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      DEPARTMENT OF DEFENSE      
 DEFENSE OFFICE OF HEARINGS AND APPEALS 
In the matter of: ) 
) 
) ISCR Case No. 16-03712 
) 
) 
Applicant for Security Clearance ) 
Appearances 
For Government: Andrew Henderson, Esq., Department Counsel 
For Applicant: Pro se 
February 7, 2018 
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Decision 
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GOLDSTEIN, Jennifer, Administrative Judge: 
Applicant is over $58,000 delinquent on two home mortgages, which have been 
past due since early 2015, and remain unresolved. Resulting security concerns were 
not mitigated. Based upon a review of the pleadings, testimony, and exhibits, national 
security eligibility is denied. 
History of Case 
On March 23, 2016, Applicant submitted an Electronic Questionnaire for 
Investigations Processing (e-QIP). On January 5, 2017, the Department of Defense 
Consolidated Adjudications Facility (DoD CAF) issued Applicant a Statement of 
Reasons (SOR) alleging security concerns under Guideline F: Financial Considerations. 
The action was taken under Executive Order (EO) 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 effective within the DoD after 
September 1, 2006.  
 
 
 
 
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 Applicant answered the SOR in writing on February 6, and February 17, 2017 
(Answer), and requested a hearing before an administrative judge. The Defense Office 
of Hearings and Appeals (DOHA) assigned the case to another administrative judge on 
September 6, 2017. DOHA issued a Notice of Hearing on September 6, 2017, setting 
the hearing for September 14, 2017, per Applicant’s request.1 On September 11, 2017, 
the case was reassigned to me. The hearing proceeded as scheduled via video 
teleconference on that date. Department Counsel offered Government Exhibits (GE) 1 
through 9 into evidence. GE1, GE 2, and GE 4 through 9 were admitted without 
objection. GE 3 was admitted over Applicant’s objection as to its relevancy. (Tr. 14.) 
Applicant testified. DOHA received the hearing transcript (Tr.) on September 22, 2017. 
The record was left open for the submission of additional documentation. On September 
15, 2017, September 28, 2017, and September 29, 2017, Applicant submitted exhibits, 
which I marked as (AE) A through H. Department Counsel had no objections to AE A 
through H, and they were admitted. 
 
The SOR in this case was issued under the adjudicative guidelines that came 
into effect within the DoD on September 1, 2006. Security Executive Agent Directive 
(SEAD) 4, National Security Adjudicative Guidelines, implemented new adjudicative 
guidelines that came into effect on June 8, 2017. All national security eligibility 
determinations issued on or after June 8, 2017, are to be decided using the new 
National Security Adjudicative Guidelines for Determining Eligibility for Access to 
Classified Information or Eligibility to Hold a Sensitive Position (AG), as promulgated in 
Appendix A of SEAD 4. I considered the previous adjudicative guidelines, as well as the 
new AG, in adjudicating Applicant’s national security eligibility. This decision is issued 
pursuant to, and cites, the new AG; but my decision would be the same under either set 
of guidelines. 
 
Findings of Fact 
 
 Applicant is 44 years old. He served in the Air Force from 1992 to 2013. He 
retired as a master sergeant, E-7. He is married to his second wife. He has two adult 
children. (GE 1; Tr. 27-29, 48.) He admitted the delinquent debts alleged in SOR ¶¶ 1.a 
and 1.b. (Answer.) Applicant’s admissions are incorporated in the findings below.  
 
 In approximately December of 2004, Applicant purchased a house (Home 1) for 
$192,000. His first mortgage was financed with a creditor (Bank 1), and had an 
adjustable rate mortgage. That loan is the subject of SOR allegation 1.b, which was 
alleged to be delinquent in the amount of $24,257 with a balance that had grown to 
$250,252. In 2007, Applicant took a second mortgage on his home for approximately 
$50,000, with a second creditor (Bank 2), which is the subject of SOR allegation 1.a. It 
is alleged to be delinquent in the amount of $34,483. He used the second mortgage to 
do upgrades to the home, including installing new countertops, adding a carport, and 
building a patio. (Tr. 29-45.) 
                                            
1 Applicant requested his hearing be held at this time to accommodate his travel schedule. See July 26, 
2017, through September 8, 2017, email correspondence chain, DOHA file.  
 
 
 
 
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 Applicant lived in Home 1 from 2004 to 2010, when he got orders from the Air 
Force to another duty station. He was unable to sell Home 1 at that time because the 
market had declined and it was worth less than he owed on it. He leased it to renters for 
three years. However, in 2011, he was selected to return to the base near Home 1. He 
lived in the home after it was vacated by the renters, from approximately October 2012 
to January 2014.2 (GE 1.) He had two short-sale offers on the property between 2011 
and 2014. Neither were approved. Applicant ceased payment to Bank 1 in December 
2014 and to Bank 2 in early 2015, after the banks were unable to work with each other 
to accept terms of a short sale. (GE 1; GE 4; GE 5; GE 6; AE A; AE C; Tr. 29-45, 52.) 
 
 In 2014, Applicant purchased a new home (Home 2) in the same geographical 
area as Home 1. He financed it with a loan for $288,000. He explained that he 
purchased Home 2, hoping that the short-sale offer that was pending on Home 1 would 
be approved. The renters that previously occupied Home 1 wanted to purchase it, and 
made Bank 1 that short-sale offer. (GE 2; GE 9; AE B; Tr. 37, 43-44.) 
 
 In February 2015, Applicant purchased a new $56,000 vehicle. (GE 6; Tr. 52-53.) 
His wife also purchased a new luxury vehicle in the same time frame. (Tr. 51.) 
 
 Applicant attempted to submit a Deed in Lieu of Foreclosure in March 2016, but it 
was rejected by Bank 1. (GE 2; AE D.) He continues to receive monthly statements in 
the mail. As of July 2017, Applicant was delinquent on his loan with Bank 1 in the 
amount of $47,237.90. He had not communicated with Bank 2 since December 2015, 
although he believes Bank 2 sold the debt to a collection company. Applicant continued 
to pay the home owners association fees on Home 1. At the close of the hearing, 
Applicant was still liable on both mortgages. (GE 1; GE 6; GE 8; Tr. 29-45.)  
 
 In his post-hearing documentation, Applicant submitted a modification application 
with Bank 1, dated September 28, 2017. There was no documentation establishing if 
that application had been approved, or documentation showing payments under the 
proposed modification. He also produced a listing agreement, showing his contract with 
a real estate agent to sell Home 1. (AE E; AE G.) 
 
 Applicant testified: 
 
[T]he most recent credit report, if you would pull it like today, would show 
that I am trying to fix everything and then some that I am doing by 
basically paying all my bills and then some. I have no credit whatsoever 
outstanding whatsoever. I have two vehicles and the house in question 
and my primary residence. And that's all I have. I don't have anything else 
                                            
2 A copy of the lease reflects the home was rented from August 1, 2011, to August 1, 2014. (AE B.) 
Applicant’s e-QIP reflected Applicant lived at this address from October 2012 to January 2014. (GE 1.) 
However, he testified that he only resided there for a few months. (Tr. 39-44.) 
 
 
 
 
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outstanding, and I'm trying to zero myself out in regards to fix my credit, if 
you will. (Tr. 20) 
 
 Applicant’s records show a Chapter 7 bankruptcy petition was filed in October 
1998. His debts were discharged in 2000.3 (GE 7.) Additionally, he had a vehicle 
repossessed in 2000. (GE 3.)  
  
Policies 
 
 When evaluating an applicant’s national security eligibility, the administrative 
judge must consider the adjudicative guidelines. In addition to brief introductory 
explanations for each guideline, the adjudicative guidelines (AG) list potentially 
disqualifying conditions and mitigating conditions, which are to be used in evaluating an 
applicant’s national security eligibility. 
 
 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 AG ¶ 2 describing the adjudicative process. The administrative judge’s 
overarching adjudicative goal is a fair, impartial, and commonsense decision. The entire 
process is a conscientious scrutiny of applicable guidelines in the context 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 national security 
eligibility will be resolved in favor of the 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. I have not drawn inferences based on mere 
speculation or conjecture.  
 
 Directive ¶ E3.1.14 requires the Government to present evidence to establish 
controverted facts alleged in the SOR. Directive ¶ E3.1.15 says that an “applicant is 
responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or 
mitigate facts admitted by the applicant or proven by Department Counsel, and has the 
ultimate burden of persuasion as to obtaining a favorable clearance decision.”  
 
 A person applying for national security eligibility seeks to enter 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 national security eligibility. Decisions include, by necessity, consideration of the 
possible risk the applicant may deliberately or inadvertently fail to protect or safeguard 
                                            
3 These debts were not alleged in the SOR and will only be considered in connection with evaluating 
mitigating conditions and whole-person analysis. 
 
 
 
 
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classified information. Such decisions entail a certain degree of legally permissible 
extrapolation as to potential, rather than actual, risk of compromise of classified or 
sensitive information. 
 
 Finally, as emphasized in Section 7 of Executive Order 10865, “[a]ny 
determination under this order adverse to an applicant shall be a determination in terms 
of the national interest and shall in no sense be a determination as to the loyalty of the 
applicant concerned.” See also Executive Order 12968, Section 3.1(b) (listing multiple 
prerequisites for access to classified or sensitive information.) 
 
Analysis 
 
Guideline F: Financial Considerations 
 
 The security concerns relating to the guideline for financial considerations are set 
out in AG ¶ 18, which reads in pertinent part:       
 
Failure 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 or sensitive information. Financial distress can also be 
caused or exacerbated by, and thus can be a possible indicator of, other 
issues of personal security concern such as excessive gambling, mental 
health conditions, substance misuse, or alcohol abuse or dependence. An 
individual who is financially overextended is at greater risk of having to 
engage in illegal or otherwise questionable acts to generate funds. 
 
 AG ¶ 19 describes conditions that could raise security concerns and may be 
disqualifying in this case:  
 
(a) inability to satisfy debts; 
 
(b) unwillingness to satisfy debts regardless of the ability to do so; and 
 
(c) a history of not meeting financial obligations. 
 
As alleged in the SOR, Applicant is over $58,000 delinquent on two home 
mortgages, which have been past due since early 2015. These facts establish prima 
facie support for the foregoing disqualifying conditions, and shift the burden to Applicant 
to mitigate those concerns. 
 
 The guideline includes four conditions in AG ¶ 20 that could mitigate the security 
concerns arising from Applicant’s admitted financial difficulties:  
 
 
 
 
 
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(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;  
 
(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, clear victimization by predatory lending practices, or identity 
theft), and the individual acted responsibly under the circumstances; 
 
(c) the individual has received or is receiving financial counseling for the 
problem from a legitimate and credible source, such as a non-profit credit 
counseling service, and there are clear indications that the problem is 
being resolved or is under control; and 
 
(d) the individual initiated and is adhering to a good-faith effort to repay 
overdue creditors or otherwise resolve debts.  
 
 Applicant’s financial problems arose as a result of a strategic default on his 
mortgages owed to Bank 1 and Bank 2. While the decline of his home value and his 
transfer to another duty station were two factors beyond his control, and may have 
initially caused his financial problems, he did not present evidence that he acted 
responsibly under such circumstances. While he attempted to address these debts 
through a short sale of Home 1, and tried to negotiate a deed in lieu of foreclosure, he 
also purchased Home 2 and two new expensive vehicles about the same time he chose 
to default on his debts to Bank 1 and Bank 2. Applicant’s default on his Home 1 
mortgage loans was part of a larger pattern of financial irresponsibility, including his 
previous bankruptcy and vehicle repossession. He has done little to show that similar 
circumstances are unlikely to occur. Mitigation was not established under AG ¶¶ 20(a) 
or 20(b). 
 
He offered no evidence of financial counseling, or budget information 
establishing either sufficient solvency going forward or an ability to responsibly manage 
his finances. Although he argued that his 2017 credit report indicates he is paying his 
debts, he failed to fully demonstrate that his financial problems are under control and 
that he has a budget to accommodate them. Accordingly, Applicant established limited 
mitigation of financial security concerns under the provisions of AG ¶¶ 20(c) or 20(d). 
 
Whole-Person Concept 
 
 Under the whole-person concept, the administrative judge must evaluate an 
applicant’s national security eligibility by considering the totality of the applicant’s 
conduct and all relevant circumstances. The administrative judge should consider the 
nine adjudicative process factors listed at AG ¶ 2(d):  
 
 
 
 
 
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(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. 
 
According to AG ¶ 2(c), the ultimate determination of whether to grant national security 
eligibility must be an overall commonsense judgment based upon careful consideration 
of the applicable guidelines and the whole-person concept.  
 
I considered the potentially disqualifying and mitigating conditions in light of all 
pertinent facts and circumstances surrounding this case. Applicant is a mature adult, 
who is accountable for his choices to incur substantial debt and not repay it. He has not 
demonstrated responsible action under the circumstances, and he has not made a 
good-faith effort to repay his mortgage debts. His finances are not yet under control. His 
financial issues are recent and ongoing, but also date back almost 20 years. A 
determination cannot be made that they are unlikely to recur. They continue to cast 
doubt on his current reliability, trustworthiness, and good judgment. Financial concerns 
remain despite the presence of some mitigation. Overall, the evidence creates 
significant doubt as to Applicant’s judgment, eligibility, and suitability for a security 
clearance. He failed to meet his burden to mitigate the security concerns arising under 
the guideline for financial considerations.  
 
Formal Findings 
 
 Formal findings for or against Applicant on the allegations set forth in the SOR, 
as required by ¶ E3.1.25 of Enclosure 3 of the Directive, are: 
 
 Paragraph 1, Guideline F:   AGAINST APPLICANT 
 
  Subparagraphs 1.a and 1.b:   Against Applicant 
 
Conclusion 
 
 In light of all of the circumstances presented by the record in this case, it is not 
clearly consistent with the interests of national security to grant Applicant eligibility for a 
security clearance. National security eligibility for access to classified information is 
denied. 
                                        
         
 
Jennifer Goldstein 
Administrative Judge