The Government submitted three items in support of its case.      1
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                        DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)       ISCR Case No. 14-01421
)
Applicant for Security Clearance )
Appearances
For Government: John Bayard Glendon, Esq., Department Counsel
For Applicant: Pro se
                                                                            
______________
Decision
______________
LYNCH, Noreen A., Administrative Judge:
On June 4, 2014, the Department of Defense (DOD) issued a Statement of
Reasons (SOR) to Applicant listing security concerns arising under Guideline F
(Financial Considerations). The action was taken under DOD Directive 5220.6, Defense
Industrial Personnel Security Clearance Review Program (January 2, 1992), as
amended (Directive); and the adjudicative guidelines (AG), implemented in September
2006. 
Applicant timely answered the SOR and requested a decision based on the
written record in lieu of a hearing. Department Counsel submitted a File of Relevant
Material (FORM), dated February 9, 2015.  Applicant received the FORM on February1
13, 2015. He submitted additional information for the record. (Applicant EX 1) I received
the case assignment on April 2, 2015. Based on a review of the case file, I find
Applicant has mitigated the security concerns raised. Eligibility for a clearance is
granted.
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Findings of Fact
In his answer to the SOR, Applicant admitted the allegations under Guideline F,
¶¶ 1.a  with explanations. (Item 1) .
Applicant is 64 years old. He obtained an undergraduate degree in 1980. (Item
3) He is an employee of a defense contractor. Applicant is married and has one child.
He has been employed with his current employer since 2000. This is Applicant’s first
request for a security clearance. On October 7, 2013, he completed a security
clearance application. (Item 3) 
 The SOR alleges a past-due mortgage loan in the amount of approximately
$37,839, with a total loan balance of approximately $160,703.
 Applicant and his wife purchased a property in state X in 2006. The purchase
price was $222,664.89. Applicant made a down payment of about $48,000. The loan
amount was $177,482. Applicant intended to move to state X for his work. However, the
request for transfer was denied. At that point, Applicant decided to rent the home. In
2007, Applicant signed an agreement with a property management agent. Applicant
paid the home owner’s fees. The rent from the tenant covered most of the monthly
mortgage loan. Applicant believes he paid an additional $300 a month to cover the loan
payments.
It is not clear from the record as to when, but at some point, due to declining
housing market prices, Applicant could not find acceptable tenants. This put a financial
strain on him. He could not afford the property in state X and his residence. He
contacted the bank and tried to refinance. After an appraisal, it was determined that the
value of the house was about $110,000 on which he owed approximately $160,000.
The bank denied the refinance. Applicant’s property manager worked with Applicant to
sell the house. The house would probably not sell for more than $120,000. Applicant
was candid that this was not an ideal situation. A foreclosure agency advised Applicant
that foreclosure would be the best route. In August 2011, Applicant stopped making
payments on the house.  The bank originally had an auction scheduled for 2012. For
various reasons, the case was dismissed in 2013, but reopened in 2014. A foreclosure
auction was held on September 28, 2014, and the home sold. As of December 11,
2014, the bank closed the loan. Applicant submitted a letter from the bank stating that
the loan has been paid in full. (Attachment L) 
Applicant now realizes the full ramifications of his decision to follow through with
a foreclosure on the property. At the time, it seemed like all other options had been
exhausted. He states that this is an isolated incident. A review of his financial records
show that all debts he acquired were paid on time. 
Applicant’s program manager attests to his character, judgment, and
trustworthiness. He has known Applicant for 20 years. He is an outstanding employee.
Applicant is a trusted and valued employee. (Attachment M)
 See also ISCR Case No. 94-1075 at 3-4 (App. Bd. Aug. 10, 1995).      2
 Department of the Navy v. Egan, 484 U.S. 518, 531 (1988).      3
 ISCR Case No. 93-1390 at 7-8 (App. Bd. Jan. 27, 1995).      4
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Applicant submitted a favorable letter of reference from a principal engineer in
the company who has known Applicant for 28 years. He finds Applicant to be
conscientious and always willing to do extra work. (Attachment N) 
Policies   
When evaluating an applicant’s suitability for a security clearance, an
administrative judge must consider the adjudicative guidelines (AG). In addition to brief
introductory explanations for each guideline, the adjudicative guidelines list potentially
disqualifying conditions and mitigating conditions. These guidelines are not inflexible
rules of law. Instead, recognizing the complexities of human behavior, they are applied
in conjunction with the factors listed in the adjudicative process. An administrative
judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision.
Under AG ¶ 2(c), this process is a conscientious scrutiny of a number of variables
known as the “whole-person concept.” An administrative judge must consider all
available, reliable information about the person, past and present, favorable and
unfavorable, in making a decision.
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 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.
The Government must present evidence to establish controverted facts alleged
in the SOR. An 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 burden of proof is something less than a2
preponderance of evidence.  The ultimate burden of persuasion is on the applicant.  3 4
A person seeking access to classified information enters into a fiduciary
relationship with the Government based on 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 classified information. Such
decisions entail a certain degree of legally permissible extrapolation of potential, rather
than actual, risk of compromise of classified information.
 
Section 7 of Executive Order 10865 provides that decisions shall be “in terms of
the national interest and shall in no sense be a determination as to the loyalty of the
 See also EO 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive      5
information), and EO 10865 § 7.
 ISCR Case No. 93-1390 at 7-8 (App. Bd. Jan. 27, 1995).      6
 Id.      7
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applicant concerned.”  “The clearly consistent standard indicates that security clearance5
determinations should err, if they must, on the side of denials.”  Any reasonable doubt6
about whether an applicant should be allowed access to classified information must be
resolved in favor of protecting such information.  The decision to deny an individual a7
security clearance does not necessarily reflect badly on an applicant’s character. It is
merely an indication that the applicant has not met the strict guidelines the President
and the Secretary of Defense established for issuing a security clearance.
Analysis
Guideline F, Financial Considerations
The security concern for Financial Considerations is set out in AG ¶ 18:
Failure or an 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.”
Applicant admitted that he had a past-due mortgage loan account in the amount
of $37,839 and a total loan balance of about $160,703. Consequently, Financial
Considerations Disqualifying Conditions (FC DC) AG ¶ 19(a) (inability or unwillingness
to satisfy debts), and FC DC AG ¶ 19(c) (a history of not meeting financial obligations)
apply. With such conditions raised, it is left to Applicant to overcome the case against
him and mitigate security concerns.  
The nature, frequency, and relative recency of Applicant’s financial difficulties
make it difficult to conclude that it occurred “so long ago.” “An unpaid debt is a
continuing course of conduct for the purposes of DOHA adjudications.”  ISCR Case No.
10-11083 at 2 (App. Bd. Dec. 17, 2012). Applicant bought a home in 2006 and due to
market economy he could not keep renters in the home. He bought it in anticipation of
being transferred to the state for work. However, the transfer was denied. There is no
record of any other delinquent debts. The bank acknowledged nothing is owed on the
loan.  The matter has been resolved. Consequently, Financial Considerations Mitigating
Condition (FC MC) AG ¶ 20(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) applies.
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FC MC AG ¶ 20(b) (the conditions that resulted in the behavior 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) partially applies. Applicant’s financial
difficulties occurred because he did not receive a work transfer to state x and he could
not keep renters in the home. He tried to sell the home and to refinance it, but he was
not successful. He took the advice of a foreclosure agency and let the house go to
foreclosure, which he thought  was the best option at the time. 
FC MC AG ¶ 20(d), (the individual initiated a good-faith effort to repay overdue
creditors or otherwise resolve debts) applies. Applicant submitted documentation that
the bank considers the mortgage loan paid in full. He did not present evidence that he
received financial counseling. AG ¶ 20(c) (the person has received or is receiving
counseling for the problem) does not apply.  
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 an applicant’s
conduct and all the 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. As noted above, the
ultimate burden of persuasion is on the applicant seeking a security clearance. 
I considered the potentially disqualifying and mitigating conditions in light of all
the facts and circumstances surrounding this case, as well as the whole-person factors.
Applicant is 64 years old. He has worked for his present company since 2000. He
bought a home with the expectation that he could transfer to that state for work.
However, that was denied. He rented the home, tried to sell it, and tried to refinance it.
It went to foreclosure. He understands the ramifications of his actions. At the time, he
did not have a security clearance.
Applicant suffered a sizeable loss in this transaction. He put $48,000 down on
the house, and made his monthly mortgage payments from 2006 through 2011. His
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entire investment was lost when factors beyond his control resulted in the house going
to foreclosure.
Applicant relied on the written record and did not have a hearing. He responded
to the FORM with a narrative, and with documents that provided additional
documentation to support resolution of his home mortgage. Based on the facts in the
record, he has met his burden of proof. I do not have doubts about his judgment or
responsibility. Applicant has mitigated the security concerns under the financial
considerations guideline.
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: FOR APPLICANT
Subparagraph 1.a: 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 a eligibility for a security
clearance. Clearance is granted.
                                                     
NOREEN A. LYNCH.
Administrative Judge