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                              DEPARTMENT OF DEFENSE
               DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)       ISCR Case No. 11-14707
)
)
Applicant for Security Clearance )
Appearances
For Government: Braden M. Murphy, Esquire, Department Counsel
For Applicant: Pro se
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Decision
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WHITE, David M., Administrative Judge:
Applicant defaulted on the mortgage loan on his former residence after relocating
for valid family reasons. He was unable to sell the residence due to soil contamination
the previous owner failed to disclose. The loan is guaranteed by the VA, foreclosure
proceedings are ongoing, and he can pay any resulting debt. The evidence is sufficient
to mitigate resulting security concerns. Based upon a review of the pleadings,
testimony, and exhibits, eligibility for access to classified information is granted. 
Statement of the Case
Applicant submitted a security clearance application (SF-86) for a periodic review
on September 6, 2011. On March 4, 2013, the Department of Defense issued a
Statement of Reasons (SOR) to Applicant, detailing 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 for Determining Eligibility for Access to Classified Information,
effective within the Department of Defense after September 1, 2006. 
Applicant’s description of this rental during the hearing differs, in some details, from his statements during1
his security interview on October 3, 2011.  The differences are neither significant for evaluation of security
worthiness, nor indicative of any attempt to be deceptive on either occasion. 
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Applicant answered the SOR in writing on April 6, 2013 (AR), and requested a
hearing before an administrative judge. Department Counsel was prepared to proceed
on May 15, 2013. The case was assigned to me on May 23, 2013. The Defense Office
of Hearings and Appeals (DOHA) issued a Notice of Video Teleconference Hearing on
June 24, 2013, and I convened the hearing, as scheduled, on July 11, 2013. Applicant
and the court reporter attended the hearing in person. Department Counsel participated
from DOHA Headquarters by video teleconference. The Government offered Exhibits
(GE) 1 through 4, which were admitted without objection, and Hearing Exhibit (HE) I, a
Government exhibit list. Applicant offered Exhibits (AE) A through G, and testified on his
own behalf. I granted Applicant’s request to leave the record open until July 25, 2013, to
permit submission of additional evidence. Applicant timely submitted AE H through J.
Department Counsel had no objection to AE A through J, and they were admitted.
DOHA received the transcript of the hearing (Tr.) on July 23, 2013.
Findings of Fact
Applicant is a 32-year-old employee of a defense contractor, where he has
worked since April 2009. He has been married since 2004, and has three young
children. He is a high school graduate, and has taken some college courses. He was
honorably discharged from the Navy in August 2007, after serving for seven years on
active duty. He has been eligible for a security clearance in connection with his military
and post-service defense contractor positions. (GE 1; Tr. 6-8.) 
In his response to the SOR, Applicant admitted the truth of SOR ¶ 1.a, and
denied SOR ¶¶ 1.b through 1.d, with explanations. Applicant’s admissions, including his
statements in response to DOHA interrogatories (GE 4), are incorporated in the
following findings.
During the last six and a half years of his naval service, Applicant was stationed
in State A where he currently lives and works. He met and married his wife there. After
leaving the Navy in 2007, Applicant went to work for a private company in state B,
where he grew up. He and his wife bought their first home there in June 2008, with a
VA-guaranteed mortgage loan of about $139,000. His wife was unhappy living in State
B, where she had no friends or family, so in November 2008 Applicant interviewed for
and was offered his present position in State A. They rented their home in State B on
terms that provided sufficient funds to cover their mortgage payments, but the tenant
stopped paying rent shortly after moving in. The tenant moved out in February or March
2009 and the house was listed for sale during April 2009.  Applicant and his wife made1
all payments while they lived in the house and while it was rented, but could not afford
to continue payments while maintaining another household in State A. They made
several partial payments when possible, but the mortgage fell into default around mid-
2009. (AR; GE 1; GE 2; GE 4; Tr. 39, 53, 57-61, 66.)
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Shortly after the house was placed on the market, the listing agent informed
Applicant and his wife that the previous owner had permitted the county to use part of
the ten acres on which it is located to mix asphalt for a road project. As a result of this
activity, which was not disclosed when Applicant purchased the property, the land is
contaminated by oil and requires over $75,000 in restoration work. This problem was
not identified during the lender-approved pre-purchase property inspection conducted
for Applicant and his wife by a licensed real estate inspector. About 50 potential buyers
or agents inquired about or visited the property with the listing agent while it was on the
market through October 2010, but after being properly informed of its contaminated
status none remained interested. (AR; AE F; AE J; Tr. 39-41, 54-56, 61-63.)  
Upon discovering that the property was contaminated, Applicant consulted an
attorney who contacted the previous owner seeking to reverse the fraudulent sale or
obtain compensation. The previous owner was an attorney who had retired to another
state, and promised to resist and stall any efforts to hold him liable for failing to disclose
the contamination. Applicant’s attorney advised Applicant that compensation was
unlikely under the circumstances, and a short sale would be his best option. Applicant
contacted his mortgage lender and the VA for assistance with attempting to resolve the
situation. The mortgage lender initiated foreclosure proceedings in late 2009, and he
was advised to make no further payments toward the loan. Due to difficulties in
arranging an auction sale of the contaminated property, and reluctance to incur clean-
up responsibility by taking possession, the lender has not completed foreclosure
proceedings. Applicant was not aware of what, if any, steps the lender had taken with
respect to the VA guarantee of the loan and is awaiting further guidance from the VA.
The lender has not issued Applicant an IRS Form 1099 indicating either abandonment
or cancellation of the mortgage debt. (AR; GE 2; GE 4; Tr. 40-42, 58-59, 62-66.) 
The $428 delinquent cell phone debt, alleged in SOR ¶ 1.b and erroneously listed
by Experian on his September 2011 Full Data Credit Report (GE 2), is actually his
father’s debt. Applicant and his father share the same name (Jr. and III), and his father
acknowledged in writing that the debt is his. (AE I.) The original creditor’s May 2007
Equifax entry on the Full Data Credit Report states the account was opened in April
2004, became delinquent in February 2005, and was placed for collection in May 2007.
It further states, “consumer disputes this account information.” The debt is not listed on
Applicant’s January 2013 Equifax credit report (GE 3.) Applicant provided sufficient
proof that this is not his debt. (AR; GE 4; Tr. 47-48.)
Applicant was unaware of the $296 collection account, as alleged in SOR ¶ 1.c,
until asked about it during his security interview on October 3, 2011. The claim
originated from the utility company that Applicant and his wife used while living in State
B. After the interview, Applicant contacted the company and was informed that the debt
was for equipment that was not shown to have been returned in the company’s records.
Applicant was directed by the company to leave the equipment (a “power box”) on the
back porch when they moved out, so someone could come and pick it up. He did as
directed, but the box was apparently not there when the employee came to get it.
Applicant has been in contact with the company on several occasions during the past
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year. On the most recent two occasions, the company was unable to locate any record
of the debt in their data base. Applicant continues to dispute responsibility for the debt,
but offered to pay it if the company verifies it. He is willing and able to do so. (GE 2; GE
4; AR; Tr. 48-49.)
The $232 medical collection account alleged in SOR ¶ 1.d arose from an
insurance billing mistake. Applicant paid the collection agency in February 2013 to
resolve the matter, and asked his medical insurer to contact the doctor’s office to
resubmit the charges as well. (AR; Tr. 49-52.) Applicant has no other delinquent debts.
(GE 2; GE 3; AE G; Tr. 34-35, 67-68.)
Applicant has not undergone any formal financial counseling, and his wife
handles most of the routine family finances. He met with a specialist to help him resolve
previous inaccuracies on his credit reports, primarily caused by having the same name
as his father. He submitted a personal financial statement demonstrating a present
monthly surplus of about $2,000, and $24,000 in accumulated financial assets. (AE A;
AE H; Tr. 68-72.) 
Six coworkers and friends, who have known Applicant well for the past three to
five years, wrote glowing letters of recommendation praising his honesty, integrity, and
trustworthiness. (AE B.) His performance evaluations from his service in the Navy
uniformly praised his exceptional performance, responsibility, reliability, leadership, and
professionalism. (AE C.) He also earned two Squadron Commodore Letters of
Commendation and was awarded two Navy and Marine Corps Achievement Medals for
exceptional professionalism, initiative, and loyal devotion to duty while on active duty.
(AE D.) Between September 2009 and April 2013, ten different coworkers nominated
Applicant for company recognition awards for his leadership, teamwork, and operational
excellence. (AE E.)
  
Policies
When evaluating an applicant’s suitability for a security clearance, the
administrative judge must consider the adjudicative guidelines (AG). In addition to brief
introductory explanations for each guideline, the adjudicative guidelines list potentially
disqualifying conditions (DCs) and mitigating conditions (MCs), which are to be used 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 AG ¶ 2 describing the adjudicative process. The administrative judge’s
overarching adjudicative goal is a fair, impartial, and commonsense decision. According
to AG ¶¶ 2(a) and 2(c), the entire process is a conscientious scrutiny of applicable
guidelines in the context 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.
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The protection of the national security is the paramount consideration. AG ¶ 2(b)
requires that “[a]ny doubt concerning personnel being considered for access to
classified information will be resolved in favor of the national security.” In reaching this
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, “[t]he 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.” Section 7
of Executive Order 10865 provides: “[a]ny 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.”
A person applying for access to classified information seeks to enter 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. Decisions include, by necessity, consideration of
the possible risk 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.
Analysis
Guideline F, Financial Considerations
The security concerns under the guideline for financial considerations are set out
in AG ¶ 18, which reads in pertinent part:      
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 record evidence potentially raises security concerns under two Guideline F
DCs, as set forth in AG ¶ 19: 
(a) inability or unwillingness to satisfy debts; and
(c) a history of not meeting financial obligations. 
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The only debt of potential security concern involves the foreclosure on a real
estate mortgage in State B. The other SOR-alleged debts were minor, and either were
not his or were unintentionally late and easily resolved. After moving back to State A to
save his marriage and family, Applicant first rented the State B house but had to evict
the tenants after they stopped paying rent. He then tried to sell the house, without
success due to contamination that was fraudulently concealed from him by the previous
owner. The mortgage debt is in foreclosure proceedings, involves a VA guarantee to the
lender, and remains pending despite Applicant’s efforts to move the process along. This
evidence raised minimal but sufficient security concerns, under DCs 19(a) and (c), to
shift the burden to Applicant to rebut, extenuate, or mitigate those concerns. The
evidence does not support any other DC under this guideline. 
The guideline includes five conditions in AG ¶ 20 that could mitigate security
concerns arising from Applicant’s financial difficulties:
(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; 
(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;
(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’s mortgage debt remains unresolved, but the creditor has VA
guarantees against loss and no active collection efforts are being made during the
ongoing foreclosure process. Applicant, a first-time home buyer, had the property
inspected by a licensed expert, but was not made aware of the chemical contamination
until he attempted to sell the property. Unlike the previous owner, he demonstrated
integrity by disclosing the problem to potential buyers with the result that the property
could not be sold. His attorney was unsuccessful in obtaining legal relief from the
previous owner. These circumstances were unique, and are highly unlikely to recur. The
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evidence establishes his current reliability, trustworthiness, good judgment, and
substantial mitigation under MC 20(a). 
Applicant offered sufficient evidence to support mitigation under MC 20(b) as
well. He had already accepted his current employment and moved back to State A
before learning that long distance rental of the house in State B was unworkable and
soil contamination prevented its being sold. He attempted to obtain legal relief from the
previous owner without success, then notified both the lender and the VA of his need to
pursue a short sale. No buyers were interested after learning of the contamination, so
the loan went into foreclosure. Applicant could have done nothing else to remedy the
situation, and has the financial wherewithal to meet any potential tax or deficiency
obligations at the conclusion of foreclosure proceedings. This demonstrates responsible
action under the circumstances. 
Applicant did not undergo financial counseling, but his ability to manage this
series of setbacks without incurring other delinquent debt is compelling evidence that he
does not need to do so. He established clear indications that his financial issues have
been or are being resolved, and are under control for the future. MC 20(c) and 20(d) are
therefore applicable. 
Applicant documented a valid basis to dispute of the legitimacy of the debt
alleged in SOR ¶ 1.b, which is actually owed by his father. Accordingly, he mitigated
that allegation under MC 20(e).
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 relevant circumstances. The administrative judge should consider the
nine adjudicative process factors listed at 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 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. 
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.   
I considered the potentially disqualifying and mitigating conditions in light of all
pertinent facts and circumstances surrounding this case. Applicant is a sincere and
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hard-working individual, whose only issue of potential security concern involves a real
estate purchase in which the previous owner fraudulently failed to disclose that the
property had chemical contamination requiring more than $75,000 in remediation.
Before he knew that, he had already relocated to State A and accepted his current
employment in order to preserve his family. He made no effort to conceal any issues
from his creditors, employer, or the Government, and stands ready to fulfill any
obligations resulting from the ongoing foreclosure proceedings. He is mature and
accountable for his choices and actions, and prioritized his spending of limited
resources in a reasonable way. His disciplined actions to prevent any additional
delinquent indebtedness demonstrate positive permanent behavioral changes and
rehabilitation. 
The potential for exploitation or duress is greatly diminished by his openness
about the circumstances, the creditor’s limited liability due to the VA loan guarantee,
and his ability to deal with any remaining financial obligations after foreclosure
proceedings are complete. The likelihood of recurrence of financial issues has been
minimized by his good new job and lessons learned from his first venture in home
ownership. Applicant has a lengthy and excellent record of valuable service to the
national security, and the trust and confidence of his coworkers and supervisors.
Overall, the record evidence creates no doubt as to Applicant’s present eligibility and
suitability 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 through 1.d: For Applicant
Conclusion
In light of all of the circumstances presented by the record in this case, it is
clearly consistent with the national interest to grant Applicant eligibility for a security
clearance. Eligibility for access to classified information is granted.
                                              
DAVID M. WHITE
Administrative Judge