ISCR Case 09-08462.h1

Case Headnote

ISCR Case No. 09-08462.h1

deniedMar 9, 2011· Hon. Arthur E. Marshall, Jr.· hearing

Summary

A 55-year-old senior test engineer with 21 years of service was denied a security clearance under Guideline F (Financial Considerations) due to significant unresolved financial issues. The applicant's financial difficulties stemmed primarily from real estate investments, leading to multiple delinquent accounts and properties in foreclosure.

Specifically, the applicant had three paid collection accounts for a utility bill ($66) and two medical bills ($505 and $400). However, several substantial debts remained unresolved. These included a home equity line of credit for $42,596, past due by over 120 days, and three mortgage accounts in foreclosure with past due amounts of $15,159, $43,570, and an original loan balance of $135,000, respectively. The actual debt for these properties could not be calculated as they had not yet been sold or auctioned. One mortgage account for $7,854 was satisfied through a short sale, and another for $30,907 was resolved after foreclosure with no deficiency judgment. A reported $110,000 deficiency balance was identified as a duplicate entry.

Despite the applicant's efforts to manage his properties and mitigate debts, the security clearance was denied. The decision cited the applicant's failure to resolve significant debts, the ongoing nature of his financial difficulties, and the insufficiency of his mitigation attempts to alleviate security concerns regarding his reliability and judgment.

Why the Applicant Was Denied

The applicant failed to resolve significant debts related to multiple properties facing foreclosure.
The applicant's financial difficulties were ongoing and unresolved, raising concerns about his reliability and judgment.
The applicant's attempts to mitigate his financial issues were insufficient to alleviate the security concerns.

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 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 JudgmentThe applicant's financial issues were recent and ongoing, indicating a potential for recurrence.

Key Rule Quoted

“"An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds."”
— AG ¶ 18

Procedural Posture

SOR issuedJul 7, 2010
Answer filedAug 1, 2010
Hearing heldDec 14, 2010
Decision dateMar 9, 2011

Cite For

Financial Considerations Under Guideline F
Impact of Unresolved Debts on Security Clearance
Insufficient Mitigation of Financial Issues Leading to Denial

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	Collection for utility account ($66) – Paid. This account for a rental property became delinquent through simple oversight. Applicant paid the balance in August 2010, shortly after learning of its existence. $66	For Applicant	Utility or Phone Debt	Admitted	—	—	—
1.b	Medical collection account ($505) – Paid. Previously unaware of this outstanding balance, this account has been paid in full. $505	For Applicant	Medical Debt	Admitted	—	—	—
1.c	Medical collection account ($400) – Paid. This account also has been paid. $400	For Applicant	Medical Debt	Admitted	—	—	—
1.d	Home equity line of credit (past due 120 days or more for $42,596) on Property “P.” – Unresolved. This home equity line of credit was taken for the upkeep on a rental property. After becoming past due on this account, Applicant tried to recommence payment on the account by submitting a check for $1,025 in September 2009. Noting that the check was not for the full amount due, the creditor returned the check and has not since accepted any form of payment on the account. At the time, the creditor indicated that the property was in foreclosure, although it has yet to be sold or auctioned by the mortgagor. Consequently, Applicant’s actual debt, if any, cannot yet be calculated. $42,596	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	Mortgage account (past due $15,159 in foreclosure status on an original total loan balance of $146,000) for Property “B.” – Unresolved. In foreclosure. See above. To date, it has yet to be sold or auctioned by the mortgagor. Consequently, Applicant’s actual debt, if any, cannot yet be calculated. $15,159	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.f	Mortgage account (past due $7,854 in foreclosure status on an original total loan balance of $76,658) for Property “M.” Satisfied. This property was sold through a short sale to HUD as a HUD-1 property. $7,854	For Applicant	Mortgage or Home Loan Debt	Admitted	—	—	—
1.g	Mortgage account (past due $43,570 in foreclosure status on an original total loan balance of $143,000) for Property “R.” – Unresolved. In foreclosure. See above. To date, it has yet to be sold or auctioned by the mortgagor. Consequently, Applicant’s actual debt, if any, cannot yet be calculated. $43,570	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.h	Mortgage account (past due $30,907 in foreclosure status on an original total loan balance of $135,000) for Property “T.” Resolved. This property was foreclosed upon and sold by the mortgagor. No deficiency judgment was found against Applicant. He received a 1099-C form cancelling the debt of $77,994.79 on the property, which had a fair market value of $85,774. $30,907	For Applicant	Mortgage or Home Loan Debt	Admitted	—	—	—
1.i	$110,000 deficiency balance owed to a bank on an unidentified property in foreclosure. Duplicate account entry. Applicant and Department Counsel tried to reconcile this SOR entry, derived from past interviews with Applicant. Applicant denies having had a mortgage with the entity listed. It appears to be a duplicate entry for one of the properties above, but identified as a separate debt due to the emergence of this mortgagor’s name. $110,000	Against Applicant	Unspecified Financial	Denied	—	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

Collection for utility account ($66) – Paid. This account for a rental property became delinquent through simple oversight. Applicant paid the balance in August 2010, shortly after learning of its existence.

$66

For Applicant

Utility or Phone Debt

Admitted

—

1.b

Medical collection account ($505) – Paid. Previously unaware of this outstanding balance, this account has been paid in full.

$505

For Applicant

Medical Debt

Admitted

—

1.c

Medical collection account ($400) – Paid. This account also has been paid.

$400

For Applicant

Medical Debt

Admitted

—

1.d

Home equity line of credit (past due 120 days or more for $42,596) on Property “P.” – Unresolved. This home equity line of credit was taken for the upkeep on a rental property. After becoming past due on this account, Applicant tried to recommence payment on the account by submitting a check for $1,025 in September 2009. Noting that the check was not for the full amount due, the creditor returned the check and has not since accepted any form of payment on the account. At the time, the creditor indicated that the property was in foreclosure, although it has yet to be sold or auctioned by the mortgagor. Consequently, Applicant’s actual debt, if any, cannot yet be calculated.

$42,596

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.e

Mortgage account (past due $15,159 in foreclosure status on an original total loan balance of $146,000) for Property “B.” – Unresolved. In foreclosure. See above. To date, it has yet to be sold or auctioned by the mortgagor. Consequently, Applicant’s actual debt, if any, cannot yet be calculated.

$15,159

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.f

Mortgage account (past due $7,854 in foreclosure status on an original total loan balance of $76,658) for Property “M.” Satisfied. This property was sold through a short sale to HUD as a HUD-1 property.

$7,854

For Applicant

Mortgage or Home Loan Debt

Admitted

—

1.g

Mortgage account (past due $43,570 in foreclosure status on an original total loan balance of $143,000) for Property “R.” – Unresolved. In foreclosure. See above. To date, it has yet to be sold or auctioned by the mortgagor. Consequently, Applicant’s actual debt, if any, cannot yet be calculated.

$43,570

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.h

Mortgage account (past due $30,907 in foreclosure status on an original total loan balance of $135,000) for Property “T.” Resolved. This property was foreclosed upon and sold by the mortgagor. No deficiency judgment was found against Applicant. He received a 1099-C form cancelling the debt of $77,994.79 on the property, which had a fair market value of $85,774.

$30,907

For Applicant

Mortgage or Home Loan Debt

Admitted

—

1.i

$110,000 deficiency balance owed to a bank on an unidentified property in foreclosure. Duplicate account entry. Applicant and Department Counsel tried to reconcile this SOR entry, derived from past interviews with Applicant. Applicant denies having had a mortgage with the entity listed. It appears to be a duplicate entry for one of the properties above, but identified as a separate debt due to the emergence of this mortgagor’s name.

$110,000

Against 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

FINDINGS OF FACT

POLICIES

ANALYSIS

WHOLE PERSON CONCEPT

FORMAL FINDINGS

CONCLUSION

FOOTNOTES