KEYWORD: Guideline F
DIGEST: The Board does not construe he Judge’s discussion of Applicant’s apparently
inconsistent statements as a security concern additional to those cited in the SOR.  Rather she
considered the statements for purposes of evaluating Applicant’s credibility.  Such an evaluation
is permissible.  Adverse decision affirmed.
CASENO: 12-02859.a1
DATE: 05/16/2014
DATE: May 16, 2014
In Re:
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Applicant for Security Clearance
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ISCR Case No. 12-02859
APPEAL BOARD DECISION
APPEARANCES
FOR GOVERNMENT
James B. Norman, Esq., Chief Department Counsel
FOR APPLICANT
Pro se
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The Department of Defense (DoD) declined to grant Applicant a security clearance.  On
September 10, 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 hearing.
On February 25, 2014, after the hearing, Defense Office of Hearings and Appeals (DOHA)
Administrative Judge Rita C. O’Brien denied Applicant’s request for a security clearance.  Applicant
appealed pursuant to Directive ¶¶ E3.1.28 and E3.1.30.
Applicant raised the following issues on appeal: whether the Judge failed to consider all of
the evidence in the record; whether the whole-person analysis was erroneous; and whether the
Judge’s adverse decision was arbitrary, capricious, or contrary to law.  Consistent with the
following, we affirm.
The Judge’s Findings of Fact
Applicant has held a security clearance without incident or concern since 2008.  He has
worked for his current employer, a Defense contractor, since that year.
In 2006, Applicant and his wife bought a house in State A for $299,000.  They financed the
purchase with primary and secondary mortgages, making no down payment.  Applicant made about
$70,000 a year at the time, and his wife received about $9,000 a year from her job.  Applicant’s wife
was pregnant at the time of the purchase, and she experienced complications requiring hospital care.
As a consequence, she and Applicant acquired about $7,000 in medical expenses.  Applicant’s
daughter was born prematurely, and his wife was not employed for four years after the birth.  All
of these circumstances affected the couple’s financial situation.
In his security clearance application (SCA), Applicant stated that he was having a difficult
time making his mortgage payments.  However, in his response to the SOR and at the hearing,
Applicant stated that his mortgage payments were on-time and that he had cash reserves that would
have enabled him to make mortgage payments for 18 months.  Because of the economic downturn
in 2008, Applicant’s house lost market value.  Desiring to move to another state, he explored ways
to address his situation.  He was not approved for a loan modification.  His lender offered him a
forbearance plan agreement.  However, that agreement would have required him to increase the
amount of his monthly payments.  
Applicant considered selling the house or renting it out, but he concluded that these options
would entail financial loss.  He consulted with an attorney, who advised him to do a “strategic
default.”  Decision at 3.  Applicant did some research on a website that assists borrowers in this
process.  Applicant then decided to pursue strategic default, making his last mortgage payment in
July 2010.  The house was subsequently sold through foreclosure for less than Applicant owed on
the loan.  In State A, lenders are not permitted to attach a borrower’s other property in satisfaction
of a deficiency judgment.  Applicant submitted a letter from an attorney stating that, in the attorney’s
opinion, State A would not permit a lawsuit by the lender against Applicant for the deficiency.  
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The delinquencies pertaining to the first and second mortgages are the only debts listed in
the SOR.  Applicant’s financial statement shows that he has a monthly remainder of about $1,000
after expenses.  He states that he is debt free.  Applicant’s rental managers describe him as a person
of good judgment who abides by rules and restrictions.  Applicant’s industrial security representative
states that he is hardworking, honest, and trustworthy.  
The Judge’s Analysis   
The Judge concluded that Applicant had not mitigated the concerns arising from his
delinquent mortgage debts.  She stated that his financial issues are recent and ongoing, insofar as
the debts have not been paid.  Acknowledging that Applicant’s finances had been affected by
circumstances beyond his control, she noted evidence of the steps that Applicant took to resolve his
problems.  She ultimately concluded, however, that Applicant’s decision to walk away from his
obligations, even though he had sufficient funds to make his payments, does not constitute a good
faith effort to pay his debts.  In the whole-person analysis, the Judge noted Applicant’s favorable
evidence, such as his education, his good work performance, and his good financial record (except
for the delinquent loans).  On the other hand, she noted his inconsistent statements about his
financial condition at the time of the market crash.  She also stated that State A’s prohibition against
collecting deficiency judgments in cases like Applicant’s does not mitigate the security significance
of a decision simply to forgo paying a legitimate debt despite having the means to do so.  The Judge
noted Applicant’s five years of having held a clearance, which should have placed him on notice of
the expectations attending that status.  She said that Applicant should have considered factors other
than mere financial benefit and that he had placed his own interest ahead of his duty to honor his
financial obligations.
Discussion
Applicant cites to record evidence, such as his reliance on legal advice in deciding to walk
away from his mortgage, his attorney’s opinion that the deficiency judgments cannot be recovered,
and his character references.  He also cites to his years of having held a clearance without a security
violation.  All of this was evidence that the Judge was bound to consider, along with the balance of
the record.  The Judge made findings about the evidence Applicant has cited and discussed it in her
analysis.  Applicant has not rebutted the presumption that the Judge considered all of the evidence
in the record.  See, e.g., ISCR Case No. 11-10988 at 3 (App. Bd. Sep. 11, 2012).  Security clearance
determinations are predictive in nature, and it is foreseeable that persons with prior good records
may nevertheless engage in conduct or undergo circumstances that raise doubts about their future
judgment or reliability.  See, e.g., ISCR Case No. 11-13626 at 3-4 (App. Bd. Nov. 7, 2013).
Applicant cites to language at the end of his clearance interview summary to the effect that
his financial circumstances do not impugn his willingness to pay his debts.  This language
summarizes Applicant’s answers to the interviewer’s questions.  It does not express the interviewer’s
opinion as to Applicant’s security worthiness.  See, e.g., ISCR Case No. 11-08118 at 3 (App. Bd.
Aug. 12, 2013).  Applicant contends that the Judge misinterpreted the statement in his SCA about
his financial situation at the time of the economic downturn.  He argues that this statement is not
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actually inconsistent with the other statements cited by the Judge.  He states that he was not aware
that inconsistent statements could be a security concern.  However, the Judge did not treat this
apparent inconsistency as a security concern in addition to those raised in the SOR.  Rather, she
considered the statements in evaluating Applicant’s credibility.  See, e.g., ISCR Case No. 11-00193
at 4 (App. Bd. Jan. 24, 2013) (Inconsistent statements can undermine an applicant’s credibility).
After examining the record, we conclude that the Judge’s treatment of this matter is reasonable.  We
find no reason to believe that she extended undue weight to Applicant’s inconsistent statements to
the detriment of other record evidence.
Applicant makes various arguments which seem designed to suggest that nobody was hurt
by his default.  He refers to one creditor where the account is now shown as “foreclosure redeemed”
and a second creditor where the account is shown as charged off.  Neither of these actually are
indicative of an absence of damage.  As Appellant knows, the first creditor sold the property for
$80,000 less than the principal owed by Applicant at the time of the foreclosure.  The second
creditor’s utilization of an accounting measure (“charge-off”) would not make the creditor whole.
See, e.g., ISCR Case No. 08-11983 at 2, n. 1 (App. Bd. Jan. 28, 2011).     
The Judge’s whole-person analysis complies with the requirements of the Directive, in that
she considered the totality of Applicant’s circumstances in reaching her decision.  See, e.g., ISCR
Case No. 08-09511 at 2 (App. Bd. Mar. 3, 2010).  The Judge examined the relevant data and
articulated a satisfactory explanation for the decision.  The decision is sustainable on this record.
“The general standard is that a clearance may be granted only when ‘clearly consistent with the
interests of the national security.’”  Department of the Navy v. Egan, 484 U.S. 518, 528 (1988).  See
also Directive, Enclosure 2 ¶ 2(b):  “Any doubt concerning personnel being considered for access
to classified information will be resolved in favor of the national security.”
Order
The Decision is AFFIRMED.  
Signed; Michael Ra’anan            
Michael Ra’anan
Administrative Judge
Chairperson, Appeal Board
Signed; Jeffrey D. Billett             
Jeffrey D. Billett
Administrative Judge
Member, Appeal Board
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Signed: James E. Moody             
James E. Moody
Administrative Judge
Member, Appeal Board