1
 
                                                             
                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)       ISCR Case No. 14-04279
)
Applicant for Security Clearance )
Appearances
For Government: Jeff A. Nagel, Esquire, Department Counsel
For Applicant: Paul E. Carreras, Esquire
______________
Decision
______________
HENRY, Mary E., Administrative Judge:
Based upon a review of the pleadings, exhibits, and testimony, Applicant’s
eligibility for access to classified information is granted.
Statement of the Case
Applicant completed and certified an Electronic Questionnaire for Investigations
Processing (e-QIP) on November 14, 2013. The Department of Defense (DOD) issued
Applicant a Statement of Reasons (SOR) on December 5, 2014, 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; DOD 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
(AG), implemented on September 1, 2006. 
 
GE 1; Tr. 20-21.1
GE 1; Tr. 28, 362
AE G; Tr. 21-22.3
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Applicant received the SOR on December 19, 2014, and he answered it the
same day. Applicant requested a hearing before an administrative judge with the
Defense Office of Hearings and Appeals (DOHA). Department Counsel was prepared to
proceed on February 9, 2015, and I received the case assignment on March 2, 2015.
DOHA issued a Notice of Hearing on April 16, 2015, and I convened the hearing as
scheduled on May 12, 2015. The Government offered exhibits (GE) marked as GE 1
through GE 4, which were received and admitted into evidence without objection.
Applicant and three witnesses testified. He submitted exhibits (AE) marked as AE A
through AE D, which were received and admitted into evidence without objection. DOHA
received the hearing transcript (Tr.) on May 19, 2015. I held the record open until June
2, 2015, for Applicant to submit additional matters. On June 11, 2015, Applicant
submitted AE D - AE I, which were received and admitted without objection. The record
closed on June 11, 2015.
Findings of Fact
In his Answer to the SOR, Applicant admitted the factual allegation in ¶ 1.a of the
SOR. His admission is incorporated herein as a finding of fact. He also provided
additional information to support his request for eligibility for a security clearance. After
a complete and thorough review of the evidence of record, I make the following findings
of fact.  
Applicant, who is 42 years old, works as a logistics and supply technician for a
DOD contractor. Applicant began his current employment in May 2010. Applicant
previously held the same position for two other DOD contractors from 2003 until May
2010. During these employments, Applicant deployed overseas to the Middle East in
support of the United States military mission in Iraq approximately seven times. His
previous employers lost the Government contract, which necessitated a change in
employers for Applicant.1
Applicant and his wife married in February 2009. They have an 11-year-old
daughter. His wife works as a pharmaceutical technician.  2
In 2009, Applicant earned $28 an hour for total yearly income of $58,240 without
overtime. When he started his current employment in May 2010, his employer paid him
$20 an hour for the same job. He continues to earn $20 an hour after five years of
employment. His annual salary is $41,600 without overtime. He earns $16,640 a year
less than he previously earned performing the same duties.3
His earnings statement indicate that much of this income is placed in his 401(k) account and treated as pretax4
income. AE G.
Applicant occasionally works overtime at the rate of $30 an hour. In April 2015, he worked eight hours of5
overtime, earning $240 in gross income and receiving $124 in net income. In April 2015, Applicant converted
10 hours of vacation time to cash, receiving $200 in gross income and $151 in additional net income. AE G.
Applicant submitted a monthly budget showing total monthly income of $6,780 (not identified as net or gross6
income) and total monthly expenses of $6,059. His budget income does not match the information on the
earnings statements submitted for him and his wife. I note that the listed expenses included taxes, union dues,
and 401(k) loan payments and monthly contributions withheld from their pay. The budget does not reflect all
items withheld from their pay. AE F; AE G.
AE F - AE I.7
GE 2 - GE 4; Tr. 22, 28-30.8
At the hearing, Applicant’s counsel advised that he tried to locate this attorney, but could not find any9
information on an attorney with the name Applicant provided. The state bar does not have an attorney by the
name provided by Applicant. Tr. 68, 73. 
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Based on the earnings statements submitted, Applicant currently earns $3,201 a
month in regular pay, plus $605 a month in Sca (not defined) pay  for a total gross4
monthly income of $3,806. His regular net monthly income totals $2,519.  His wife earns5
$30 an hour. Her earnings statements reflect a small fluctuation in the hours worked
over a month. Her hours averaged 81.5 for each pay period. Her net income averages
about $3,622 a month for a total net monthly household income of $6,141.  Applicant’s6
usual and customary monthly expenses paid from net income include $1,600 for
housing, $791 for transportation, $575 for food and eating out, $45 for pet food and
care, $170 for personal care, $100 for other, and $100 for miscellaneous expenses
totaling $3,381. His budget included as a monthly expense $40 for vehicle licensing, an
expense that is usually once a year or less and is not included in the above total. Based
on the information provided, Applicant has $2,720 a month in discretionary income. He
and his wife have approximately $17,000 in savings and available cash.7
In March 2004, Applicant purchased a house in his name only. He financed his
purchase with a primary mortgage of $268,000 and second mortgage of $67,000. His
monthly payments totaled approximately $2,680. Two years later, he refinanced the
house. At this time, he combined the two mortgages into one mortgage for $345,000.
The combination reduced his monthly payment to $2,188. At the same time, he took a
$85,000 second mortgage on his property with a monthly payment of $559. Applicant
used the money from the second loan to pay debts. Applicant made his monthly
payments without difficulty until 2009, when his income declined after losing his job of
nearly ten years. 8
Applicant paid an individual, whom he believed to be an attorney, $3,000 in 2009
to assist Applicant with obtaining a modification of his mortgage loans. This individual
did little work for Applicant, and the loan modification never occurred.  In early 2010,9
Applicant attempted to sell his house through a short sale. He found a purchaser and
GE 2 - GE 4; AE D; Tr. 31-32.10
AE B; AE E; Tr. 26-27, 32-34.11
GE 2 - GE 4.12
Tr. 46-60.13
AE A; Tr. 21.14
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submitted the offer of purchase to the first and second mortgage lenders. His primary
mortgage lender agreed to the sale, but the mortgage lender holding the second
mortgage would not agree to the sale. Applicant lost the buyer for his house. In
February 2011, the primary mortgage lender foreclosed on his property. The balance
remaining on the second mortgage is $61,000 and it provides the basis for the SOR.10
At some point after the foreclosure, the mortgage lender holding the second
mortgage contacted Applicant to resolve the debt. Applicant was unable to pay the
amount of money requested to resolve the debt. After receiving the SOR, Applicant
contacted the lender holding the second mortgage and reached an agreement about
paying his debt. They agreed that Applicant would pay $100 a month for three months
beginning in March 2015. At the end of the payment period, Applicant and the lender
would discuss a longer and possibly permanent payment plan to resolve his debt.
Applicant made the three required payments, the last on May 13, 2015. The results of
further negotiations with the lender are unknown.11
The credit reports of record reflect that Applicant timely pays his bills and his
debts. Except for the foreclosure on his house and the unpaid second mortgage debt,
Applicant has always paid his bills. The credit reports do not show collection or charge-
off accounts.12
Applicant’s older brother, his best friend, and his department head, who is his
second level supervisor, testified on his behalf.  His brother described him as a “real
honest person” and “a man of his word”. His friend views him as a good father, husband
and friend. Both consider him honest, trustworthy, dependable, and reliable and not a
security risk. His department head and second level supervisor described him as a
person who performs his job exceptionally well and above standard. Applicant has a
proven ability to do his duties. He is a good natured person, a dedicated employee, a
team player, and a nice guy. He also considers Applicant absolutely trustworthy, honest,
dependable, and reliable.13
Applicant submitted 11 citations for his work performance, particularly related to
his work in the middle east. He also submitted two acknowledgments for years of
service in two separate companies. Applicant has not violated the rules for handling
classified information or the proprietary rules of his employer. He has not been
disciplined at work.14
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Policies
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 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 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.
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.
Under Directive ¶ E3.1.14, the Government must present evidence to establish
controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, 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. . . .” An
applicant has the ultimate burden of persuasion for obtaining a favorable security
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. Decisions include, by necessity, consideration of
the possible risk an 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.  
 
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
applicant concerned.” See also EO 12968, Section 3.1(b) (listing multiple prerequisites
for access to classified or sensitive information).  
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Analysis
Guideline F, Financial Considerations
The security concern relating to the guideline 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. 
AG ¶ 19 describes the disqualifying conditions that could raise security concerns.
I have considered all the conditions, and the following are potentially applicable: 
(a) inability or unwillingness to satisfy debts; and
(c) a history of not meeting financial obligations. 
After a loss in income, Applicant experienced difficulties paying his first and
second mortgages on his house. The primary lender foreclosed on his property, and he
has not resolved the second mortgage. These two disqualifying conditions apply.
The financial considerations guideline also includes examples of conditions that
can mitigate security concerns. I have considered mitigating factors AG ¶ 20(a) through
¶ 20(f), and the following are potentially applicable:
(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; and
(d) the individual initiated a good-faith effort to repay overdue creditors or
otherwise resolve debts.
Applicant lost approximately 25% of his income in 2009 when his employer lost
the government contract on the job Applicant was performing. Applicant continues to
perform this job at a reduced salary and without an increase in salary in five years. The
loss of income is a factor beyond his control. When his income initially declined,
Applicant attempted to obtain a modification of his mortgage, but was unsuccessful. He
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then listed his house for sale as a short sale and found a buyer. Although his primary
lender agreed to the sale price, the second mortgage lender did not. As a result, the
sale of his house failed. The refusal of the second mortgage lender to accept the sale
price of his house is also a factor beyond his control. His efforts to sell his house and
obtain a loan modification show he acted reasonably in 2009 and 2010 after
experiencing financial difficulty. Sometime after this, he and the second mortgage
lender, the SOR creditor, discussed payment of his debt. Applicant could not afford the
amount of money requested by the second mortgage lender, and all efforts to resolve
the debt ended. He took no further action until receiving the SOR. In January 2015, he
initiated contact with the lender and agreed to a trial payment period. A final payment
plan had not been reached at the time of the hearing, and the status of the agreement is
not known. AG ¶ 20(b) applies.
Applicant manages his monthly income and expenses. He lives well within his
income and is working on a resolution of his outstanding debt. AG ¶ 20(c) applies.
Applicant’s efforts to modify his mortgage and his efforts to sell his house in 2009 and
2010 show a good-faith effort to resolve his mortgage debt at that time. His recent
contact with the second mortgage lender to resolve his debt also reflects a good-faith
effort on his part. Because he took no action for nearly five years to resolve his
outstanding mortgage, AG ¶ 20(d) is not fully applicable.
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 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. The decision to grant or
deny a security clearance requires a careful weighing of all relevant factors, both
favorable and unfavorable. In so doing, an administrative judge must review all the
evidence of record, not a single item in isolation, to determine if a security concern is
established and then whether it is mitigated. A determination of an applicant’s eligibility
for a security clearance should not be made as punishment for specific past conduct,
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but on a reasonable and careful evaluation of all the evidence of record to decide if a
nexus exists between established facts and a legitimate security concern. 
In assessing whether an applicant has established mitigation under Guideline F,
the Appeal Board provided the following guidance in ISCR Case No. 07-06482 at 3
(App. Bd. May 21, 2008):
In evaluating Guideline F cases, the Board has previously noted that the
concept of “‘meaningful track record’ necessarily includes evidence of
actual debt reduction through payment of debts.” See, e.g., ISCR Case
No. 05-01920 at 5 (App. Bd. Mar. 1, 2007). However, an applicant is not
required, as a matter of law, to establish that he has paid off each and
every debt listed in the SOR. See, e.g., ISCR Case No. 02-25499 at 2
(App. Bd. Jun. 5, 2006). All that is required is that an applicant
demonstrate that he has “. . . established a plan to resolve his financial
problems and taken significant actions to implement that plan.” See, e.g.,
ISCR Case No. 04-09684 at 2 (App. Bd. Jul. 6, 2006). The Judge can
reasonably consider the entirety of an applicant’s financial situation and
his actions in evaluating the extent to which that applicant’s plan for the
reduction of his outstanding indebtedness is credible and realistic. See
Directive ¶ E2.2(a) (“Available, reliable information about the person, past
and present, favorable and unfavorable, should be considered in reaching
a determination.”) There is no requirement that a plan provide for
payments on all outstanding debts simultaneously. Rather, a reasonable
plan (and concomitant conduct) may provide for the payment of such
debts one at a time. See, e.g., ISCR Case No. 06-25584 at 4 (App. Bd.
Apr. 4, 2008). Likewise, there is no requirement that the first debts actually
paid in furtherance of a reasonable debt plan be the ones listed in the
SOR.
The evidence in support of granting a security clearance to Applicant under the
whole-person concept is more substantial than the evidence in support of denial. In
reaching a conclusion, I considered the potentially disqualifying and mitigating
conditions in light of all the facts and circumstances surrounding this case. Applicant
and his wife have a long track record of managing their household income. They pay
their bills every month. They live frugally, not extravagantly, as shown by their savings
and cash on hand. In 2009, Applicant’s long-time employer lost the Government
contract for the job Applicant worked. Applicant moved to the company with the contract
and that company lost the contract a year later. When Applicant accepted the job offer
with his current employer to perform the same work he had been doing for 10 years, he
also agreed to work at a lower salary, which decreased his income by 25%. While he
paid all his other bills, the loss of income impacted his ability to make his two mortgage
payments on his house. He immediately sought help to reduce his monthly payments
with a home loan modification. This endeavor was unsuccessful. He then listed his
house for short-sale and found a buyer. Both mortgage lenders had to accept the terms
of the sale. The primary lender did, and the secondary lender did not, causing the sale
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to fail. Both acts of Applicant reflect his efforts in late 2009 and early 2010 to resolve his
mortgage debt issue. Through no fault of his, neither worked. The second mortgage
lender approached him to resolve the debt sometime ago, but would not agree to a
reasonable repayment plan. Because the second mortgage lender would not work with
him, Applicant took no further action to resolve this debt until he received the SOR. His
failure to continue communication with the second mortgage lender is not viewed as a
lack of responsibility because he did not have any expectation that the second
mortgage lender would work with him to develop a reasonable payment plan. Five years
later, the second mortgage lender appears to be more willing to work with Applicant to
negotiate either a reasonable payment plan or a possible full settlement of the debt.
Applicant’s track record of debt payment convinces me that he will continue to work with
the creditor to resolve this substantial debt. Considering all the evidence of record,
Applicant’s long history of stable finances, his reputation for honesty, trustworthiness,
and hard work, I find that the unpaid second mortgage debt does not show lack of
judgment and failure to abide by rules, contracts, and financial commitments. See AG ¶
18. Of course, the issue is not simply whether his debt is paid: it is whether his financial
circumstances raise concerns about his fitness to hold a security clearance. This one
debt is insufficient to raise security concerns. (See AG & 2(a)(1).)
Overall, the record evidence leaves me without questions or doubts as to
Applicant’s eligibility and suitability for a security clearance. For all these reasons, I
conclude Applicant mitigated the security concerns arising from his finances under
Guideline F.
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 eligibility for a security
clearance.  Eligibility for a security clearance is granted.
                                                              
MARY E. HENRY
Administrative Judge