KEYWORD: Guideline F
DIGEST: Judge’s adverse conclusion based, in part, on statements that were not supported by
the record.  Judge went beyond the plain language of the Guidelines in analyzing Applicant’s
response to his debts.  Adverse decision remanded.
CASE NO: 11-09258.a1
DATE: 09/30/2013
DATE: September 30, 2013
In Re:
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Applicant for Security Clearance
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ISCR Case No. 11-09258
APPEAL BOARD DECISION
APPEARANCES
FOR GOVERNMENT
James B. Norman, Esq., Chief Department Counsel
FOR APPLICANT
Pro se
The Department of Defense (DoD) declined to grant Applicant a security clearance.  On
March 1, 2013, DoD issued a statement of reasons (SOR) advising Applicant of the basis for that
decision–security concerns raised under Guideline F (Financial Considerations) of Department of
Defense Directive 5220.6 (Jan. 2, 1992, as amended) (Directive).  Applicant requested a decision
on the written record.  On July 30, 2013, after considering the record, Defense Office of Hearings
and Appeals (DOHA) Administrative Judge Robert E. Coacher denied Applicant’s request for a
security clearance.  Applicant appealed pursuant to Directive ¶¶  E3.1.28 and E3.1.30.
1“[T]he 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[.]”
2“[T]he 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[.]” 
3“[T]he individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts[.]”
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Applicant raised the following issue on appeal: whether the Judge’s adverse decision was
arbitrary, capricious, or contrary to law.  Consistent with the following, we remand the decision to
the Judge.
The Judge’s Findings of Fact
Applicant has worked for his current employer, a Defense contractor, since October 2010.
He was unemployed from March 2009 until October 2010.  He served on active duty with the U.S.
military from 1982 to 1986, when he received an honorable discharge.
Applicant has two delinquent debts, one for a home equity loan in the amount of about
$60,000 and the other a mortgage which is past due in the amount of $45,000.  His problems resulted
from his unemployment, when he exhausted his savings while looking for work.  He sought a loan
modification on his mortgage, but it was denied in 2010.  In August 2011, he retained a law firm to
assist in negotiating with his creditors.  The last correspondence regarding his mortgage was dated
January 2013.  There is no record evidence showing any modification to Applicant’s home equity
loan.  The last correspondence regarding the home equity loan was dated September 2012 and shows
a new servicing creditor for the loan.  In his response to the File of Relevant Material (FORM),
Applicant stated that he had sufficient funds to qualify for a modified mortgage loan, although he
did not corroborate this claim.
The Judge’s Analysis
The Judge concluded that Applicant’s delinquent loans raised security concerns under
Guideline F.  In further concluding that Applicant had not mitigated these concerns, the Judge cited
to evidence that the debts were recent and unresolved.  He stated that there is no evidence that the
law firm Applicant hired had produced favorable results concerning the mortgage.  Additionally,
there is no evidence of any action at all to resolve the home equity loan.  This demonstrates a lack
of responsible behavior.  AG ¶20(b)1  He stated that Applicant had not presented evidence of
financial counseling.  The Judge also concluded that there is no clear evidence that Applicant’s
financial problems are being resolved or are under control because both debts remain unpaid.  There
is no evidence that Applicant has made a good-faith effort to pay the remaining debts.  AG ¶¶20(c)2
and 20(d)3 do not apply.  In the whole-person analysis, the Judge stated that Applicant had not
4“[T]he 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[.]”
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demonstrated a track record of financial stability and that the record lacks evidence that Applicant
has made an overall good-faith effort to resolve his debts.
Discussion
Applicant asserts that he has acted responsibly and in good-faith throughout the period of
his financial difficulties and that the home loan modification process is still ongoing and under
control.  He takes issue with the Judge’s statement that there is no record evidence of action to
resolve the home equity loan and that this demonstrates a lack of responsible behavior.  Applicant
also disagrees with the Judge’s statement that, although he hired a law firm to negotiate a home
mortgage modification, nothing resulted from that effort.  Applicant states that this comment
suggests that the loan modification process is complete, whereas the modification process is still
ongoing.  Applicant asserts that the Judge erred when he concluded that AG ¶¶20(a),4 20(c), and
20(d) do not apply and that 20(b) partially applies.
Applicant cites to his interview summary, included in Item 6, Response to Interrogatories,
to the effect that the law firm was seeking to combine the home equity loan with the mortgage and
modify them in one effort.  This constitutes evidence that Applicant made efforts to resolve the
home equity loan.  Thus, the challenged statement by the Judge was erroneous as was his follow-on
conclusion that Applicant’s failure to address the home equity loan demonstrated a lack of
responsible behavior, inasmuch as his conclusion about a lack of responsible behavior appears to
be based specifically on the Judge’s statement regarding inattentiveness to the home equity loan.
Applicant argues that the Judge erred when concluding that although he hired a law firm to
negotiate a home mortgage modification, nothing resulted from that effort.  Applicant is correct in
stating that the Judge’s language could reasonably be interpreted as a conclusion that efforts to
negotiate a mortgage modification have terminated.  There is no record evidence to support a finding
that mortgage negotiation efforts have ceased, and, to the extent that the Judge so finds, his finding
is in error.  On appeal,  Applicant has presented evidence not contained in the record consisting of
letters from his mortgage lender concerning the proposed modification.  These documents are
evidence of ongoing modification efforts.  We cannot consider new evidence on appeal.  See, e.g.,
ISCR Case No. 11-09742 at 2 (App. Bd. Jul, 8, 2013), nor can the Judge be charged with error based
on documents that were never before him.  However, there is record evidence indicating ongoing
efforts at loan modification.  Applicant’s answer to the SOR (Item 4), Item 6, and Applicant’s June
28, 2013 response to the Government’s File of Relevant Material all reference ongoing efforts to
obtain loan modification.
Applicant’s disagreement with the Judge’s statement that “nothing resulted from that effort”
(referencing loan modification) raises another issue.  The Judge is basing his conclusion that
Applicant failed to demonstrate responsible behavior in part on his finding that loan modification
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efforts did not produce results.  AG ¶20(b) requires that an applicant act responsibly under the
circumstances.  It is silent as to results.  To the extent that the Judge based his conclusion that
Applicant failed to act responsibly on lack of results, the Judge erred, especially in light of evidence
that Applicant took numerous steps in an attempt to address his indebtedness.  Of course, the Judge
was entitled to assess record evidence of Applicant’s conduct to determine if it constituted acting
responsibly for the purposes of AG ¶20(b).  On this record, however, it was error for the Judge to
go beyond the plain language of the Guidelines and rely on the results (or lack thereof) of
Applicant’s conduct.          
In this case, the evidence establishes that Applicant paid on the mortgage and the home
equity loan after losing his job and continued to pay until his savings were exhausted.  He then
attempted to work with the lender to obtain payment modifications on the loans.  When he
experienced difficulties in working with the lender, he hired an attorney to negotiate with the lender
on his behalf.  There is no evidence that Applicant or his attorney have abandoned the negotiation
process.  This is substantial evidence of responsible conduct.
On remand, the Judge should issue a new decision after correction of identified errors and
should reevaluate the applicability of AG ¶20(b) and ¶20(d). 
Order
The Decision of the Judge is REMANDED.  
Signed: Michael Y. Ra’anan          
Michael Y. Ra’anan
Administrative Judge
Chairperson, Appeal Board
Signed: Jeffrey D. Billett                
Jeffrey D. Billett
Administrative Judge
Member, Appeal Board
Dissenting Opinion of Administrative Judge James E. Moody
I disagree with my colleagues.  The record contains various letters from the lender discussing
options for Applicant in his efforts to obtain mortgage assistance.  The last one, dated January 31,
2013, requests additional documentation from Applicant, but the record contains no evidence of a
response.  Applicant’s reply to the FORM was dated June 28, 2013, almost five months later.  This
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reply restates information already contained in the file, but it does not provide any evidence as to
efforts at debt resolution after January 2013 beyond an uncorroborated statement that Applicant is
complying with his lawyer’s strategy.  The Judge’s view that there is insufficient evidence of
responsible action is consistent with the record that was before him.  I would affirm.
Signed: James E. Moody           
James E. Moody
Administrative Judge
Member, Appeal Board