Consisting of the transcript (Tr.), Government exhibits (GE) 1-4   and Applicant exhibits (AE) A-G.1
DoD acted under Executive Order 10865, Safeguarding Classified Information Within Industry (February 20,2
1960), as amended; DoD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program
(January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG) effective within the DoD on
1 September 2006. 
1
                                                             
                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
XXXXXXXXXXXXXXXXXX )       ISCR Case No. 14-07001
)
Applicant for Security Clearance )
Appearances
For Government: Bryan J. Olmos, Esquire, Department Counsel
For Applicant: Bradley P. Moss, Esquire
______________
Decision
______________
METZ, John Grattan, Jr., Administrative Judge:
Based on the record in this case,  Applicant’s clearance is denied.1
On 13 May 2015, the Department of Defense (DoD) sent Applicant a Statement
of Reasons (SOR) detailing security concerns under Guideline F, Financial
Considerations.  Applicant timely answered the SOR requesting a hearing before the2
Defense Office of Hearings and Appeals (DOHA). DOHA assigned the case to me 21
August 2015, and I convened a hearing 5 October 2015. DOHA received the transcript
13 October 2015, and the record closed.
However, the proof of satisfaction does not indicate when the judgment was satisfied.3
He has also served as the executive vice president of the parent company division to which his employing4
company reports, since about January 2015 (Tr. 27). From December 2008 to December 2013, he was
employed at another contractor, where he eventually rose to the title of senior manager.
He mistakenly testified (Tr. 36) that he left active duty in January 2006. However, I accept as more likely5
correct the dates reported on his clearance application. He was commissioned in May 2000, so his active duty
obligation would not have expired until May 2006. Moreover, he reports his two-year employment with another
Government agency (AGA) from December 2006 to December 2008 (GE 1).
He must have an industrial clearance. However, he reported none on his September 2013 clearance6
application (GE 1).
However, technically his mortgage is in review for a loan modification (Tr. 53, 67).7
Applicant later corrected the date to 2011 (Tr. 61).8
2
Findings of Fact
Applicant admitted SOR financial allegation 1.b. He denied allegation 1.a and
documented that the judgment had been satisfied (Answer, Attachment 1).  He is a 38-3
year-old managing director at the defense contractor that has employed him since
January 2014 (Tr. 37).  He is a May 2000 graduate of a United States (U.S.) service4
academy (GE 1; Tr. 35). He has been continuously employed since leaving active duty
in December 2006 (GE 1).  He seeks to retain the clearance he has held, as necessary,5
since entering the academy (Tr. 38).  He has never had any security violations.6
The SOR alleges two delinquent debts totaling over $134,000, a June 2013
judgment for $900 that has been satisfied, and an allegedly-foreclosed mortgage, over
$133,000 past-due on a balance of nearly $500,000. Applicant’s September 2013 credit
report (GE 2) reports the mortgage in foreclosure as alleged in SOR 1.b. Applicant’s
December 2014 credit report (GE 3) reports the past-due balance as alleged in SOR
1.b. Applicant’s October 2015 credit report (GE 4) reports that the past-due balance had
grown to nearly $175,000. Applicant’s September 2013 clearance application (GE 1)
reported his being $35,000 delinquent on his mortgage, which he attributed to disputes
with his wife, his separation, and pending divorce. He anticipated selling the house in
spring 2014. He is currently pursuing a deed in lieu of foreclosure with the lender (Tr.
53, 67).  This should be accomplished by November 2015. If successful, Applicant7
would be relieved of responsibility for the $500,000 outstanding balance on the
mortgage.
Applicant attributes his mortgage problem to his wife losing her job in late 2011-
early 2012 (Tr. 39).  He never stated how much family income was lost. They began to8
use their savings to continue making the mortgage payment. Applicant wanted to sell
the house and move into a more affordable residence. Applicant’s wife did not want to
Applicant initially put this event in 2012 (Tr. 40-41), but later amended the date to 2011 (Tr. 62).9
The company was organized as a limited liability corporation (LLC) and Applicant was part of the corporation10
(Tr. 43-43).
However, none of Applicant’s credit reports list a second mortgage on the house, or any other joint loan11
aside from the first mortgage, that could possibly serve as a source for this funding. Applicant did not explain
how a loan was obtained with the house as collateral without his signature since the first mortgage is a joint
account.
W hich Applicant is unable to document (Tr. 63).12
Applicant’s September 2013 credit report (GE 2) reports April 2012 as the date of last activity. His December13
2014 credit report (GE 3) reports March 2012 as the date of last activity. Applicant’s October 2015 credit report
(GE 4) April 2012 as the date of last payment.
Perhaps as many as six-eight months (Tr. 72).14
Applicant did not submit a copy of the marital settlement agreement, so it is unknown whether any provision15
was made for mortgage payments. Moreover, Applicant did not submit the preliminary settlement agreement
which obligated Applicant to assume all the joint debt (Tr. 80).
3
sell the house. Instead, in 2011,  she opened a small business with Applicant’s9
support.  He described his support as rooted in his thought that the business might10
succeed and as a last-ditch effort to try to save their marriage. He did not otherwise
reveal what the problems were in the marriage.
Applicant claims that they funded the new business with a $38,000 additional
loan on the house (Tr. 41).  The venture was not a success, and was closed in 2013. In11
2012, Applicant’s annual salary was $170,000-175,000, not including an $11,000 bonus
at year’s end (Tr. 45).
In the meantime, Applicant and his wife were supposedly going into debt to make
the mortgage payment. In early 2012, they applied for a loan modification.   In March or12
April 2012 (Tr. 62), Applicant consulted a county housing assistance office, where a
staffer told him they were unlikely to get the lender’s attention unless they were
delinquent on their mortgage. Applicant and his wife stopped paying the $4,200 per
month mortgage in April 2012 (Tr. 48-49).  Applicant has made no payments since,13
although he estimates he could have continued to make payments for another five or six
months after he stopped making the payments initially. Even today, he could make the
mortgage payments long enough to put the house on the market (Tr. 68).14
Applicant left the marital home in August 2012. They are legally separated, and
they have been through two rounds of mediation to reach a settlement agreement,
which they expect to file shortly for judgment of absolute divorce (Tr. 51).  Applicant’s15
wife and children left the marital home in September 2015, and moved to a different city.
Applicant and his wife apparently discussed renting the house, selling the house, or
attempting a short sale at various times after they decided to separate, but the house
was never put on the market (Tr. 72-73).
Applicant testified to a $190,000 base salary plus a $10,000-11,000 bonus (Tr. 76, 79). His wife was making16
$50,000-55,000 annually.
As is sadly typical with modification requests, the lender required the borrowers to submit updated17
information while each request was pending, then demanded that the borrowers re-submit the entire
application when the lender was unable to make a decision within some established time line.
Applicant estimated this year’s bonus as $60,000-70-000 (Tr. 78).18
4
Applicant and his wife re-submitted a loan modification request in October 2013
(AE B). By this time, Applicant’s wife had started a job in mid-to-late 2013 (Tr. 79), and
they reported over $245,000 gross annual income.  They re-submitted again in June16
2014 (AE C), reporting nearly $280,000 gross annual income. Finally, in August 2015,
Applicant, through counsel, demanded that the lender make a decision on the loan
modification after the lender apparently sought a fourth submission (AE D). The lender
promised to respond by early September 2015, but did not.17
Applicant’s annual salary in January 2014 was $235,000 (Tr. 31). He currently
earns $250,000 annually (Tr. 30, 58) and is eligible for a 30% bonus ($75,000)  if18
certain business metrics are met. Ten percent of the bonus is discretionary to
Applicant’s performance rater (Tr. 32). Applicant’s bonuses are taxable income, and he
has owed additional Federal income taxes in recent years (Tr. 69).
 Applicant submitted a personal financial statement (PFS) for 2012 showing $850
negative monthly cash flow with Applicant making the $4,175 monthly mortgage
payment (AE A). Of course, after April 2012, Applicant was not making the monthly
mortgage payment, so he had $3,325 positive monthly cash flow which Applicant was
using to pay his and his wife’s consumer debt (Tr. 50). His October 2015 PFS (also AE
A) shows $860 positive monthly cash flow after a $1,700 monthly rent payment.
Applicant documented no credit or financial counseling. His neighbor considers
him honest and trustworthy, says he does not live beyond his means, and recommends
him for his clearance (Tr. 17-22). The Chief Executive Officer (CEO) of Applicant’s
parent company, and Applicant’s performance rater, is aware of the SOR, but still
considers Applicant an outstanding employee and recommends him for his clearance
(Tr. 24-34). A former supervisor echoes those sentiments, although he also stated his
confidence that Applicant would make all financial restitutions on his mortgage (AE G).
Policies
The adjudicative guidelines (AG) list factors for evaluating a person’s suitability
for access to classified information. Administrative judges must assess disqualifying and
mitigating conditions under each issue fairly raised by the facts and situation presented.
Each decision must also reflect a fair, impartial, and commonsense consideration of the
factors listed in AG ¶ 2(a). Any one disqualifying or mitigating condition is not, by itself,
conclusive. However, specific adjudicative guidelines should be followed where a case
can be measured against them, as they represent policy guidance governing access to
See, Department of the Navy v. Egan, 484 U.S. 518 (1988).19
¶ 19 (a) inability or unwillingness to satisfy debts; (c) a history of not meeting financial obligations;20
5
classified information. Considering the SOR allegations and the evidence as a whole,
the relevant adjudicative guideline is Guideline F (Financial Considerations).
Security clearance decisions resolve whether it is clearly consistent with the
national interest to grant or continue an applicant’s security clearance. The Government
must prove, by substantial evidence, controverted facts alleged in the SOR. If it does,
the burden shifts to applicant to refute, extenuate, or mitigate the Government’s case.
Because no one has a right to a security clearance, the applicant bears a heavy burden
of persuasion.
Persons with access to classified information enter into a fiduciary relationship
with the Government based on trust and confidence. Therefore, the Government has a
compelling interest in ensuring each applicant possesses the requisite judgement,
reliability, and trustworthiness of those who must protect national interests as their own.
The “clearly consistent with the national interest” standard compels resolution of any
reasonable doubt about an applicant’s suitability for access in favor of the
Government.19
Analysis
The Government established a case for disqualification under Guideline F, and
Applicant failed to mitigate the security concerns, which largely relate to Applicant’s
judgment. Applicant deliberately stopped paying his mortgage after April 2012. Although
he submitted loan modification applications in early 2012, October 2013, and June
2014—none of which were acted upon—Applicant sought no other solution with the
lender despite having the apparent means to do so.20
The essence of the case is this: once the Government established its case, the
burden shifted to Applicant to refute, extenuate, or mitigate the Government’s case.
Thus, it was Applicant’s burden to establish the essential time line of the case, including
his wife’s alleged job loss, the establishing of a new business with commensurate
funding, and the circumstances of their subsequent separation, settlement negotiations,
and ultimate divorce. Applicant failed to establish those elements to my satisfaction.
Applicant’s time line is not a model of clarity, and while I do not cite the
discrepancies in his chronology to undercut his credibility, I nevertheless must conclude
that Applicant’s evidence does not establish that he could not make his mortgage
payments after his wife lost her job in 2011. At the very most, the period of time when
Applicant’s family was a single-income family ran from late 2011 to mid-to-late 2013.
Applicant puts this job loss in late 2011. The absence of any greater precision seriously
undercuts Applicant’s claim that he had little other choice in dealing with his mortgage.
Applicant’s last mortgage payment was April 2012 (GE 2-4). Applicant’s late September 2013 credit report21
(GE 2) records a balance date of August 2013—some 16 months of missed payments. Applicant states that
he never received any notice of foreclosure and subsequent credit reports appear to corroborate that, each
reporting increasing past-due balances but no foreclosure (GE 3, 4).
¶ 20 (a) the behavior happened so long ago, was so infrequent, or occurred under such circumstances that22
it is  unlikely to recur . . . 
6
Applicant’s chronology must have these data points between late 2011, when his
wife lost her job, and April 2012, when there is objective proof that Applicant stopped
paying his mortgage:
1. Applicant’s wife loses her job.
2. Applicant and his wife discuss disposition of the house.
3. Applicant’s wife establishes new company.
4. Applicant and his wife apply for and obtain second mortgage.
5. Applicant and his wife apply for a mortgage modification.
5. Applicant consults state housing assistance office.
7. Applicant stops paying his mortgage.
These data points omit necessary integral steps required to accomplish each
larger step. But these steps alone take time. To list just the larger chronology
demonstrates its improbability. Applicant’s 2012 salary was $170,000-175,000 plus
bonus. That salary, plus his wife’s business plan, was enough to  qualify for a second
mortgage, although there is no evidence in the record to show any such loan was
obtained. Even so, by Applicant’s testimony, this business was closed in 2013, and in
mid-to-late 2013 Applicant’s wife obtained a salaried job. In September 2013, when he
reported being $35,000 delinquent on his mortgage, he had to have been in the
neighborhood of $67,000 delinquent and the account was reported in foreclosure.21
Nearly-simultaneously Applicant reported the annual family income was $245,000 as of
his October 2013 modification application. The loan modification would certainly have
made it easier but his stated income makes it clear he could have resumed regular
payments, at a minimum to forestall greater delinquencies. In June 2014, the annual
family income had risen to $280,000. And he reported a $78,000 bonus for that year.
Consequently, the mitigating factors for financial considerations give Applicant
little aid. His financial difficulties are recent, but not multiple, yet the circumstances that
caused them cannot be considered unlikely to recur because Applicant and his wife
essentially made a deliberate choice to walk away from the mortgage.  The Appeal22
Board has described this conduct as a strategic default [ISCR Case No. 11-07747 (App.
Bd., 27 February 2013.)].
Further, while his financial problems started as a circumstance beyond his
control and his initial response to apply for a loan modification could be considered
responsible, his decision to stop paying the mortgage—even on the advice of a county
housing assistance office—was not, particularly where a plan was potentially available
to address the mortgage delinquencies by mid-to-late 2013. Instead, Applicant reapplied
¶ 20 (b) the conditions that resulted in the financial problem were largely beyond the person’s control . . . and23
the individual acted responsibly under the circumstances;
¶ 20 (c) the person has received or is receiving counseling for the problem and there are clear indications24
that the problem is being resolved or is under control;
¶ 20 (d) the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts.25
ISCR Case No. 07-06482 (App. Bd. 21 May 2008).26
7
for a loan modification again in October 2013, at a time when he clearly had the income
to pursue another course of action. He had even more income in June 2014 when he
filed a third loan modification application. Under these circumstances, I do not consider
him to have been responsible in pursuing resolution of his delinquent mortgage.  There23
is no evidence that Applicant has had any financial or credit counseling, although frankly
this is not an issue in this case; however, he has not clearly acted to get his finances
under control.  Moreover, continuing to pursue loan modification to the exclusion of24
other remedies that he could afford does not constitute a good-faith effort to resolve his
delinquent mortgage.25
The Appeal Board has stated that an Applicant need not have paid every debt
alleged in the SOR, need not pay the SOR debts first, and need not be paying on all
debts simultaneously. Applicant need only establish that there is a credible and realistic
plan to resolve the financial problems, accompanied by significant actions to implement
the plan.  Applicant’s efforts to date do not constitute such a plan. His actions to relieve26
himself of financial responsibility have been belated and not significant. Although
Applicant’s character evidence is quite impressive I find it insufficient to mitigate the
security concerns raised by his lengthy period of atrocious judgment demonstrated by
his failure to pay his mortgage for over three years. I conclude Guideline F against
Applicant.
Formal Findings
Paragraph 1. Guideline F: AGAINST APPLICANT
Subparagraph a: For Applicant
Subparagraph b: Against Applicant
8
Conclusion
Under the circumstances presented by the record in this case, it is not clearly
consistent with the national interest to grant or continue a security clearance for
Applicant. Clearance denied.
                                                 
                                             
JOHN GRATTAN METZ, JR.
Administrative Judge