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                           DEPARTMENT OF DEFENSE    
         DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
 
In the matter of: ) 
) 
  )   ISCR Case No. 10-01271 
 ) 
) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: D. Michael Lyles, Esquire, Department Counsel 
For Applicant: Pro se 
 
 
 
______________ 
 
Decision 
______________ 
 
 
MATCHINSKI, Elizabeth M., Administrative Judge: 
 
 Applicant was granted a bankruptcy discharge in July 2001 during the breakup of his 
first marriage. As of September 2009, Applicant and his current spouse owed a $160,259 
mortgage debt for a home in foreclosure, and they were 180 days past due on a $6,082 
installment loan debt that they had taken out in January 2009. On August 13, 2010, he paid 
$1,006 on the installment loan to bring it current, but he does not intend to make payments 
on the defaulted mortgage for his previous residence. Clearance denied. 
 
Statement of the Case 
 
 On August 3, 2010, the Defense Office of Hearings and Appeals (DOHA) issued a 
Statement of Reasons (SOR) to Applicant detailing the security concerns under Guideline F, 
Financial Considerations, which provided the basis for its preliminary decision to deny him a 
security clearance. DOHA acted 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 adjudicative guidelines (AG) effective 
within the Department of Defense on September 1, 2006. 
 
 
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Applicant acknowledged receipt of the SOR on August 10, 2010. He answered the 
SOR on August 19, 2010, and requested a decision without a hearing. On October 19, 
2010, the Government submitted a File of Relevant Material (FORM) consisting of eight 
exhibits (Items 1-8). DOHA forwarded a copy of the FORM to Applicant and instructed him 
to respond within 30 days of receipt. No response was received by the November 26, 2010, 
due date. On December 13, 2010, the case was assigned to me to consider whether it is 
clearly consistent with the national interest to grant or continue a security clearance for 
Applicant. 
Findings of Fact 
 
The SOR (Item 2) alleged under Guideline F, Financial Considerations, that 
subsequent to a July 2001 bankruptcy discharge (SOR 1.a), Applicant was seriously 
delinquent on two accounts. As of August 2010, he was 120 days or more past due on a 
$6,092 installment loan (SOR 1.b), and his mortgage was foreclosed with a loan balance 
around $160,000 (SOR 1.c). In his Answer (Item 4), Applicant did not dispute the 
bankruptcy or the debts, but he maintained there were extenuating circumstances and the 
loan in SOR 1.b was now current. After considering the Government‟s FORM, including 
Applicant‟s documentation submitted with his Answer, I make the following findings of fact. 
 
Applicant is a 50-year-old engineering technician, who has worked for his current 
employer since September 2009. He retired from the United States Navy after serving 20 
years on active duty. (Item 1, 6.) He has held several different jobs since leaving active duty, 
including as a mechanic, a kitchen manager, a pest control technician, a team leader, and a 
pipe shop supervisor, before his present employment. (Item 1.) 
 
Applicant was married to his first wife from April 1982 to March 2003. When they 
separated around April 2001, they owed substantial debt, including a mortgage on their 
home that neither he nor his spouse could afford to pay. In order to keep the home until 
their divorce could be finalized, Applicant and his first wife filed for Chapter 7 bankruptcy in 
April 2001. They were granted a bankruptcy discharge in July 2001. (Item 4, 7, 8.) On their 
divorce in March 2003, Applicant‟s ex-wife was given $36,000 of his retirement pay, payable 
to her at $300 per month for ten years. (Item 4.) 
 
In September 2006, Applicant married his current spouse. (Item 1.) In March 2007, 
he and his spouse took out a mortgage loan of $163,000. (Item 7.) When they bought their 
home, Applicant had a roof inspector certify that the roof could withstand weather damage, 
and they insured the property. (Ex. 4, 5.) They were current in their mortgage payments 
through February 2008, but fell behind around 90 days as of May 2008 due to his spouse‟s 
unemployment.
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 Their financial pressures were alleviated when Applicant‟s spouse began 
working, and they brought the mortgage current. Around August 2008, the house sustained 
interior damage through the roof caused by heavy rains during a tropical storm. They filed a 
claim against their homeowner‟s insurance, which apparently covered damages to the 
                                                 
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Applicant indicated in his Answer that his spouse was unemployed from April 2007 to September 2007 and 
from November 2007 to March 2008. (Item 4.) However, Applicant‟s October 2009 credit report (Item 7) 
indicates that they were delinquent in their mortgage from March through May 2008, and that they brought it 
current until December 2008.  
 
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interior but not the roof. On August 28, 2008, the insurance company asked them to obtain 
an evaluation of their roof from a roofing contractor, and at their expense, have the roofer 
repair any deficiencies found during the inspection. The evaluation and repairs were 
required to be completed within 90 days to continue their insurance coverage. The 
insurance underwriter also informed Applicant that if the conditions were attributable to 
hurricane damage, he should contact his agent. To prevent further damage to the property, 
they solicited bids for permanent repair of the roof. Because the design was no longer in 
accord with the state building codes, the roofing contractors recommended that the roof be 
replaced at a cost of $10,000 to $12,000. Applicant and his spouse did not have the funds, 
and he claims he had no collateral with which to secure a loan. (Item 4, 5.) 
 
They notified their mortgage lender that they wanted to vacate the premises, and 
they stopped making their loan payments around December 2008. In January 2009, 
Applicant‟s spouse lost her job. They notified their mortgage lender that they wanted out of 
the residence as they could not afford the mortgage payments, which were around $1,513. 
(Item 7.) They took out a joint installment loan of $6,082 in January 2009, to be repaid at 
$49 per month. (Item 7, 8.) Applicant told a Government investigator on December 3, 2009, 
that they opened the loan to help with the mortgage payments. (Item 5.) Yet his credit 
reports do not corroborate that he used any of the loan to make payments on his mortgage 
loan. (Item 7, 8.) In March 2009, Applicant and his spouse vacated the house because they 
could not afford to insure it and they were again behind in their mortgage payments. (Item 1, 
4.) As of September 2009, the mortgage lender had initiated foreclosure proceedings. Their 
mortgage loan was $15,130 past due on a balance of $160,259. Also, they were $393 past 
due on the installment loan. (Item 8.) 
 
Applicant listed the defaulted mortgage on an Electronic Questionnaire for 
Investigations Processing (e-QIP) certified on October 6, 2009. He indicated that his 
previous residence could well be in foreclosure, although neither he nor his spouse had 
been formally notified that foreclosure had begun. (Item 1.) On December 3, 2009, 
Applicant was interviewed about the mortgage debt. He indicated that he and his spouse 
had tried to give the residence to their lender, who would not reclaim it. They decided that 
their only option was to walk away from the home. Applicant maintained that he was 
financially stable other than losing his home due to damage sustained during the tropical 
storm that was not covered by insurance. (Item 5.) 
 
In response to DOHA inquiries about any efforts to resolve the delinquent mortgage 
and newer installment loans, Applicant indicated on April 14, 2010, that he and his spouse 
had no intent to reassume the mortgage due to the condition of the roof and their financial 
inability to replace it. He denied that he had received any invoices for the installment loan 
debt that was reportedly 180 days past due. Applicant provided DOHA with a personal 
financial statement reporting monthly income from his employment and retirement of 
$4,279.54, and monthly expenses of $2,459.80. He listed no debt payments, and only one 
asset, a car worth $8,000. (Item 6.) Available credit records show that Applicant took out an 
automobile loan of $9,804 in April 2007. He has been late in his payment seven times since 
he took out the loan. (Item 7.) 
 
 
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As of April 2010, Applicant was current in his car loan, which had a balance of 
$5,286. He was $639 behind in the installment loan, and $24,209 past due on the mortgage 
loan for his previous residence. He was making $68 monthly payments on time on his 
student loan balance of $4,340. He had no other outstanding debts on his credit record. A 
couple of unsecured loans taken out in 2007, for $6,000 and $3,500, were paid off. (Item 7.) 
In July 2010, Applicant‟s spouse began receiving disability pay (Item 4.), although there is 
no evidence as to the amount. On August 13, 2010, Applicant paid $1,006 on the 
installment loan debt in SOR 1.b. He indicated that it was not until he received the SOR that 
they were able to contact the creditor and arrange for payment. They had been operating 
under the impression that the mortgage lender had rolled the installment loan into the 
mortgage as part of their mortgage saver program. (Item 4.) On August 19, 2010, he 
indicated that he had set up monthly payments to address the remaining balance (Item 4.), 
but he provided no specifics and no corroborating documentation. 
 
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. 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 
 
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the applicant may deliberately or inadvertently fail to 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. 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). 
 
Analysis 
 
Guideline F, Financial Considerations 
 
The security concern for Financial Considerations is set out in AG ¶ 18, as follows:  
     
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 guideline notes several conditions that could raise security concerns under AG ¶ 
19. Two are potentially applicable in this case:   
 
 (a) inability or unwillingness to satisfy debts; and 
 
(c) a history of not meeting financial obligations. 
 
Applicant and his first wife filed for bankruptcy in April 2001 because they could not 
separately manage to pay their combined debt, including their mortgage. AG ¶ 19(a) and ¶ 
19(c) are clearly implicated by the need to file for bankruptcy to save their home for their 
divorce settlement, and by Applicant‟s recent defaults of the mortgage and personal 
installment loans opened with his current wife. 
 
Applicant‟s decision to walk away from his house and mortgage obligation is difficult 
to mitigate under 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 he and his 
spouse faced financial pressures because of circumstances beyond their control (see AG ¶ 
20(b), infra), his disregard of this legal obligation casts doubts on his financial judgment. 
Furthermore, Applicant demonstrated recent irresponsibility by failing to address the 
installment loan in SOR 1.b until after the SOR was issued. And while it had been nine 
years since his bankruptcy, it cannot be assessed in isolation from his more recent financial 
difficulties. 
 
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 
 
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the circumstances,” applies in part. Marital separation was a factor in Applicant‟s 2001 
bankruptcy. Yet without evidence about his income, and other indebtedness at the time, I 
am unable to fully apply AG ¶ 20(b) to mitigate the bankruptcy. Concerning his recent 
mortgage default, Applicant‟s unrebutted explanation is that a roofing inspector certified the 
roof when they bought the property in March 2007. And the damage to their roof and interior 
were caused by a tropical storm in August 2008, which was beyond their control, even if 
Applicant can be imputed to have known that his homeowner‟s policy did not cover the roof. 
However, Applicant did not fully establish a nexus between his financial problems and the 
storm damage. His homeowner‟s insurance covered interior repairs. And he presented no 
evidence of any payments that he made to repair the roof. Despite his full-time employment 
as a pipe shop foreman, his military retirement pay, and the fact that his spouse had been 
working since March 2008, they were unable to borrow the funds to replace the roof 
because they had no collateral. Applicant also has a history of late payments on his car 
loan. So there is some indication of financial instability unrelated to the storm damage. And 
notwithstanding his expressed concerns about his and his spouse‟s health and safety due to 
the “increasing damage to the interior of the house making it unlivable,” Applicant and his 
spouse remained in the home for another six months after the storm. They continued to 
make their mortgage payments until December 2008. 
 
Rather, it appears that the loss of his spouse‟s employment in January 2009 had a 
more significant impact on their finances. Unemployment is a factor that implicates AG ¶ 
20(b), and it explains their delinquency on the loan in 2009. Applicant acted responsibly in 
notifying his mortgage lender that they could no longer afford his monthly mortgage 
payment. According to Applicant, he was told by his lender that no action would be taken 
until they were 90 days in default. But he presented no evidence from the lender showing 
that they would be offered a loan modification program, and the lender initiated foreclosure 
on the property. Applicant‟s decision to default is difficult to justify without assurances from 
the creditor that it will accept the property in full settlement of the mortgage balance. And 
there are no such assurances in the record. Furthermore, there are no circumstances of 
record that mitigate his delinquency on the installment loan in SOR 1.b. Available 
information indicates that the loan was taken out in January 2009, with repayment at a 
minimal $49 per month. When he was asked about that loan in December 2009, Applicant 
stated that it was a loan to help with the mortgage payments on his residence. (Item 5.) In 
April 2010, he told DOHA that the loan was an attempt by his mortgage lender to prevent 
foreclosure and that he had not received any invoices from the creditor. (Item 6.) In answer 
to the SOR, Applicant explained that the loan was established by their mortgage lender as 
part of its mortgage saver program for him and his spouse to repay the four-month shortfall 
due to his spouse‟s unemployment in 2008. Applicant maintained that he and his spouse 
were operating under the assumption that their mortgage lender had rolled the loan into 
their mortgage. (Item 4.) Irrespective of whether the loan was opened to address their 
mortgage delinquency in 2008 or instead in 2009 (as shown in his credit reports), there is no 
record of any payments on the loan before August 2010. If the debt was incurred in a 
mortgage saver‟s program, he failed to inquire about his payment responsibilities. As of 
April 2010, he reported monthly discretionary funds in excess of $1,000, so he had the 
means to address the debt. AG ¶ 20(b) does not apply to the loan in SOR 1.b. 
 
 
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 Despite Applicant‟s August 2010 payment of $1,006 on the installment loan identified 
in SOR 1.b, it would be premature to apply either 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,” or AG ¶ 20(d), “the individual initiated a good-faith effort 
to repay overdue creditors or otherwise resolve debts.” Applicant has not been in contact 
with his mortgage lender about the status of his loan. The debt remains on his credit 
records with an outstanding balance of $160,259. His payment of $1,006 on the installment 
loan is viewed favorably, but it appears to have been prompted solely by the SOR. 
Applicant maintains that it was not until he received the SOR that he was able to contact the 
creditor and obtain an account number. However, the evidence shows Applicant was on 
notice as of DOHA‟s interrogatories in April 2010, if not during his interview in December 
2009, that the Government was concerned about the debt. Assuming that Applicant has 
arranged to pay that debt, the financial issues would still not be fully mitigated because of 
the sizeable mortgage debt. 
 
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 his conduct and all 
relevant circumstances in light of 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. 
 
Applicant took advantage of a financial fresh start afforded by a Chapter 7 
bankruptcy discharge in July 2001. He managed his finances responsibly until 2008, when 
his spouse‟s unemployment caused them to fall behind in their mortgage. There were 
extenuating circumstances that led to the mortgage delinquency, and Applicant is justifiably 
proud of his years of dedicated service in the United States military and as a defense 
contractor employee. But Applicant‟s choice to walk away from this obligation, without taking 
steps to negotiate repayment arrangements or creditor abrogation of his liability, is 
inconsistent with the good judgment that must be demanded of those persons with access 
to classified information. Based on the information reviewed, I am unable to conclude that it 
is clearly consistent with the national interest to grant Applicant eligibility for a security 
clearance at this time. 
 
 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: 
 
 
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Paragraph 1, Guideline F:   AGAINST APPLICANT 
 
Subparagraph 1.a:   Against Applicant 
Subparagraph 1.b:   Against Applicant 
Subparagraph 1.c:   Against Applicant 
 
Conclusion 
 
In light of all of the circumstances presented by the record in this case, it is not 
clearly consistent with the national interest to grant Applicant eligibility for a security 
clearance.  Eligibility for access to classified information is denied. 
 
 
________________________ 
Elizabeth M. Matchinski 
Administrative Judge