DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
                                                                      )                                                             
        ------------------------------------                   )       ISCR  Case No.  12-11714           
                                                           )
)
Applicant for Security Clearance )
Appearances
For Government: Eric Borgstrom, Esq., Department Counsel
For Applicant: Pro se               
_____________
 Decision
  ______________
WESLEY, Roger C., Administrative Judge:
Based upon a review of the pleadings, exhibits, and testimony, I conclude that
Applicant did not mitigate the security concerns regarding her financial considerations.
Eligibility for access to classified information is denied. 
 
Statement of Case
On June 20, 2015, the Department of Defense (DOD) Consolidated
Adjudications Facility (CAF) issued a Statement of Reasons (SOR) detailing reasons
why DoD adjudicators could not make the affirmative determination of eligibility for a
security clearance, and recommended referral to an administrative judge to determine
whether a security clearance should be granted, continued, denied, or revoked. 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 (AGs) implemented by DoD on
September 1, 2006.  
2
Applicant responded to the SOR on July 27, 2015, and requested a hearing. The
case was assigned to me on October 20, 2015. The case was scheduled for hearing on
November 19, 2015. At the hearing, the Government's case consisted of six exhibits (GEs
1-6). Applicant relied on one witness (herself) and six exhibits (AEs A-F). The transcript
(Tr.) was received on December 2, 2015.     
Procedural Issues
Before the close of the hearing, Applicant requested the record be kept open to
permit her the opportunity to supplement it with documented payments on her real estate
mortgage covering her investment property and other documents. For good cause shown,
Applicant was granted 14 days to supplement the record. Department Counsel was
afforded ten days to December 11, 1015 to respond. Within the extended time permitted,
Applicant supplemented the record with performance evaluations from her employer, but
no documentation addressing her first mortgage delinquencies on her investment
property. Applicant’s post-hearing submission was admitted as AE G.  
Summary of Pleadings
Under Guideline F, Applicant allegedly accrued a delinquent mortgage obligation
on her rental property in the amount of $54,331 on a first mortgage with a loan balance of
$85,593.  Allegedly, this mortgage debt remains outstanding.
In her response to the SOR, Applicant admitted her mortgage delinquency with
explanations, but denied the remaining two obligations, claiming they have been paid.
She claimed the mortgage covered a rental property owned by her husband and herself,
jointly. She claimed her husband lost his job about six years ago and still has not found
permanent employment. She claimed the tenant moved out, leaving the house in poor
condition.  She claimed she hired a realtor to sell the house or find another renter, but has
been unsuccessful in finding either a buyer or a renter. Applicant claimed she is current
with all of her other financial responsibilities. And she claimed the remaining two amounts
(creditors 1.b and 1.c)  have since been paid. 
      Findings of Fact
Applicant is a 39-year-old software engineer of a defense contractor who seeks a
security clearance. The allegations covered in the SOR and admitted by Applicant are
incorporated and adopted as relevant and material findings. Additional findings follow.
Background
Applicant married in September 2005 and has two children (ages 4 and 6) and a
step daughter (age 18) from this marriage. (GE 1; Tr. 36, 68-70) She attended college
classes between September 1995 and August 1999 and earned a bachelor’s degree in
August 1999. (GE 1; Tr. 33) Applicant attended additional college classes between
September 2003 and November 2004 and earned a certificate in December 2004. She
earned a masters degree in July 2010. (GE 1; Tr. 33-34) Applicant claimed no military
3
service and has been employed by her current firm as a software engineer, with an
annual salary of $101,000,  since October 2001. (GE 1; Tr.  35)
Applicant’s finances
Applicant and her husband purchased a home in September 2006 and financed
their purchase with an $87,975 first mortgage. (GEs 2 and 5; Tr. 19, 42, 71) When they
purchased their second home in November 2006, they financed this purchase with a
$410,000 first mortgage and assumed monthly loan payments of $3,234. (GEs 2 and 5;
Tr. 51-52)  To cover their $714 mortgage payments on the their first home, they leased
the premises to a renter who occupied the home for four to five years. (Tr. 42) 
For the first four years following their home purchases, Applicant and her husband
were able to make their mortgage payments and stay current with their other bills. (GEs 2
and 5) Circumstances changed rapidly for Applicant and her husband in 2010 when her
husband lost his job and could not find full-time replacement employment. (GE  2; Tr.  28)
As a paralegal, Applicant’s husband made about $55,000 a year. (Tr. 37-38) While out of
work for over 12 months, he relied on seasonal work as a paralegal, supplemented by
unemployment insurance.  In March 2010, their tenant moved out of the home and left the
rental property in poor condition. (GE 2; Tr. 28) 
With their income limited, Applicant and her husband hired a realtor to sell the
rental home or find another renter. (Tr. 37-38) Over the course of the ensuing five years
(i.e., between April 2010 and July 2015), they listed the property for sale or rent
periodically, but without any success. (AE C; Tr. 18) Her listing records document their
listing the rental property for sale on four occasions between April 2010 and July 2015,
each time for $85,000. (AE C; Tr. 20) Frustrated with their inability to find a renter or
buyer, Applicant and her husband sought mortgage assistance from their lender in
September 2015. Their application sought modification of the loan terms to make the loan
more affordable, or in the alternative approval of a deed-in-lieu of foreclosure. (AE D; Tr.
20-21) Applicant confirmed that she and her husband never sought loan refinancing of
their  mortgage on the rental property. (Tr. 46) 
By the time of the convened hearing, Applicant and her husband still had heard
nothing back on their loan modification request, and was uncertain whether her husband
had received any short-sale approval, or whether her realtor had obtained any short-sale
approval from her lender. (Tr. 71-73) In turn, she asked for additional time to inquire of
her lender on the status of her loan modification request. (Tr. 71-72) Afforded an
opportunity to supplement the record, she has not to date provided any lender response
to her loan assistance application, and presumably has not been successful. Currently,
Applicant still remains legally responsible for over $54,000 in past due mortgage
payments.  Whether the lender foreclosed on the mortgage, accepted a deed in-lieu-of
foreclosure, or initiated other debt enforcement measures is unknown.
Besides her reported mortgage delinquency on her rental property, Applicant
accumulated two delinquent student loan debts with listed creditors 1.b ($264 on a total
4
loan balance of $7,639) and creditor 1.c ($471 on a total loan balance of $13,620) (GEs 5
and 6 and AE A; Tr. 14-15) These student loan debts were accumulated in March 2001
and were in forbearance until the loans were sold to creditors 1.b and 1.c in 2013. (GEs
4-5 and AEs A-B and H; Tr. 29-30) Applicant claimed that both of these past due debts
have been paid, and the accounts brought into current status. (Tr. 31-32) The payment
schedule she provided documented regular monthly payments between April 2013 and
October 2015 and a current total loan balance of $21,409. (AEs A and B). Applicant is
credited with resolving these two reported past due student loan debts and bringing them
into current status. 
Endorsements
Applicant is well regarded by supervisors and colleagues who know her and have
worked with her. Her performance evaluations for 2013, 2014, and 2015 document
ratings ranging from meets expectations in some areas to exceeds expectations in most
areas (inclusive of management of processes, technical lead, meeting business goals,
problem solving, communication, technical skills, quality and productivity, customer
satisfaction, leadership, development goals, and most importantly, integrity. (AEs E and
H) In recognition of her exceptional performance and company contributions, she
received a cash award in June 2015 from her employer. (AE F; Tr. 24) 
Policie  s                   
           The AGs list guidelines to be used by administrative judges in the decision-making
process covering security clearance cases. These guidelines take into account factors that
could create a potential conflict of interest for the individual applicant, as well as
considerations that could affect the individual’s reliability, trustworthiness, and ability to
protect classified information. These guidelines include "[c]onditions that could raise a
security concern and may be disqualifying” (disqualifying conditions), if any, and many of
the "[c]onditions that could mitigate security concerns.” 
These guidelines must be considered before deciding whether or not a security
clearance should be granted, continued, or denied. The guidelines do not require
administrative judges to place exclusive reliance on the enumerated disqualifying and
mitigating conditions in the guidelines in arriving at a decision. Each of the guidelines is to
be evaluated in the context of the whole person in accordance with AG ¶ 2(c). 
In addition to the relevant AGs, administrative judges must take into account the
pertinent considerations for assessing extenuation and mitigation set forth in AG ¶ 2(a) of
the AGs, which are intended to assist the judges in reaching a fair and impartial
commonsense decision based upon a careful consideration of the pertinent guidelines
within the context of the whole person. 
The adjudicative process is designed to examine a sufficient period of an
applicant’s life to enable predictive judgments to be made about whether the applicant is
an acceptable security risk. The following AG ¶ 2(a) factors are pertinent: (1) the nature,
5
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 chances; (7) the motivation for the conduct; (8) the potential for
pressure, coercion, exploitation, or duress; and (9) the likelihood of continuation or
recurrence.
 Viewing the issues raised and evidence as a whole, the following individual
guidelines are pertinent in this case:
Financial Considerations
The Concern: 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.  Compulsive gambling is a concern as it may lead to financial
crimes including espionage.  Affluence that cannot be explained by known
sources of income is also a security concern.  It may indicate proceeds
from financially profitable criminal acts.  AG ¶ 18.
Burden of Proof
By virtue of the principles and policies framed by the AGs, a decision to grant or
continue an applicant's security clearance may be made only upon a threshold finding
that to do so is clearly consistent with the national interest.  Because the Directive
requires administrative judges to make a commonsense appraisal of the evidence
accumulated in the record, the ultimate determination of an applicant's eligibility for a
security clearance depends, in large part, on the relevance and materiality of that
evidence. See United States, v. Gaudin, 515 U.S. 506, 509-511 (1995).  As with all
adversarial proceedings, the judge may draw only those inferences which have a
reasonable and logical basis from the evidence of record.  Conversely, the judge cannot
draw factual inferences that are grounded on speculation or conjecture.
The Government's initial burden is twofold: (1) it must prove by substantial
evidence any controverted facts alleged in the SOR, and (2) it must demonstrate that
the facts proven have a material bearing to the applicant's eligibility to obtain or maintain
a security clearance. The required materiality showing, however, does not require the
Government to affirmatively demonstrate that the applicant has actually mishandled or
abused classified information before it can deny or revoke a security clearance. Rather,
the judge must consider and weigh the cognizable risks that an applicant may
deliberately or inadvertently fail to safeguard classified information.
6
Once the Government meets its initial burden of proof of establishing admitted or
controverted facts, the evidentiary burden shifts to the applicant for the purpose of
establishing his or her security worthiness through evidence of refutation, extenuation,
or mitigation.  Based on the requirement of Executive Order 10865 that all security
clearances be clearly consistent with the national interest, the applicant has the ultimate
burden of demonstrating his or her clearance eligibility. “[S]ecurity-clearance
determinations should err, if they must, on the side of denials.” See Department of the
Navy v. Egan, 484 U.S. 518, 531 (1988). 
Analysis  
Applicant comes to these proceedings as a highly regarded software engineer,
who after her husband’s layoff in 2010 and ensuing period of unemployment and
underemployment, encountered severe income shortages that ultimately caused her to
default on the first mortgage on her rental property. Security concerns are raised over
Applicant’s continuing past-due mortgage on her rental property, in excess of $54,000
and her reported delinquent student loans. 
Applicant’s accrual of a past-due mortgage debt on her rental house and
delinquent balances owing on her student loan accounts warrant the application of two
of the disqualifying conditions (DC) of the AGs for financial considerations:  DC ¶ 19(a),
“inability or unwillingness to satisfy debts,” and DC ¶ 19(c), “a history of not meeting
financial obligations,” apply to Applicant’s situation. Applicant’s credit reports
corroborate these listed debts.
Holding a security clearance involves the exercise of important fiducial
responsibilities, among which is the expectancy of consistent trust and candor.
Financial stability in a person cleared to access classified information is required
precisely to inspire trust and confidence in the holder of the clearance. While the
principal concern of a clearance holder’s demonstrated financial difficulties is
vulnerability to coercion and influence, judgment and trust concerns are also implicit in
financial cases.
Extenuating circumstances are present in connection with Applicant’s accrual of
a past-due mortgage debt on her rental property. Applicant’s circumstances merit
application of MC ¶ 20(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.” Financial hardships associated with her
husband’s 2010 layoff and ensuing unemployment and underemployment in seasonal
jobs contributed to Applicant’s problems with her mortgage on her rental property.  
Before her husband’s 2010 layoff, Applicant enjoyed good credit and was able to
meet her financial responsibilities with both of her mortgages.  With her reduced family
income while her husband was unemployed and working low paying seasonal jobs,
7
Applicant struggled to stay current with her two mortgages and ultimately defaulted on
the mortgage supporting the loan on her rental property. 
Records document that Applicant did try for several years to sell the property
through multiple listings over a four-year period (2010-2015), albeit without success.
More recently (in 2015), she sought mortgage assistance from her mortgage lender, but
to no apparent avail. Since the November 2015 hearing, she has provided no updates
on her mortgage assistance efforts with creditor 1.a , and the $54,000 mortgage debt
remains outstanding by all documented accounts.
To her credit, Applicant has made substantial gains with her student loan lender
(creditors 1.b and 1.c) and has succeeded in bringing her student loan accounts current.
Applicant’s payment efforts entitle her to partial mitigation credit under  MC ¶ 20(d), “the
individual initiated a good-faith effort to repay overdue creditors or otherwise resolve
debts.” With the satisfaction of two of her listed debts in the SOR, and her likely
improved credit standing, Applicant is able to demonstrate some level of financial
progress.
Applicant’s exhibited good-faith efforts are not enough, however, to meet the
criteria established by the Appeal Board for assessing an applicant’s efforts to rectify
her financial condition with responsible efforts considering her circumstances. See ISCR
Case No. 08-06567 at 2-3 (App. Bd. Oct. 29, 2009). Her past-due real estate mortgage
on her rental property, left unaddressed, remains an impediment to demonstrating the
financial progress she needs to meet the Appeal Board’s minimal criteria for
establishing financial stability. 
While Applicant has mounted considerable effort to cure her past-due mortgage
balance, too much uncertainty exists over the status of the $54,000 past-due balance
on the mortgage covering her rental property to meet her evidentiary burden of
demonstrating necessary progress on the account to merit credit for resolving the debt
at this time. Overall, Applicant’s actions in addressing her creditor 1.a mortgage debt,
while encouraging, are not enough to mitigate financial concerns covering the creditor
1.a debt.
From a whole-person perspective, Applicant’s demonstrated repayment efforts
reflect considerable goof-faith effort on her part, but are still not enough to overcome
security concerns associated with her pass-due mortgage debt with creditor 1.a. Her
contributions to her employer and the national defense that are demonstrated with her
excellent performance evaluations are commendable and worthy of considerable weight
when assessing her trustworthiness and reliability.
Considering all of the circumstances surrounding Applicant’s accrual of a
substantial past-due mortgage account with the mortgage lender financing her rental
property purchase and her two resolved student loan debts, Applicant’s actions in
resolving her debts, while encouraging, are insufficient to meet mitigation requirements
imposed by the guideline governing her finances. Unfavorable conclusions are
8
warranted with respect to the allegations covered by subparagraph 1.a. of Guideline F.
Favorable conclusions are warranted with respect to the allegations covered by
subparagraphs 1.b and 1.c.
Formal Findings
In reviewing the allegations of the SOR and ensuing conclusions reached in the
context of the findings of fact, conclusions, conditions, and the factors listed above, I
make the following formal findings:
GUIDELINE F (FINANCIAL CONSIDERATIONS): AGAINST APPLICANT
Subpara. 1.a:                           Against Applicant
Subparas. 1.b-1.c:      For Applicant
Conclusions                                 
In light of all the circumstances presented by the record in this case, it is not
clearly consistent with the national interest to grant or continue Applicant’s security
clearance.  Clearance is denied.
                                          
Roger C. Wesley
Administrative Judge 
                                        
9