This action was taken under Executive Order 10865, DoD Directive 5220.6, dated January 2, 1992,1
as amended (Directive), and the adjudicative guidelines which became effective within the Department of
Defense for SORs issued after September 1, 2006.
                                                                                                                                                
                                                                                              
In the matter of: )
)
)       ISCR Case No. 10-03031
)
)
Applicant for Security Clearance )
Appearances
For Government: Pamela Benson, Esq., Department Counsel
For Applicant: Pro se
                                                              
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Decision
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LAZZARO, Henry, Administrative Judge
Applicant purchased a house in anticipation of an employment transfer to a different
state. When his employer cancelled the transfer, Applicant was unable to continue the
mortgage payments on the house which eventually led to a foreclosure. He has otherwise
led a financially responsible lifestyle and his delinquent mortgage debts have now been
resolved. Clearance is granted.
On September 2, 2010, the Defense Office of Hearings and Appeals (DOHA) issued
a Statement of Reasons (SOR) to Applicant stating it was unable to find it is clearly
consistent with the national interest to grant or continue a security clearance for Applicant.1
The SOR alleges a security concern under Guideline F (financial considerations). Applicant
submitted a response to the SOR that was received by DOHA on September 20, 2010. He
admitted both SOR allegations and requested a hearing.
DEPARTMENT OF DEFENSE
DEFENSE OFFICE OF HEARINGS AND APPEALS
2
The case was assigned to me on November 17, 2010. A notice of hearing was
issued on December 2, 2010, scheduling the hearing for January 13, 2011. The hearing
was conducted as scheduled. The government submitted six documentary exhibits that
were marked as Government Exhibits (GE) 1-6 and admitted into the record without
objection. Applicant testified and submitted 4 documentary exhibits that were marked as
Applicant’s Exhibit (AE) 1-4 and admitted into the record without objection. Applicant
submitted copies of state statutes that were marked as Appellate Exhibit (App. Ex) I.
Administrative notice was taken of those statutes without objection. 
The record was held open to provide Applicant the opportunity to submit additional
documentation in support of his case. One document was timely received, marked as AE
5, and admitted into the record without objection. Department Counsel’s forwarding e-mail,
indicating she did not object to the admission of AE 5, was marked as App. Ex. II and is
included in the record.  The transcript was received on January 19, 2011.     
Findings of Fact
Applicant’s admissions to the SOR allegations are incorporated herein. In addition,
after a thorough review of the pleadings, testimony and exhibits, I make the following
findings of fact:
Applicant is a 32-year-old man who has worked as an information technology
coordinator for a federal contractor since September 2008. Applicant graduated high
school in 1996. He graduated from college in August 2001, with a double major in
computer science and linguistics. He is single and resides with his fianceé, who he is to
marry in early-2011. Applicant currently has no dependents.
Applicant was employed part-time as a substitute teacher from September 2002
until June 2003. He was unemployed from June 2003 until September 2003. Applicant was
employed as an estimator/information system administrator from September 2003 until
April 2007. Applicant was employed as a land survey coordinator form April 2007 until
October 2007. Applicant was unemployed from October 2007 until April 2008. 
Applicant’s financial problems originated in 2005, when his then employer offered
him a position with the company in another state. In anticipation of moving to that state,
Applicant purchased a house on which he began making mortgage payments in January
2006. The house was financed with a first and second mortgage totaling $255,000. Before
Applicant was able to relocate to the other state, his employer apparently lost the client
Applicant was being transferred to service and cancelled Applicant’s relocation.   
Applicant’s financial problems were exacerbated by an injury he sustained while
unemployed and without medical insurance that required him to undergo several surgical
procedures. He obtained the medical services at a teaching hospital, but he still incurred
a medical debt of $6,000 that he has now satisfied. 
Applicant was sporadically able to find tenants to rent the house he purchased, but
it also sat vacant for extended periods of time. Due to real estate market conditions, the
value of the house Applicant purchased severely decreased. He considered a short-sale
 ISCR Case No. 96-0277 (July 11, 1997) at 2.2
 ISCR Case No. 97-0016 (December 31, 1997) at 3; Directive, Enclosure 3, Item E3.1.14. 3
 Department of the Navy v. Egan 484 U.S. 518, 531 (1988).4
3
of the house, but concluded he would be unable to pay the approximate $35,000 tax
liability he would incur from such a sale. 
Applicant negotiated a restructuring of the first mortgage on the house which only
reduced his monthly payment about $100. He lacked the financial resources to make the
reduced monthly payment. He was unsuccessful in his effort to restructure the second
mortgage because the creditor told him they were legally required to charge off that debt.
Applicant eventually concluded his only alternative was to allow the mortgage companies
to foreclose on the house. Applicant also stopped paying homeowners association dues,
which resulted in him incurring a $1,600 deficiency to the association before the house was
foreclosed on. 
Applicant’s responsibility for the mortgage debts on the house were discharged
under applicable state law with the foreclosure. He unsuccessfully attempted to negotiate
a settlement with the homeowners association. That association has now informed him
they have charged off the debt.   
Applicant’s credit reports disclose no negative entries other than those related to the
home purchase discussed above. He and his fianceé share all living expenses and are
marginally living within their means. Applicant’s performance report from his current
employer discloses he is dependable, committed to his job, and a great asset to the office
where he is employed. His letters of recommendation indicate he has earned a reputation
as a loyal, honest, dependable, and trustworthy individual.      
  
Policies
The Directive sets forth adjudicative guidelines to consider when evaluating a
person’s eligibility to hold a security clearance. Chief among them are the disqualifying and
mitigating conditions for each applicable guideline. Each clearance decision must be a fair
and impartial decision based upon relevant and material facts and circumstances, the
whole-person concept, and the factors listed in ¶ 6.3.1 through ¶ 6.3.6 of the Directive.
Although the presence or absence of a particular condition or factor for or against
clearance is not outcome determinative, the adjudicative guidelines should be followed
whenever a case can be measured against this policy guidance. Guideline F (financial
considerations) with its disqualifying and mitigating conditions, is most relevant in this case.
  The sole purpose of a security clearance decision is to decide if it is clearly
consistent with the national interest to grant or continue a security clearance for an
applicant.  The Government has the burden of proving controverted facts.  The burden of2 3
proof in a security clearance case is something less than a preponderance of evidence,4
although the Government is required to present substantial evidence to meet its burden
 ISCR Case No. 01-20700 (December 19, 2002) at 3 (citations omitted).5
 ISCR Case No. 98-0761 (December 27, 1999) at 2.6
 ISCR Case No. 94-1075 (August 10, 1995) at 3-4; Directive, Enclosure 3, Item E3.1.15.7
 ISCR Case No. 93-1390 (January 27, 1995) at 7-8; Directive, Enclosure 3, Item E3.1.15.8
 Egan, 484 U.S. at 528, 531.9
 Id. at 531.10
 Egan, Executive Order 10865, and the Directive.11
4
of proof.  “Substantial evidence is more than a scintilla, but less than a preponderance of5
the evidence.”  Once the Government has met its burden, the burden shifts to an applicant6
to present evidence of refutation, extenuation, or mitigation to overcome the case against
him.  Additionally, an applicant has the ultimate burden of persuasion to obtain a favorable7
clearance decision.8
No one has a right to a security clearance  and “the clearly consistent standard9
indicates that security clearance determinations should err, if they must, on the side of
denials.”   Any reasonable doubt about whether an applicant should be allowed access10
to classified information must be resolved in favor of protecting national security.      11
Analysis
Guideline F, Financial Considerations
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. . . .
(Adjudicative Guideline [AG] 18)
Applicant prematurely purchased a house in another state in anticipation of a job
transfer. When the employment relocation was cancelled, he was unable to sell the house,
retain tenants in the house, or maintain the mortgage and homeowners association
payments on the house. Disqualifying Condition (DC) 19(a): inability or unwillingness to
satisfy debts applies.
When Applicant’s job relocation was cancelled, he was unable to sell the house
because of a decline in the real estate market. He reasonably, but unsuccessfully,
attempted to obtain tenants for the house to allow him to keep up with the mortgage
payments. He considered a short-sale, but he concluded he could not afford the taxes he
would incur if he was successful in that endeavor. He thereafter unsuccessfully attempted
to restructure the mortgage payments to an amount he could afford. Finally, as a last
resort, he allowed the property to be foreclosed on, which, under state law, relieved him
5
of all responsibility for any deficiency that he might otherwise have owed. Applicant also
unsuccessfully attempted to negotiate a settlement of the delinquent homeowners dues
which have now been charged off. 
Applicant’s financial problems with the home he purchased were aggravated by the
period of unemployment he experienced between October 2007 and April 2008. Further,
while unemployed, Applicant sustained an injury that required multiple surgeries and left
him with about $6,000 in medical expenses that he has satisfied.   
Applicant’s credit reports indicate he has lived a financially responsible lifestyle and
remained current on his debts, with the sole exception of the house he purchased in
anticipation of a job-related relocation. The evidence fully supports a finding that
Applicant’s financial problems were solely due to the unforeseen situation he found himself
in when his job transfer was cancelled after he had purchased the home in anticipation of
the relocation. There is no reason to suspect that Applicant’s financial problems will recur.
The following Mitigating Conditions (MC) apply: MC 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; MC 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; MC 20(c): . . . there are clear indications that the problem is
being resolved or is under control; and MC 20(d): the individual initiated a good-faith effort
to repay overdue creditors or otherwise resolve debts.  
Considering the testimony and other evidence Applicant presented at the hearing,
Department Counsel conceded it would be the Government’s position that there would not
be a security concern in this case if the delinquent mortgage debt alleged in SOR
subparagraph 1.a was in fact no longer collectible under applicable state law. The record
was held open to provide Applicant the opportunity to provide evidence in support of his
testimony to that effect. He thereafter submitted a letter from an attorney in that state who
practices in the applicable fields that corroborates Applicant’s testimony (AE 5).
Considering all relevant and material facts and circumstances present in this case,
the factors listed in ¶ 6.3.1 through ¶ 6.3.6 of the Directive, the whole-person concept, the
employment performance report and letters of recommendation Applicant submitted, and
the applicable disqualifying and mitigating conditions, I find Applicant mitigated the financial
considerations security concern. He has overcome the case against him and satisfied his
ultimate burden of persuasion. It is clearly consistent with the national interest to grant
Applicant a security clearance. Guideline F is decided for Applicant. 
 
6
Formal Findings
Formal findings for or against Applicant on the allegation 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
Subparagraphs 1.a & b: For Applicant
Conclusion
In light of all the circumstances presented by the record in this case, it is clearly
consistent with the national interest to grant or continue a security clearance for Applicant.
Clearance is granted.
Henry Lazzaro
Administrative Judge