There are approximately 850,000 Americans with top secret security clearance and hundreds of thousands of others who have varying degrees of clearance as the result of government, quasi-government or contract employment. In order to obtain security clearance, one’s credit score and financial stability are considered by an administrative board. These clearances are renewed several times, if not dozens of times, during the course of employment. The foreclosure crisis in this country is having an unforeseen, adverse effect on the security clearances of thousands of security clearance holders. Considering that there were 332,172 default notices, scheduled auctions, and bank repossessions nationwide in October 2010, it is no wonder that the ability to maintain security clearance is on the forefront of many citizens minds. Without clearance, these individuals may lose their livelihood and be forced to seek out new employment in an already incredibly weakened job market.
A recent study by Sheldon Cohen, a Virginia based attorney specializing in security cases, has evidenced how security clearance due to foreclosure has been evaluated by the Department of Defense Office of Hearings and Appeals (DOHA). In fact, the study shows that between 2000 and 2002, there was only one reported case before the DOHA dealing with foreclosure. In contrast, there were twenty-four foreclosure based cases before the DOHA in 2009 alone. As the DOHA is only one of twelve such administrative bodies that make rulings on security clearance, it is clear that foreclosures are impacting a number of citizens and it is safe to assume that number will continue to grow over the next several years.
The government has the right to question your financial stability for security reasons. A person in a difficult financial situation is seen to be more vulnerable to offers of money in exchange for secrets. Additionally, those who are overextended are considered more susceptible to performing other illegal acts to generate funds necessary to pay their debts. That being said, the administrative bodies evaluating how financial hardship and foreclosure affect a person’s security clearance take into consideration conditions that were beyond a person’s control. A downtrodden economy, orders to relocate, and lenders that refuse to work with the borrower, could all be identified as factors by an adjudicator to mitigate the presumption of financial irresponsibility. However, it should be noted that whether or not mitigating circumstances exist, a person’s security clearance may still be affected.
Persons facing foreclosure and trying to maintain active security clearance should seek the advice of counsel in order to assist them in navigating this complex terrain. It is difficult enough for a person to lose their home; it is even more harrowing to compound that injury by losing your livelihood as well.
 “Report: :Loss of Security Clearances Matches Rise in Home Foreclosures,” http://www.cbsnews.com/8301-31727_162-20017125-10391695.html
Carlos L. McDade, Esq.
Kelle L. Kuebler, Attorney*
*Licensed only in New York and Connecticut