ISCR Case 09-07172.h1

Case Headnote

ISCR Case No. 09-07172.h1

deniedJul 1, 2009· Hon. Joan Caton Anthony· hearing

Summary

A 46-year-old U.S. citizen was denied a security clearance under Guideline F (Financial Considerations) due to unresolved financial issues. These issues stemmed from real estate investments and marital difficulties, which raised concerns about her reliability and judgment.

One significant debt arose after her husband's family stopped paying the mortgage on a house he had deeded to her. After evicting the family, she sold the property in a short sale in July 2009. The lender issued a Form 1099-C for a debt cancellation of approximately $89,467. Subsequently, the lender notified her of an additional balance of approximately $67,283, which she settled for $12,000, satisfying the debt in full.

However, a second debt, totaling $49,839, remained unresolved. This debt originated from the foreclosure of an investment property she purchased in July 2007 for $230,000 with no money down, incurring two mortgages with monthly payments of $1,900. After tenants moved out in July 2008, attempts to re-rent or short-sell the property were unsuccessful, leading her to stop mortgage payments in 2008. The property was foreclosed in January 2010 at a value of $140,000. The applicant's failure to resolve this significant debt and her ongoing financial delinquencies ultimately led to the denial of her security clearance.

Why the Applicant Was Denied

The applicant failed to resolve a significant debt of $49,839 related to a foreclosure.
The applicant's financial delinquencies were ongoing and cast doubt on her reliability and trustworthiness.
The applicant did not demonstrate sufficient evidence of responsible financial management or resolution of her debts.

Conditions Referenced

Disqualifying

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

Mitigating

AG ¶ 20(a)rejectedThe Behavior Happened so Long Ago, Was Infrequent, or Occurred Under Circumstances Unlikely to RecurThe applicant's financial issues were ongoing and significant.
AG ¶ 20(b)rejectedConditions Largely Beyond the Person's ControlWhile some circumstances were beyond her control, the applicant's choices contributed to her financial issues.
AG ¶ 20(c)rejectedReceived Counseling for the ProblemThe applicant did not provide documentation of counseling.
AG ¶ 20(d)rejectedGood-faith Effort to Repay Overdue CreditorsThe applicant had not resolved all debts and did not demonstrate a consistent effort to repay.
AG ¶ 20(e)rejectedReasonable Basis to Dispute the Legitimacy of the DebtThe applicant did not provide evidence disputing the legitimacy of the unresolved debt.

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 issuedMar 31, 2010
Answer filedApr 28, 2010
Hearing heldJul 14, 2010Applicant waived the 15-day notice requirement.
Decision dateSep 28, 2010

Cite For

Denial of Security Clearance Due to Unresolved Financial Obligations Under Guideline F
Impact of Personal Circumstances on Financial Reliability
Importance of Demonstrating Good-faith Efforts to Resolve Debts in Security Clearance Cases

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	The debt alleged at SOR ¶ 1.a. arose after Applicant’s husband and his family stopped paying the mortgage on the house he had deeded to her. The mortgage lender turned to Applicant, as the owner of record, for payment. Applicant brought an action to evict her husband’s family from the house. In September 2008, the family members vacated the house. In July 2009, Applicant sold the property at a short sale. On July 23, 2009, the lender issued Applicant a Form 1099-C showing a debt cancellation of approximately $89,467. In April 2010, the lender notified Applicant that she owed an additional balance of approximately $67,283 after the short sale. Applicant settled the debt for $12,000. Applicant’s documentation established that the lender consider the debt satisfied in full. $12,000	For Applicant	Unspecified Financial	Admitted	—	—	—
1.b	The debt alleged at SOR ¶ 1.b. arose from the foreclosure of a property Applicant purchased on her own as an investment in July 2007. Applicant paid $230,000 for the property, which was her first attempt to purchase real estate for investment purposes. She put no money down and purchased the property by taking out two mortgages. Her monthly payments on the mortgages totaled $1,900. Applicant found tenants and rented the house for approximately $1,400 a month. In July 2008, Applicant’s tenants moved out. She tried renting the property again and also tried to sell it by short sale. Applicant’s attempts to rent the property or to sell it by short sale were unsuccessful. She stopped making mortgage payments on the property in 2008. In January 2010, the lender foreclosed on the property, which had a value of $140,000. $49,839	Against Applicant	Mortgage or Home Loan Debt	Admitted	—	—	—
1.c	The debt alleged at SOR ¶ 1.c. is not recovered from source.	For Applicant	Unspecified Financial	Denied	—	—	—
1.d	The debt alleged at SOR ¶ 1.d. is not recovered from source.	For Applicant	Unspecified Financial	Denied	—	—	—
1.e	The debt alleged at SOR ¶ 1.e. is not recovered from source.	For Applicant	Unspecified Financial	Denied	—	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

The debt alleged at SOR ¶ 1.a. arose after Applicant’s husband and his family stopped paying the mortgage on the house he had deeded to her. The mortgage lender turned to Applicant, as the owner of record, for payment. Applicant brought an action to evict her husband’s family from the house. In September 2008, the family members vacated the house. In July 2009, Applicant sold the property at a short sale. On July 23, 2009, the lender issued Applicant a Form 1099-C showing a debt cancellation of approximately $89,467. In April 2010, the lender notified Applicant that she owed an additional balance of approximately $67,283 after the short sale. Applicant settled the debt for $12,000. Applicant’s documentation established that the lender consider the debt satisfied in full.

$12,000

For Applicant

Unspecified Financial

Admitted

—

1.b

The debt alleged at SOR ¶ 1.b. arose from the foreclosure of a property Applicant purchased on her own as an investment in July 2007. Applicant paid $230,000 for the property, which was her first attempt to purchase real estate for investment purposes. She put no money down and purchased the property by taking out two mortgages. Her monthly payments on the mortgages totaled $1,900. Applicant found tenants and rented the house for approximately $1,400 a month. In July 2008, Applicant’s tenants moved out. She tried renting the property again and also tried to sell it by short sale. Applicant’s attempts to rent the property or to sell it by short sale were unsuccessful. She stopped making mortgage payments on the property in 2008. In January 2010, the lender foreclosed on the property, which had a value of $140,000.

$49,839

Against Applicant

Mortgage or Home Loan Debt

Admitted

—

1.c

The debt alleged at SOR ¶ 1.c. is not recovered from source.

For Applicant

Unspecified Financial

Denied

—

1.d

The debt alleged at SOR ¶ 1.d. is not recovered from source.

For Applicant

Unspecified Financial

Denied

—

1.e

The debt alleged at SOR ¶ 1.e. is not recovered from source.

For Applicant

Unspecified Financial

Denied

—

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Case Profile

Summary

Why the Applicant Was Denied

Conditions Referenced

Key Rule Quoted

Procedural Posture

Cite For

Full decision

DEFENSE OFFICE OF HEARINGS AND APPEALS

HEARING

APPEARANCES

STATEMENT OF CASE

PROCEDURAL MATTERS

FINDINGS OF FACT

POLICIES

ANALYSIS

WHOLE PERSON CONCEPT

FORMAL FINDINGS

CONCLUSION

FOOTNOTES