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                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)         ISCR Case No. 11-07982
)
)
Applicant for Security Clearance )
Appearances
For Government: Alison O’Connell, Esq., Department Counsel
For Applicant: James S. Delsordo, Esq.
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Decision
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MASON, Paul J., Administrative Judge:
Applicant mitigated his delinquent credit card debt through settlement. He is actively
engaged in seeking a home loan modification for his primary mortgage. However, he has
taken no action to address his second mortgage or the $205 medical debt. Applicant has
not mitigated the security concerns raised under the financial considerations guideline.
Eligibility for access to classified information is denied. 
Statement of the Case
Applicant completed and signed an Electronic Questionnaire for Investigations
Processing (e-QIP), identified as Government’s Exhibit (GE 1), on December 1, 2010. He
was interviewed by an investigator from the Office of Personnel Management (OPM) on
December 20, 2010. The interview summary appears in GE 2, Applicant’s interrogatory
 Page number cites from Applicant’s e-QIP and interview summary are typed and located in the upper right1
hand corner of the page. Page number cites from other exhibits are handwritten and appear in the lower right
portion of the exhibits, except where otherwise noted. 
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answers, dated July 3, 2012. Applicant responded “yes” when asked whether he agreed
summary could be admitted in evidence at a hearing to determine his security suitability.
(GE 2)
On September 20, 2012, the Department of Defense issued a Statement of Reasons
(SOR) detailing security concerns under financial considerations (Guideline F). The action
was taken pursuant to 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 furnished his notarized answer to the SOR on September 29, 2012. The
Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on February
8, 2013, for a hearing on March 1, 2013. The hearing was held as scheduled. Five
Government exhibits (GE 1-GE 5) were admitted in evidence without objection. Applicant
testified and offered three exhibits (AE) A-C that were admitted into evidence without
objection. Applicant’s three post hearing exhibits (AE D-F) were admitted into evidence
without objection. The transcript was received on March 7, 2013. The record closed on
March 19, 2013. 
Findings of Fact
The SOR contains four allegations under the financial considerations guideline.
Applicant admitted SOR 1.a. He settled the account on September 19, 2012. He admitted
SOR 1.b, and stated that he had complied with every request of the lender for approval of
a home loan modification agreement (HMA). He admitted SOR 1.c (second mortgage) and
was told the account was written off and no longer existed. Applicant denied SOR 1.d
because he could not identify the debt or collection agency. 
Applicant is 35 years old. He has been married since February 2000. He has three
children, 11, 8, and 3 years old. He studied computer technology in college for two years,
but received no degree. From August 2010 to the present, Applicant has been employed
as a systems engineer with employer C. Before his current employment, he worked as a
systems engineer for employer B between May 2009 and August 2010. He was a computer
engineer from 1999 to May 2009 with employer A. He has held a security clearance for the
past three years with no record of a security violation. He was investigated for a security
clearance in August 2005. (Tr. 18; GE 1 at 14-16, GE 2 at 3)1
 Applicant’s credit report reflects the account was opened in October 2006. (GE 2 at 186)2
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By May 2009, Applicant had been working full-time as a computer engineer for
employer A for 10 years, where he was earning $62,000 a year. A new employer won the
contract and decreased Applicant’s salary by 40%. Applicant resigned from employer A and
was unemployed for about 30 days before being hired by employer B at a salary of about
$79,000. He was employed with employer B until the Department of State replaced
employer B with a major contractor to perform a project. Applicant currently earns about
$80,000 with employer C. (Tr. 30-33; GE 1 at 14-16)
Applicant’s wife was fired from her job because her employer did not provide
maternity leave. She was unemployed for about three months between March and June
2009. She found another job. Her current salary is $72,000. (Tr. 33-34, 52) 
Applicant purchased his home in August 2005 for about $500,000, with an “80/20
mortgage loan,” consisting of two mortgage loans on the same home to make the home
more affordable for the buyer. His monthly mortgage payments were almost $4,000 a
month. Applicant refinanced the home in August 2006 and withdrew $60,000 in equity to
pay some debts that he indicated were not delinquent. Applicant testified that in 2007, he
obtained another equity loan of $20,000 to pay bills that were not delinquent debts. (Tr. 36,
49)  He claimed he is now current on the 2007 equity loan which has a monthly payment2
of $352. Applicant’s credit report shows the account as past due as of June 2012. The
creditor designated the account in repayment phase with credit no longer available. (Tr. 28,
36, 49; GE 2 at 186)
Applicant became delinquent on the listed mortgages in 2008 when his wife, who
had been paying the second mortgage, lost her job. She found other employment, but
Applicant never caught up on the two mortgages. (Tr. 21, 35-39) As shall be addressed
later in the factual findings, Applicant furnished different positions about when he
completely stopped paying on both mortgages. 
Applicant applied for a home HMA in 2009. He was approved for the trial payments
(a method for the lender to determine whether he could afford the HMA). He paid the three
trial payments, but the HMA was not approved. The SOR 1.b creditor did not supply
Applicant with a reason. Applicant claimed that he continued to make payments on the
mortgage. (Tr. 25, 38-40) No additional evidence of payment information was provided.
Applicant stopped making payments on the mortgage in the middle of 2011 on the
advice of the Neighborhood Assistance Corporation of America (NACA), a non-profit
organization that assists mortgagors to obtain fair home modification agreements from their
lender. The organization told Applicant that to get an HMA from the SOR 1.b lender, he
 In GE 2, he claimed that he made a payment to the SOR 1.b lender in May 2012. The undated exhibit is a3
notice from the lender requesting payment. It is not evidence of a payment by Applicant. (GE 2 at 179)
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should stop paying the mortgage. Another reason Applicant stopped paying the mortgage
was because of the times the lender returned his mortgage payments. He has not made
any payment on his mortgage since the middle of 2011. (Tr. 22-23, 42)
Applicant began his second HMA process by making payments in February 2012
under a trial modification. The SOR 1.b lender told Applicant the purpose of the payments
was to find out whether the mortgagor could afford the loan. He testified that he had made
three payments under the trial modification, but had not brought the supporting documents
with him. (Tr. 43-45)3
Applicant believed his most recent HMA would be approved because the SOR 1.b
creditor has continually communicated with him by mail or telephone. Though he was not
present during the telephone conversation, Applicant believed his home was under an HMA
because a loan officer talked to Applicant’s wife on February 27, 2013. He submitted AE
E which states that qualification for the modification agreement required a three-month trial
period. During the three-month period, a payment of $2,952 would be due on the first of
April 2013, and at the beginning of the next two months. (Tr. 45; AE E) No payments have
been made under the trial payment procedure.
The debts will be discussed in the order they appear in the SOR:
SOR 1.a (Resolved), $7,713, credit card. The account was opened in April 2007.
The last activity on the account was July 2009, and it was charged off in March 2010.
Applicant provided proof the account was settled on September 19, 2012. SOR 1.a is
resolved in Applicant’s favor. (GE 2 at 189; Tr. 20, 45; AE B, D)
SOR 1.b (Beginning HMA process trial payment period), primary mortgage that is
delinquent by $19,101, with a balance of $443,488. The account was opened in August
2005, with the last activity posted as October 2011. (GE 2 at 220) Applicant’s attempts to
obtain an HMA agreement have been addressed earlier in this section. Applicant’s
testimony intimates he was involved in three, not two, home loan modifications. The
documentation provided by Applicant concerning his attempts to obtain an HMA warrant
a finding in his favor under SOR 1.b.
SOR 1.c (Unresolved), second mortgage, $168,000. The account was opened in
September 2006 and charged off in May 2012. Last activity on the account was October
2011. Applicant explained in his answer that the SOR 1.b lender told him the second loan
was written off and no longer existed. The SOR 1.c lender has contacted Applicant, but he
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does not intend to reply until he receives something in writing from the lender. He has made
no payments on the second mortgage. (Tr. 23-24, 45)
SOR 1.d, $205 (Unresolved), medical account. The account was transferred to a
collection agency in March 2009 by the original creditor. At the hearing, Applicant surmised
the account could be for medical services. If someone presented documentation that
indicated it was for medical services, he would pay the debt. He made a phone call to the
collection agency about the debt. About eight months before the hearing, he disputed the
debt on the Internet. He indicated he had proof of his search, but he did not bring that
evidence to the hearing. Later he testified that he disputed SOR 1.d with the three credit
agencies, but received no reply. Applicant intended to contact the collection agency to
resolve the debt. (Tr. 27-28, 47-49, 60-61)
Applicant has never had financial counseling. He consulted with a law firm providing
HMA services. After discovering the law firm was unable to provide assistance, Applicant
contacted NACA in the middle of 2011. (Tr. 25, 42; GE 2 at 181)
Applicant indicated he has saved about $11,000 that he would have normally used
to pay the mortgages. The savings account is at his primary bank. When the home loan
modification is approved, Applicant intends to begin payments on the primary mortgage.
(Tr. 56, 58-59) No additional evidence of a savings account was submitted.
The monthly net income of Applicant and his wife totals $9,100. When the two
monthly mortgage payments are added to Applicant’s list of monthly debt and expense
payments, his July 2012 monthly debts and expenses ($11,184) exceed his combined net
income by $2,084. He will eliminate the shortfall by buying less food and using less gas for
his car. (GE 2 at 176; Tr. 54-55)
Policies
When evaluating an applicant's suitability for a security clearance, the administrative
judge must consider the AG. Each guideline lists potentially disqualifying conditions and
mitigating conditions, which are useful in evaluating an applicant's eligibility for access to
classified information.
The disqualifying and mitigating conditions should also be evaluated in the context
of nine general factors of the whole-person concept to bring together all available, reliable
information about the person, past and present, favorable and unfavorable, in making a
decision for security clearance eligibility. Decisions include, by necessity, consideration of
the possible risk the applicant may deliberately or inadvertently fail to protect or safeguard
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classified information. Such decisions entail a certain degree of legally permissible
extrapolation as to the potential, rather than actual, risk of compromise of classified
information.
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 of establishing that it is clearly consistent with the
national interest to grant him a security clearance. 
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. Compulsive gambling is a concern
as it may lead to financial crimes including espionage. Affluence that cannot
be explained by known sources of income is also a security concern. It may
indicate proceeds from financially profitable criminal acts.
The Government has the responsibility of presenting sufficient information to support
all allegations under the financial considerations guideline. Based on the credit reports (GE
3, 4, and 5), Applicant’s interview summary, his interrogatory responses, and the record
transcript, the Government has established its case. 
The two pertinent disqualifying conditions under AG ¶ 19 are: 
(a) (inability or unwillingness to satisfy debts); and 
(c) (a history of not meeting financial obligations). 
As of the date of the SOR, Applicant’s four delinquent accounts included a credit
card account, two mortgages, and a medical account. Though SOR 1.d was the first listed
account to become delinquent in March 2009, the preliminary signs of financial difficulty
emerged in August 2006, one year after purchasing his home, when Applicant refinanced
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his home to obtain a $60,000 equity loan to pay bills. Two months later, he obtained a
$20,000 loan to pay bills in October 2006. In 2008, the second mortgage became
delinquent after his wife lost her job. They have not been able to restore either mortgage
to a current status. AG ¶¶ 19(a) and 19(c) are applicable. 
Five mitigating conditions under AG ¶ 20 are potentially pertinent: 
(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 reliability, trustworthiness, and good judgment); 
(b) (the conditions that resulted in the financial problem were largely beyond
the person's control 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); 
(d) (the individual initiated a good-faith effort to repay overdue creditors or
otherwise resolve debts); and 
(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).
Applicant owes more than $168,000 for the second mortgage (SOR 1.c) and the
medical debt (SOR 1.d). He has been delinquent to both creditors for more than three
years. It is likely that he will continue to be indebted to both creditors in the near future. His
failure to address either account continues to cast doubt on his reliability, trustworthiness,
and good judgment. AG ¶ 20(a) does not apply. 
Applicant’s mortgage problems were triggered by his wife’s loss of employment in
2008, an unforeseen event beyond Applicant’s control. Though she and Applicant were
unemployed for different periods of time in 2009, they have both been employed
continuously since then. Under the second prong of the mitigating condition, an applicant
must also show that he acted “responsibly under the circumstances.” Applicant provided
no documentary evidence of steps taken to resolve the second mortgage or the medical
debt. AG ¶ 20(b) applies only in part based on the unanticipated unemployment of his
Applicant and his wife in 2008 and 2009. 
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Applicant never had financial counseling. His consultation with the home loan
modification law firm was unsuccessful. He exercised good judgment by settling the
delinquent credit car account (SOR 1.a) debt and actively pursuing a home loan
modification with the first mortgage lender (SOR 1.b). However, he has done nothing to
resolve the two remaining accounts. Without a plan to deal with his second largest
delinquent account and documented action to resolve the account, I am unable to conclude
his financial problems are being resolved or under control. AG ¶ 20(d) applies to Applicant’s
good-faith efforts in handling the first two listed accounts. On the other hand, Applicant
receives no credit under AG ¶ 20(c).
Applicant made claims about disputing the medical debt identified in SOR 1.d. The
mitigating condition requires an applicant to provide a reasonable basis for the dispute and
documented proof to support the dispute. The record contains no documentation to confirm
that Applicant formally disputed the medical account. AG ¶ 20(e) does not apply.
Whole-Person Concept 
I have examined the evidence under the disqualifying and mitigating conditions of
the financial considerations guideline. I have also weighed the circumstances within the
context of nine variables known as the whole-person concept. In evaluating the relevance
of an individual's conduct, the administrative judge should consider the following factors set
forth in 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.
Under AG ¶ 2(c), the ultimate determination of whether to grant eligibility for a
security clearance must be a commonsense judgment based on careful consideration of
the guidelines and the whole-person concept.
The record reflects that Applicant is 35 years old. He attended college for two years,
where he studied information technology. Except for about 30 days in May 2009, he has
been continuously employed in the information technology field since at least 1999. There
is no record of security violations. Applicant has been married since 2000, and has three
children. In September 2012, he settled a credit card debt. From 2009 to the present, he
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has been actively engaged in obtaining a home loan modification, and is currently in a
three-month trial period payment plan.
What is missing from Applicant’s case in mitigation is financial counseling which
could have influenced Applicant to make more responsible decisions about his financial
practices. Purchasing a less expensive home and prudent use of credit could have averted
the necessity to obtain $80,000 in loans in 2006 and to incur mortgage delinquencies in
2008. Applicant’s July 2012 complete list of debts and expenses (including the two
mortgages) exceeds the combined monthly income of Applicant and his wife by $2,084.
Applicant’s financial problems are not under control. Having weighed and balanced the
evidence under the disqualifying and mitigating conditions, and in the context of the whole-
person concept, Applicant has not mitigated the security concerns under the financial
considerations guideline. 
One additional issue warrants discussion. Applicant cited two hearing level cases
(ISCR Case No. 11-06512, Jan. 15, 2013, ISCR Case No. 04-06180, Mar. 20, 2006) to
support his position that the whole-person concept supports a finding in Applicant’s favor.
Hearing-level decisions are not binding on other administrative judges even when factual
similarities may exist between the cited decision and the case to be decided. Each of the
cited cases is factually distinguishable from the instant case primarily because the applicant
was more active in addressing all listed debts and in settling debts when able. 
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): AGAINST APPLICANT
      Subparagraph 1.a, 1.b: For Applicant
      Subparagraph 1.c, 1d: 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. 
Paul J. Mason
Administrative Judge
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