perseverance through a difficult series of personal and financial setbacks.  Applicant18
and his wife were extremely credible, organized, and well informed about their financial
situation during the hearing.
Policies
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 (DCs) and mitigating conditions (MCs), which are to be used 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 AG ¶ 2 describing the adjudicative process. The administrative judge’s
overarching adjudicative goal is a fair, impartial, and commonsense decision. According
to AG ¶¶ 2(a) and 2(c), the entire process is a conscientious scrutiny of applicable
guidelines in the context 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
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classified information will be resolved in favor of the 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. Likewise, I have avoided drawing inferences
grounded on mere speculation or conjecture.
Under Directive ¶ E3.1.14, the Government must present evidence to establish
controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, “[t]he applicant is
responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or
mitigate facts admitted by the applicant or proven by Department Counsel, and has the
ultimate burden of persuasion as to obtaining a favorable clearance decision.” Section 7
of Executive Order 10865 provides: “[a]ny determination under this order adverse to an
applicant shall be a determination in terms of the national interest and shall in no sense
be a determination as to the loyalty of the applicant concerned.”
A person applying for access to classified information seeks to enter 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 the applicant may deliberately or inadvertently fail to protect or
safeguard classified information. Such decisions entail a certain degree of legally
permissible extrapolation as to potential, rather than actual, risk of compromise of
classified information.
Analysis
Guideline F, Financial Considerations
The security concerns relating to the guideline for financial considerations are 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. 
The evidence raised security concerns under two Guideline F DCs, as set forth in
AG ¶ 19(a) “inability or unwillingness to satisfy debts”; and ¶ 19(c) “a history of not
meeting financial obligations.” Applicant’s history of delinquent debt stretches back
about three years, and continues, in part, at present. The burden accordingly shifts to
Applicant to rebut, explain, extenuate or mitigate these facts and the resulting security
concerns.
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The guideline includes four conditions in AG ¶ 20 that could mitigate security
concerns arising from Applicant’s financial problems:
(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; 
(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;
(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; and
(d) the individual initiated a good-faith effort to repay overdue creditors or
otherwise resolve debts.
Applicant’s delinquent indebtedness is ongoing in part. He repaid the $37
medical debt listed in SOR ¶ 1.a, during May 2009, shortly after becoming aware of it.
Applicant had fully resolved that debt well before the issuance of the SOR, thereby
mitigating any resulting security concerns through application of AG ¶ 20(d). 
Applicant has good-paying and steady work, and has surplus income again now
that his wife has obtained full-time employment. During 2009, they entered into
repayment agreements for three credit cards (two of which are listed in the SOR), that
had fallen delinquent due to the conditions and circumstances discussed below. They
have remained current on these agreements, and have the means to continue to do so.
At the present rate of $200 per month per card, all three debts will be repaid within 18
months. He also has sufficient savings to completely repay all three debts immediately,
once it becomes unnecessary to hold those funds in reserve in case he loses his
security clearance and job. He therefore established substantial mitigation under AG ¶¶
20(c) and (d) because these debts are under control, and being resolved under their
good-faith efforts to repay these creditors.  
Mitigation under AG ¶ 20(b) was also established, concerning the three debts
that are not yet repaid. Applicant’s now-delinquent debts were not originally caused by
matters outside his control, but his inability to pay them as he originally intended
resulted from the collapse of the housing market; his wife’s loss of employment and
income despite working additional jobs; a series of difficult and expensive medical
developments; and the cancellation of two months worth of mortgage payments without
their knowledge that made their plan to bring their mortgage current impossible to
implement. Applicant and his wife have acted with great responsibility throughout these
problems. They worked very hard for almost two years to renegotiate their mortgage
ISCR Case No. 06-12930 at 2 (App. Bd. Mar. 17, 2008) (quoting  ISCR Case No. 04-09684 at 2-3  (App.19
Bd. Jul. 6, 2006)). 
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loan terms, despite the fact that their home was worth substantially less that they owed
on the mortgage loan. It was the mortgage lender who chose to exercise foreclosure
proceedings, and under state law Applicant and his wife are not responsible for the
resulting deficiency. Such circumstances may negate the element of good-faith under
other circumstances. However, Applicant did everything within his power to resume
mortgage payments and fulfill his promise, but was refused by the lender. His conduct
reflected a responsible approach to his commitments, and he is no longer subject to any
pressure or coercion over any remaining deficiency claim, which the bank abandoned. 
Applicant and his wife are both employed, fully current in paying their regular
living expenses, and have more than $15,500 in liquid savings with which to address the
delinquencies once his clearance and job are no longer in jeopardy. Thus, additional
mitigation was established under AG ¶¶ 20(c) and (d).
  
As the Appeal Board has ruled concerning the successful mitigation of security
concerns arising from financial considerations, “[a]n applicant is not required to show
that [he] has completely paid off [his] indebtedness, only that [he] has established a
reasonable plan to resolve [his] debts and has ‘taken significant actions to implement
that plan.’”  This applicant has established and substantially implemented an effective19
plan to resolve the debts that could formerly have given rise to security concerns. He
also demonstrated his commitment to avoiding future financial problems, and a solvent
budget that will permit him to do so.
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 applicant’s
conduct and all relevant circumstances. The administrative judge should consider the
nine adjudicative process factors listed at AG ¶ 2(a): 
(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. 
Under AG ¶ 2(c), the ultimate determination of whether to grant eligibility for a security
clearance must be an overall commonsense judgment based upon careful consideration
of the guidelines and the whole-person concept.   
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I considered the potentially disqualifying and mitigating conditions in light of all
pertinent facts and circumstances surrounding this case. Applicant incurred a moderate
amount of delinquent debt in connection with his wife’s medical and employment
problems. He has maintained an excellent employment record, and actively attempted
to negotiate good-faith resolution of those debts with his creditors. His home mortgage
loan was resolved through foreclosure by the lender, despite almost two years of very
diligent efforts by Applicant and his wife to resolve that debt in the only way offered by
the lender. He is a mature and responsible individual, and the recurrence of financial
problems is quite unlikely. His proactive efforts to achieve resolution of his debts have
eliminated any ongoing potential for pressure, coercion, exploitation, or duress. 
Overall, the record evidence creates substantial confidence as to Applicant’s
present eligibility and suitability for a security clearance. He fully met his burden to
mitigate the security concerns arising from his financial considerations.
Formal Findings
Formal findings for or against Applicant on the allegations set forth in the SOR,
as required by ¶ E3.1.25 of Enclosure 3 of the Directive, are:
Paragraph 1, Guideline F: FOR APPLICANT
Subparagraphs 1.a through 1.d: For Applicant
Conclusion
In light of all of the circumstances presented by the record in this case, it is
clearly consistent with the interests of national security to grant Applicant eligibility for a
security clearance. Eligibility for access to classified information is granted.
                                              
DAVID M. WHITE
Administrative Judge