ISCR Case 15-04554.h1

Case Headnote

ISCR Case No. 15-04554.h1

grantedMar 30, 2017· Hon. Robert Robinson Gales· hearing

Summary

A 36-year-old project engineer with a defense contractor was granted a security clearance despite concerns under Guideline F (Financial Considerations). The applicant's financial difficulties arose from family growth and a loss of income.

Specifically, the applicant faced two judgments from his Homeowners Association (HOA) in 2010 for $1,755 and $4,360, respectively. By November 2011, the balance, including late fees, reached $8,719. In early 2014, the HOA placed a lien on his residence for approximately $18,000. After learning of these issues in 2011, the applicant contacted the creditor and, when able, made a $10,000 lump-sum payment. He also entered a repayment agreement for $680 monthly. In March 2015, he paid the HOA $13,578 using his income tax refund, covering arrears and legal fees, and continued monthly payments until the property was sold. The lien was subsequently canceled in May 2015.

The applicant also resolved issues related to the sale of his property. After repeated attempts to secure a short sale approval, the property was successfully sold on June 13, 2016, at an approved price. The administrative judge found that the applicant had taken responsible actions to resolve his debts, including substantial payments and the sale of the property, which eliminated the remaining debts and lien. His financial status had significantly improved, with no remaining delinquent debts, leading to the granting of his security clearance.

Why the Applicant Prevailed

The applicant made substantial payments to resolve outstanding debts, including a $10,000 lump-sum payment and monthly payments to the HOA.
He sold the property associated with the financial issues, eliminating the debts and lien.
The applicant's financial status improved significantly, with no remaining delinquent debts.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability or Unwillingness to Satisfy Debts
AG ¶ 19(c)raisedHistory of Not Meeting Financial Obligations

Mitigating

AG ¶ 20(a)appliedBehavior Happened Long Ago or Infrequently
AG ¶ 20(b)appliedConditions Largely Beyond the Person's Control
AG ¶ 20(c)appliedReceived Counseling and Indications of Resolution
AG ¶ 20(d)appliedGood-faith Effort to Repay or Resolve Debts

Key Rule Quoted

“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.”

Procedural Posture

SOR issuedNov 24, 2015Applicant received SOR on December 9, 2015.
Answer filedDec 19, 2015Requested a hearing.
Hearing heldApr 26, 2016Hearing conducted as scheduled.
Decision dateMar 30, 2017

Cite For

Mitigation of Financial Issues Under Guideline F
Good-faith Efforts to Resolve Debts
Impact of Personal Circumstances on Financial Reliability

Editorial summary generated for research. Not legal advice; not a prediction. Verify against the full decision before relying on any quoted language.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	In March 2010, the HOA sued Applicant and obtained a $1,755 judgment. In October 2010, they sued him again and obtained a $4,360 judgment. By November 2011, the unpaid balance, including late fees, had risen to $8,719. In early 2014, the HOA placed a lien on the residence, claiming Applicant owed the HOA about $18,000. At some point in 2011, Applicant learned of the judgments and the lien, and he contacted the creditor in an effort to resolve the matter. At the time, he was unable to make a large lump-sum payment, but when he was able to do so, he made one $10,000 lump-sum payment, and he entered into a repayment agreement under which he agreed to pay the HOA $680 each month until the entire amount is paid off. On March 23, 2015 – eight months before the SOR was issued – Applicant used his income tax refund and paid the HOA $13,578, covering the arrears and $7,228.59 in legal fees. He also continued to make his monthly HOA payments until he eventually sold the property. On May 8, 2015, a Stipulation Discontinuing Action with Prejudice and a Stipulation Cancelling Notice of Pendency of Action were issued, signifying that the matter had been satisfied and the lien was cancelled. $1,755	For Applicant	Judgment Against Applicant	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full Claimed Other
1.b	In March 2010, the HOA sued Applicant and obtained a $1,755 judgment. In October 2010, they sued him again and obtained a $4,360 judgment. By November 2011, the unpaid balance, including late fees, had risen to $8,719. In early 2014, the HOA placed a lien on the residence, claiming Applicant owed the HOA about $18,000. At some point in 2011, Applicant learned of the judgments and the lien, and he contacted the creditor in an effort to resolve the matter. At the time, he was unable to make a large lump-sum payment, but when he was able to do so, he made one $10,000 lump-sum payment, and he entered into a repayment agreement under which he agreed to pay the HOA $680 each month until the entire amount is paid off. On March 23, 2015 – eight months before the SOR was issued – Applicant used his income tax refund and paid the HOA $13,578, covering the arrears and $7,228.59 in legal fees. He also continued to make his monthly HOA payments until he eventually sold the property. On May 8, 2015, a Stipulation Discontinuing Action with Prejudice and a Stipulation Cancelling Notice of Pendency of Action were issued, signifying that the matter had been satisfied and the lien was cancelled. $4,360	For Applicant	Judgment Against Applicant	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full Claimed Other
1.c	In January 2015, Applicant listed the house for sale with a real estate agent. The original listing price was $235,000, but it was reduced to $225,000. He repeatedly sought approval for a short sale of the property, but the loan servicing company kept delaying a decision, requesting additional information, and potential purchasers withdrew their offers. An April 2015 offer for $210,000 was seemingly ignored by the loan servicing company. The new loan servicing agent on the first mortgage finally approved a short sale request for $170,184 on April 11, 2016. However, during the delay, Applicant sought assistance from the loan servicing company on the second mortgage, and on March 21, 2016, it approved a short sale for $196,500. The settlement on the property was completed on June 13, 2016, with the established and approved price. $196,500	For Applicant	Mortgage or Home Loan Debt	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full Claimed Other

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

In March 2010, the HOA sued Applicant and obtained a $1,755 judgment. In October 2010, they sued him again and obtained a $4,360 judgment. By November 2011, the unpaid balance, including late fees, had risen to $8,719. In early 2014, the HOA placed a lien on the residence, claiming Applicant owed the HOA about $18,000. At some point in 2011, Applicant learned of the judgments and the lien, and he contacted the creditor in an effort to resolve the matter. At the time, he was unable to make a large lump-sum payment, but when he was able to do so, he made one $10,000 lump-sum payment, and he entered into a repayment agreement under which he agreed to pay the HOA $680 each month until the entire amount is paid off. On March 23, 2015 – eight months before the SOR was issued – Applicant used his income tax refund and paid the HOA $13,578, covering the arrears and $7,228.59 in legal fees. He also continued to make his monthly HOA payments until he eventually sold the property. On May 8, 2015, a Stipulation Discontinuing Action with Prejudice and a Stipulation Cancelling Notice of Pendency of Action were issued, signifying that the matter had been satisfied and the lien was cancelled.

$1,755

For Applicant

Judgment Against Applicant

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(a) behavior happened long ago / infrequent / unlikely to recur

(b) conditions largely beyond the person’s control; acted responsibly

(c) received/receiving counseling; problem being resolved

(d) good-faith effort to repay or otherwise resolve debts

Documented

Debt Paid in Full

Claimed

Other

1.b

$4,360

For Applicant

Judgment Against Applicant

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(a) behavior happened long ago / infrequent / unlikely to recur

(b) conditions largely beyond the person’s control; acted responsibly

(c) received/receiving counseling; problem being resolved

(d) good-faith effort to repay or otherwise resolve debts

Documented

Debt Paid in Full

Claimed

Other

1.c

In January 2015, Applicant listed the house for sale with a real estate agent. The original listing price was $235,000, but it was reduced to $225,000. He repeatedly sought approval for a short sale of the property, but the loan servicing company kept delaying a decision, requesting additional information, and potential purchasers withdrew their offers. An April 2015 offer for $210,000 was seemingly ignored by the loan servicing company. The new loan servicing agent on the first mortgage finally approved a short sale request for $170,184 on April 11, 2016. However, during the delay, Applicant sought assistance from the loan servicing company on the second mortgage, and on March 21, 2016, it approved a short sale for $196,500. The settlement on the property was completed on June 13, 2016, with the established and approved price.

$196,500

For Applicant

Mortgage or Home Loan Debt

Admitted

—

(a) behavior happened long ago / infrequent / unlikely to recur

(b) conditions largely beyond the person’s control; acted responsibly

(c) received/receiving counseling; problem being resolved

(d) good-faith effort to repay or otherwise resolve debts

Documented

Debt Paid in Full

Claimed

Other

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Case Profile

Summary

Why the Applicant Prevailed

Conditions Referenced

Key Rule Quoted

Procedural Posture

Cite For

Full decision

DEFENSE OFFICE OF HEARINGS AND APPEALS

HEARING

APPEARANCES

STATEMENT OF CASE

FINDINGS OF FACT

POLICIES

ANALYSIS

WHOLE PERSON CONCEPT

FORMAL FINDINGS

CONCLUSION

FOOTNOTES