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                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
 )         ISCR Case No. 11-02811 
)
Applicant for Security Clearance )
Appearances
For Government: Candace Garcia, Esquire, Department Counsel
For Applicant: Christopher Graham, Esquire
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Decision
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MASON, Paul J., Administrative Judge:
In July 2006, Applicant opened two mortgages to purchase a home for about a
million dollars. He regularly paid the mortgage for more than two years. During his overseas
deployment in August 2008, his wife informed him the home had lost 60 per cent of its
value. In response to his wife’s request for a loan modification, the lender indicated no
assistance could be provided until their mortgages were 90 days delinquent. In November
2008, Applicant and his wife stopped paying the mortgage, believing that a loan
modification could be negotiated. After repeated efforts to reach a modification, Applicant
suddenly received a foreclosure notice at the end of May 2009, requiring him to either pay
the delinquent mortgage or vacate the premises by June 11, 2009. Applicant’s decision to
proceed with the foreclosure occurred under unusual circumstances that will not be
repeated. Eligibility for access to classified information is granted. 
 Handwritten page numbers appear in lower right hand corner of page.1
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Statement of the Case
Applicant completed and certified his Electronic Questionnaire for Investigations
Processing (e-QIP)(GE 1) on February 26, 2010. He was interviewed by an investigator
from the Office of Personnel Management (OPM) on March 30, 2010. A summary of his
interview appears within Applicant’s interrogatory answers dated July 18, 2011. (GE 3) In
response to question 3 of the exhibit, Applicant checked “No,” indicating that the interview
was not accurate, and made several modifications and additions. (Id. at 163)  After making1
the modifications, Applicant checked “Yes” under question 6, indicating  that he agreed with
his changes to the interview summary, and that it could be admitted in evidence to
determine his security suitability. (Id. at 165)
On November 16, 2011, DOHA issued a Statement of Reasons (SOR) detailing
security concerns under financial considerations (Guideline F) and personal conduct
(Guideline E). 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 adjudicative guidelines (AG)
implemented by the Department of Defense on September 1, 2006. 
Applicant submitted his answer to the SOR on November 24, 2011. DOHA issued
a notice of hearing on February 16, 2012, for a hearing on February 29, 2012. The hearing
was held as scheduled. At the hearing, eight exhibits (GE 1 through 8) were admitted in
evidence (without objection) in support of the Government’s case. Applicant testified and
offered three exhibits (AE A through AE C) which were admitted without objection. I
admitted one additional exhibit labeled Hearing Exhibit 1 (HE 1), six pages in length,
identifying changes in statute concerning when a court shall not award a deficiency
judgment on the foreclosure of a mortgage or deed of trust. DOHA received the transcript
(Tr.), and the record closed on March 7, 2012.
Findings of Fact
SOR ¶ 1 lists two allegations under the financial considerations guideline. Under
SOR ¶ 1.a, Applicant admitted he intentionally stopped paying his monthly mortgage
because the mortgage exceeded the value of the property. He denied he owed a deficiency
balance after the property was sold. Applicant denied SOR ¶ 1.b. There is one allegation
under the personal conduct guideline. Applicant denied SOR ¶ 2.a, averring that his
decision to stop paying the mortgage alleged in SOR ¶ 1.a does not show poor judgment
under the personal conduct guideline. 
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Applicant is 43 years old. He has been married since June 1993. He has a 15-year-
old daughter and a 13-year-old son from this marriage. He also has two adult stepchildren.
Applicant graduated from a military academy in May 1990 with a bachelor’s degree in
business and economics. He served on active duty in the U.S. Army from June 1990 to July
1997, when he received a medical discharge for an eye injury. (GE 2; Tr. 19) He held a
security clearance throughout his military career between 1990 and July 1997. He was
granted a security clearance in December 2005 by OPM. (GE 3 at 171) Between May 2005
and June 2007, Applicant took graduate management and business courses, and was
awarded a master’s degree in management and business in June 2007. 
After his medical discharge from the military in July 1997, Applicant was employed
by several federal contractors and private companies 1998 and July 2006. He was a
general manager for a private limited liability company. He was an engineering and
planning supervisor for a federal contractor. He was a senior project manager for a federal
contractor. From March 2005 to December 2005, Applicant was unemployed. He was a
construction services manager for a private company. 
From July 2006 to the present, Applicant has been employed as a lead project
manager for a federal contractor. He works in improvised explosive device direct energy
systems. He has been stationed most of the past six years in the Middle East, except for
periods when he was on leave visiting his family or in training and recruiting new personnel
at a military base in the United States. 
In July 2006, Applicant purchased a home for approximately $1,000,000. To
consummate the purchase, he opened two mortgages from the same lender. The first
mortgage was for $784,000, and the second was for $220,000. (Tr. 40; GE 3 at 166) The
mortgage payments were $8,000 a month. Applicant’s wife regularly made the monthly
mortgage payments for more than two years until November 2008. She has always handled
the finances because he has been deployed outside the country most of the time since
2006. (Tr. 21) 
In approximately August 2008, his wife informed Applicant (who was deployed in the
Middle East) that their home had depreciated in value by sixty per cent. (GE 3 at 166) After
consulting with Applicant, his wife sought a loan modification, but the lender advised her
that no modifications could be effectuated until the mortgage was 90 days delinquent. (Id.;
Tr. 21-22) Applicant explained to the lender that he could still afford to pay the mortgage
of $8,000 a month because he was deployed overseas. But if his employment location
changed, his income would change (decrease) as well. (Id.) Applicant and his wife decided
to act on the lender’s implied recommendation, so they intentionally made no mortgage
payments from November 2008 to June 2009. (Id.; Tr. 41) Applicant’s wife kept calling the
lender about the status of the loan modification, but the lender provided rationalizations for
not having any remedy available. (Tr. 24, 47-48) 
 In his interrogatory answers, Applicant stated that he utilized a software program to report the first mortgage2
1099-A information on his 2009 tax return. (GE 4 at 221). He testified that according to  an IRS tax publication,
once it was determined that the property was his primary residence for more than a year, he did not have to
report the 1099-A information on his 2009 tax return (Tr. 55) 
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Applicant never attempted to short-sell the house because he and wife wanted to keep it.
(Tr. 46)
Although the record is not absolutely clear, Applicant came home on leave in late
2008 or early 2009 because he was in-between projects. In the next two months, he was
assigned to a U.S. military base to receive additional training and to recruit new personnel
for another project in the Middle East. He also wanted to check with his wife on the status
of his house. (Tr. 23) 
Some time in early March 2009, Applicant redeployed to another country in the
Middle East. Then his father, with whom he had developed a close relationship from
serving several years together in the Middle East, died. The impact of his father’s death
caused Applicant to temporarily lose focus on reaching a home modification agreement
with the lender. (Tr. 23-24, 46-47)
At the end of May 2009, Applicant was able to schedule some leave from his
overseas assignment to meet his brother at his father’s funeral, and help his wife obtain the
loan modification. (Tr. 25) Applicant was notified by the bank that the only solution was for
Applicant to pay the delinquent mortgage arrears (approximately $84,000) which he did not
have, or vacate the premises in about 11 days and accede to the foreclosure. (Tr. 25, 48-
49) Applicant chose the foreclosure because the housing crisis had reduced the value of
the home to a level far below the original purchase price of the home. (Tr. 49-50) He
realized he could no longer provide his children a permanent home where they could
establish roots in the community as they matured. (Tr. 50)
Between the end of May 2009 and June 11, 2009, Applicant relocated his family into
a home that they rent for $2,500 a month (Tr. 51). Then, he returned to his overseas
assignment. On June 11, 2009, the house was foreclosed and sold at auction for about
$420,000 on July 20, 2009. Applicant received an Internal Revenue Service (IRS) tax form
(1099-A) indicating that June 11, 2009 (date of foreclosure) was the date of the lender’s
acquisition of the property, and that Applicant was liable for the balance owed on the
property. (GE 3 at 201) Appellant never received an IRS 1099-C form on the property. The
sale of the property apparently resolved the first mortgage. (SOR ¶ 1.a) The credit reports
reflect a zero balance owed on the first mortgage. (GE 6, GE 7)2
Applicant never received an IRS 1099-A or 1099-C form for the second loan
($168,000). When he called the lender, he was informed the loan had been “charged off,”
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which he mistakenly understood to mean he was no longer liable. He now understands he
owes the loan. He hired an attorney on February 27, 2012, to resolve the loan. (AE B) The
attorney informed him that it usually takes about 30 days for the lender to begin discussions
on the loan. (Tr. 57-58, 64) Applicant is able to settle the loan, but cannot pay the entire
amount in a single payment. One reason is that while he is stationed stateside, his income
is only $6,000 or $7,000 a month. He is living in one area of the United States while his
family is living in another area. His employer will not deploy him overseas while his security
clearance is under review. (Tr. 65-67)
The only delinquent credit entry in Applicant’s credit reports is the second loan for
$168,000. GE 5 (May 29, 2004) reflects an unrelated bank loan that was 30 days late, but
was paid and closed. The remaining entries show the accounts were paid satisfactorily, in
good standing, or paid as agreed. (Id.)
GE 6 (March 23, 2010) shows a lien filed in 2007 that was released in June 2006.
(GE 3 at 172) The lien does not appear in more recent credit reports. The exhibit also
reflects a student loan in collection and charged off. (Id. at 7) Next, the exhibit lists the first
and second mortgages of the house that was foreclosed. The first mortgage is listed as
having a zero balance. The second mortgage is $168,000. (Id. at 8) Except for an entry
listed as 30 days late, the remainder of the report indicates the accounts were being paid
as agreed. (Id.)
GE 7 (April 17, 2011) reflects no delinquent accounts except for the second
mortgage. (Id. at 192A) The most recent credit report dated November 3, 2011, lists the
second mortgage on the foreclosed property as Applicant’s only delinquent account. (GE
8) The school loan does not appear in the most recent credit report. 
Character Evidence
Applicant provided character statements from five individuals who are coworkers and
friends. The first character statement comes from a lead scientist who observed Applicant
while he was team leader on a project from February 2011 to January 2012. According to
the scientist, Applicant delivered a reliable and professional performance. (AE C)
The second reference believes Applicant is trustworthy and reliable. A coworker for
the past three years has found Applicant to be trustworthy. Another coworker of six years
credits Applicant’s outstanding leadership qualities. In February 2010, a fifth reference
indicated that he had known Applicant for several years as a coworker and friend, and
recommended him for a position of trust. (Id.) 
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Policies
Under Directive ¶ E3.1.4., 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 for obtaining a favorable security decision.
Analysis
Financial Considerations 
The security concern for financial considerations is set forth 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.
There are three disqualifying conditions under AG ¶ 19 that apply:
AG ¶ 19(a) inability or unwillingness to satisfy debts; and 
AG ¶ 19 (c) a history of not meeting financial obligations.
In July 2006, Applicant purchased a home he could afford with his overseas duty pay.
After regularly paying the mortgage for the next two years, his wife informed him the
property had lost 60% of its value. In November 2008, Applicant decided to accept the
lender’s implied recommendation to let the mortgage lapse for three months, believing that
a loan modification could be negotiated. Although he could have continued to pay the
mortgage, he decided to let the property foreclose because of the huge loss in the property’s
value. Applicant’s unwillingness to pay the delinquent mortgage falls within the scope of AG
¶ 19(a). 
The 10-month period when Applicant’s first mortgage loan was in default represents
a history of not meeting financial obligations. The second loan is still in default. AG ¶ 19(c)
also applies. 
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Four conditions under AG ¶ 20 could potentially mitigate Applicant’s delinquent
indebtedness: 
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; 
AG ¶ 20(b) the conditions that resulted in the financial problem were largely
beyond the person’s control, and the person acted responsibly under the
circumstances; 
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; and
AG ¶ 20(d) the individual initiated a good-faith effort to repay overdue
creditors or otherwise resolve debts; and 
The foreclosure of Applicant’s property occurred in June 2009. Between August 2008
and June 2009, both Applicant and his wife repeatedly tried to obtain a loan modification.
When Applicant received the foreclosure notice at the end of May 2009, he decided to allow
the property to be foreclosed. The only alternative to the foreclosure was to pay the
delinquent mortgage on property that had lost 60 per cent of its value. Faced with two
unappealing options, Applicant decided to accept the foreclosure and move on with his life.
I am confidant Applicant is not going to place himself in similar circumstances in the future.
The mortgage cited in SOR ¶ 1.a has been resolved. Now that he knows he is responsible
for the $168,000 second mortgage, he is taking responsible action to address the
delinquency. His affirmative conduct is indicative of trustworthiness and good judgment
under AG ¶ 20(a).
Applicant receives mitigation under AG ¶ 20(b). When his wife informed him about
the 60 per cent drop in their home’s value, they contacted the lender to arrange a loan
modification agreement. They acted responsibly under the circumstances by repeatedly
calling lender to procure a loan adjustment. Obviously, the inaction by the lender was due
to being inundated with similar requests by borrowers that the lender was not equipped to
handle. Rather than continue to pay the mortgage for property that was worth less than half
the mortgage, Applicant acquiesced to the foreclosure. 
Applicant’s first mortgage has been resolved by the sale of the property in July 2009.
He is actively addressing the second mortgage. The credit bureau reports, which show that
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Applicant has no other delinquent debt,  demonstrates that he is living within his means and
has incurred no new debt. Applicant receives some mitigation under AG ¶¶ 20(c) and 20(d).
Personal Conduct
The security concern for personal conduct is set forth in AG ¶ 15:
AG ¶ 15. Conduct involving questionable judgment, lack of candor,
dishonesty, or unwillingness to comply with rules and regulations can raise
questions about an individual’s reliability, trustworthiness and ability to protect
classified information. Of special interest is any failure to provide truthful and
candid answers during the security clearance process or any other failure to
cooperate with the security clearance process. 
AG ¶ 16 contains one disqualifying condition that may be applicable: 
AG ¶ 16(c) credible adverse information in several adjudicative areas that is
not sufficient for an adverse determination under any other single guideline,
but which, when considered as a whole, supports a whole-person assessment
of questionable judgment, untrustworthiness, unreliability, lack of candor,
unwillingness to comply with rules and regulations, or other characteristics
indicating that he may not properly safeguard classified information.
When viewed in isolation, Applicant’s decision to stop paying his mortgage in
November 2008 establishes a deliberate breach of his mortgage contract with the lender to
pay his monthly mortgage on a regular basis. AG ¶ 16(c) applies because Applicant’s rules
violations constitutes a whole-person assessment of poor judgment. 
There is one mitigating condition under AG ¶ 17 that is potentially applicable to the
circumstances in this case. Those conditions is: 
AG ¶ 17(d) the individual has acknowledged the behavior and obtained
counseling to change the behavior or taken other positive steps to alleviate
stressors, circumstances, or factors that caused untrustworthy, unreliable or
other inappropriate behavior, and such behavior is unlikely to recur.
Because Applicant wanted to save his home, he relied on the lenders’s veiled advice
to allow the mortgage to become delinquent, an extenuating circumstance that ultimately
resulted in Applicant losing his home to foreclosure when the lender could not structure a
modification agreement after ten months. Applicant no longer owns the property. The first
mortgage has been resolved and Applicant is taking responsible action to resolve the 
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second mortgage. The factors that caused the foreclosure are unlikely to recur. AG ¶ 17(d)
applies.
Whole-Person Concept 
In evaluating Applicant’s security clearance worthiness, the administrative judge
should consider the following factors of the whole-person concept:
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 the
participation was 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.
The determination of whether the granting or continuing of eligibility for a security
clearance is clearly consistent with the interests of national security must be an overall
common sense judgment based upon careful consideration of the financial guideline, which
is to be evaluated in the context of the whole person. AG ¶ 2(c)
The potentially disqualifying and mitigating conditions have been considered in light
of all the facts and circumstances of this case. Applicant graduated from a military academy
in 1990. He served his country for seven years until he had to leave the service in 1997
because of an eye injury. He has worked for the same employer since 2006. His work
occurs inside combat zones and his job involves neutralizing improvised explosive devices.
He is considered trustworthy and reliable with outstanding leadership qualities. 
In August 2008, Applicant’s wife told him their home had lost 60 per cent of its value.
Because he wanted to save his home, he yielded to the lender’s veiled recommendation of
not paying his mortgage. He had a reasonable expectation the lender was going to negotiate
an agreement that allowed him to retain his home. When the lender instead notified him ten
months later that his home would be foreclosed, he faced a difficult decision which he had
to make in approximately 11 days. Though he could have continued to pay the mortgage,
he did not want to continue to pay a mortgage that was more than twice the value of the
home. Except for the second mortgage, no other delinquent accounts appear in Applicant’s
credit reports. Having weighed and balanced the disqualifying evidence with the mitigating
evidence, the financial and personal conduct guidelines are resolved in Applicant’s favor.
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Formal Findings
Paragraph 1 (Financial Considerations): FOR APPLICANT
Subparagraphs 1.a, 1.b: For Applicant
Paragraph 2 (Personal Conduct): FOR APPLICANT
Subparagraph 1.a: 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 Applicant access to classified information.
Eligibility for access to classified information is granted. 
Paul J. Mason
Administrative Judge