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                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
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-------------------------- )       ISCR Case No. 11-08119
)
)
Applicant for Security Clearance )
Appearances
For Government: 
Melvin A. Howry, Esq., Department Counsel
For Applicant:
Pro se
May 22, 2013
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DECISION
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ROSS, Wilford H., Administrative Judge:
Applicant submitted her Electronic Questionnaire for Investigations Processing
(e-QIP) on December 22, 2010. (Government Exhibit 4.) On August 3, 2012, the
Department of Defense issued a Statement of Reasons (SOR) detailing the 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 adjudicative guidelines (AG) effective within the Department of
Defense for SORs issued after September 1, 2006. 
 
Applicant answered the SOR in writing on August 21, 2012, and requested a
hearing before an administrative judge. (Answer.) Department Counsel was prepared to
proceed on October 30, 2012. This case was assigned to me on November 7, 2012.
DOHA issued a notice of hearing on December 5, 2012. I convened the hearing as
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scheduled on January 16, 2013. The Government offered Government Exhibits 1
through 10, which were received without objection. Applicant testified on her own
behalf, and submitted Applicant Exhibits A through I, which were also received without
objection. Applicant asked that the record remain open until February 1, 2013, for the
receipt of additional documents. Applicant submitted Applicant Exhibits J and K on
January 23, 2013, which were admitted without objection. DOHA received the transcript
(Tr.) of the hearing on January 24, 2013. The record closed on February 1, 2013. Based
upon a review of the pleadings, exhibits, and testimony, eligibility for access to classified
information is granted.
Findings of Fact
Applicant is 37 and married to her second husband. She is employed by a
defense contractor and seeks to retain a security clearance in connection with her
employment. 
Guideline F, Financial Considerations
The Government alleges that Applicant is ineligible for clearance because she is
financially overextended and, therefore, at risk of having to engage in illegal acts to
generate funds. Applicant admitted the two factual allegations in the SOR. Those
admissions are findings of fact. She also submitted additional information to support her
request for a security clearance.
The two debts contained in the SOR are the second (1.a) and first (1.b)
mortgages of what was Applicant’s house before it was sold at a foreclosure sale. The
SOR alleges total delinquencies of approximately $313,534. Both debts are supported
by credit reports of October 11, 2008; and February 18, 2010. (Government Exhibits 2
and 3.) The first mortgage debt, in the amount of $220,000, is also supported by credit
reports of January 12, 2011; April 23, 2012; and January 9, 2013. (Government Exhibits
5, 7, and 10.) Two credit reports supplied by Applicant dated August 1, 2012; and two
more dated December 19, 2012, also support the existence of the debts. (Applicant
Exhibit A at Attachments 2, 3; Exhibits C and D.)
Applicant and her husband bought the house at issue in 2004. They did this
using an “80/20" loan. In other words, the first mortgage covered 80% of the purchase
price and the second mortgage the remaining 20%. The first mortgage was an
adjustable rate mortgage (ARM). Beginning in 2007 Applicant tried to refinance both
loans. At that time the housing market was beginning to collapse in the state where the
house was located. Applicant’s house was underwater and they were unable to
refinance. (Tr. 38, 102-104.)
Applicant’s husband began suffering from a chronic illness in 2007. He quickly
found himself unable to work full or part time and their household income plummeted,
making it impossible for them to maintain payments on the house and pay their other
debts. He has not worked since February 2011. (Tr. 38, 92-98, 113-118.) As a result of
Applicant filed a law suit in December 2009, during the pendency of the loan modification. This case was1
dismissed without prejudice. (Applicant Exhibit A at Enclosures 5, 8 and 9.)
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continuing financial pressures, in 2008 Applicant began trying to sell her house.
Unfortunately, the house was located in a very depressed area, which was hard hit
during the financial crisis, and she was unable to sell the house. Several  attempts to
complete a short sale of the property failed. (Applicant Exhibit A at Attachment 4; Tr. 39-
41.)
Due to the inability to complete a short sale of the house, Applicant next began
the process of loan modification with her lender. This process took a considerable
period of time, starting in 2009 and extending into April 2011.  (Tr. 41-46, 98-102, 104-1
106.) Simultaneously, the first mortgage holder also began foreclosure proceedings
against Applicant. A trustee sale date was set for May 2, 2011. (Applicant Exhibit A at
Enclosure 1, page 7.) Applicant received a loan modification package from their lender
on approximately April 28, 2011. Applicant needed to respond in writing to the loan
modification offer by May 3, 2011. This response required them to provide $6,500 in
certified funds, in addition to various other documents. (Applicant Exhibit A at Enclosure
1, pages 5-6.) Applicant successfully did what the bank wanted, but it was too late. The
house was sold on May 2, 2011, and Applicant and her husband were forced to vacate
the premises by the new owner. (Applicant Exhibit A at Enclosure 1, page 7.) Applicant
subsequently received a Form 1099 from the mortgage company. (Applicant Exhibit J;
Tr. 107-108.)
Applicant and her husband responded to the bank’s conduct by filing a law suit
on or about May 25, 2011. The law suit was settled in May 2012 when the bank paid
Applicant $20,000. (Government Exhibit 8 at 21-24; Applicant Exhibit A at Enclosure 6,
Exhibit B; Tr. 46-59.) The law suit was subsequently dismissed in accordance with the
settlement agreement.
Turning to the second mortgage for $93,534. Once the market turned bad, and
Applicant’s husband was unable to work full-time because of his illness, they were
unable to pay this debt. Applicant was in frequent contact with this creditor starting in
2009. The original creditor charged off and sold the loan in 2010. (Applicant Exhibit A at
Enclosure 9; Tr. 60-61.)
Applicant was contacted by the successor in interest, a collection agency,
beginning in approximately July 2010. Applicant and her husband corresponded with the
collection agency several times in 2010 in writing in an attempt to resolve the debt.
(Government Exhibit 1 at 25-33.) First the collection agency offered a settlement
Applicant was not then in a position to pay. Then the agency sent Applicant a copy of
the original loan documents. The collection agency has not contacted Applicant since
August 2010. The debt is not found on any credit reports after 2010. Applicant and her
husband are ready and willing to resolve this remaining debt, as soon as someone will
talk to them. (Tr. 61-66.) 
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Applicant states that other than this house problem she had excellent credit.
Credit reports provided by the Government and Applicant show this fact to be true.
Applicant submitted an updated Personal Financial Statement at the hearing, which
shows that she is able to maintain her current debts without difficulty. (Applicant Exhibits
H and I; Tr. 35-37, 66-68, 78-79, 119-122.)
Mitigation
Applicant is a well respected person and employee who works in the security
area. She submitted letters of recommendation from her supervisors. These security
supervisors state that Applicant was very pro-active in informing her employers of the
financial situation as it developed. They also state, “The management team has
received numerous accolades of appreciation for [Applicant] from internal and external
customers.” She is described as a person who exceeds expectations, is extremely loyal
to her job, has been identified as an “Outstanding Performer” and has been promoted in
her job. (Applicant Exhibit A at Enclosure 8, page 34; Exhibits E and F.)
Applicant provided various certificates of appreciation she has received.
(Applicant Exhibit G.) She also provided her performance reviews for the years 2010
through 2012. These reports describe Applicant as someone who “consistently exceeds
established job responsibilities and goals within job level.” (Applicant Exhibit K.)
(Emphasis in original.)
Policies
Security clearance decisions are not made in a vacuum. 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 to be used as appropriate 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. In addition, the administrative judge may also rely on his or her own
common sense, as well as knowledge of the law, human nature, and the ways of the
world, in making a reasoned decision.
The protection of the national security is the paramount consideration. AG ¶ 2(b)
requires that, “Any doubt concerning personnel being considered for access to
classified information will be resolved in favor of national security.” In reaching this
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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, “The 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.”
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. Security clearance decisions include, by
necessity, consideration of the possible risk that 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.
 
Finally, as emphasized in Section 7 of Executive Order 10865, “Any
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.” 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:      
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(a), an Ainability or unwillingness to satisfy debts@ is potentially disqualifying.
Similarly under AG & 19(c), Aa history of not meeting financial obligations@ may raise
security concerns. Applicant, by her own admission, and supported by the documentary
evidence, had two mortgages that she could not resolve. The evidence is sufficient to
raise these potentially disqualifying conditions.
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The guideline also includes examples of conditions that could mitigate security
concerns arising from financial difficulties. Under AG ¶ 20(a), disqualifying conditions
may be mitigated where Athe 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.@ In addition, AG
¶ 20(b) states that disqualifying conditions may be mitigated where “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.”  
The evidence shows that both of the above mitigating conditions apply to
Applicant. Her financial situation was caused by a drop in her income, due to her
husband’s medical condition, along with the financial crisis. There is no evidence of poor
judgment on her part. Her home was foreclosed on by the bank after a four year effort to
refinance the mortgage, arrange a short sale, or modify the loan. To add insult to injury
the bank sold the house at a foreclosure sale the day before Applicant was supposed to
submit modification documents to the bank. This resulted in a law suit. The location of
her foreclosed house is in a state that was extremely hard hit by the housing crisis. She
and her husband have repeatedly attempted to resolve the second mortgage, without
success. Based on the particular facts of this case, I find that she has “initiated a good-
faith effort to repay overdue creditors or otherwise resolve debts,” as required by AG ¶
20(d).
Applicant has not received financial counseling. However, as found above, her
current financial situation is stable. I find that “there are clear indications that the
problem is being resolved or is under control,” as required by AG ¶ 20(c). In addition,
Applicant and her husband have been proactive in contacting her remaining creditor,
and attempting to resolve that second mortgage debt. Their actions bring them under
the orbit of AG ¶ 20(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 has acted in a way that shows good judgment, making the best she
could out of a difficult situation. All of these mitigating conditions apply to the facts of
this case.
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 the relevant circumstances. 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. The administrative judge should consider the nine adjudicative process factors
listed at AG ¶ 2(a): 
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(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.      
I considered the potentially disqualifying and mitigating conditions in light of all
the relevant facts and circumstances surrounding this case. Applicant’s financial
difficulties were not a result of poor judgment on her part. Rather, they were brought
about by the turmoil in the real estate market in 2008 and 2009, and the unexpected
loss of income by Applicant and her husband. Under AG ¶ 2(a)(2), I have considered
the facts of Applicant’s debt history. As stated above, this situation concerning the
foreclosed house is an aberration, and not indicative of her usual conduct. Based on the
record, I find that there have been permanent behavioral changes under AG ¶ 2(a)(6).
Accordingly, I find that there is little to no potential for pressure, coercion, exploitation,
or duress (AG ¶ 2(a)(8)); and that there is a low likelihood of recurrence (AG ¶ 2(a)(9)). 
Overall, the record evidence leaves me with no questions or doubts as to
Applicant’s eligibility and suitability for a security clearance. For all these reasons, I
conclude Applicant has mitigated the security concerns arising from her financial
situation. Accordingly, the evidence supports granting her request for a security
clearance.
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 and 1.b: For Applicant
Conclusion
In light of all of the circumstances presented by the record, it is clearly consistent
with the national interest to grant Applicant eligibility for a security clearance.  Eligibility
for access to classified information is granted.
                                              
WILFORD H. ROSS
Administrative Judge