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Can a Home Foreclosure Affect Your Security Clearance

Posted by Kathleen Smith

Unfortunately there isn’t a clear cut answer. As one official noted, “If it were black and white, we wouldn’t need people to review the information.”

If you tried to do the right thing and are a victim of circumstance, you’re in a much better position than someone who pursued a “strategic” foreclosure or short sale. A strategic foreclosure means that someone who can afford to make their mortgage payments decides not to do so. For example when properties are underwater — worth less than what is owed — some homeowners choose to abandon the property because it may take years for the property to be worth as much as they owe. That individual has made a strategic decision to allow the house to go into foreclosure or short sale because it’s perceived to be a bad investment — not because of an inability to make the payments. 

If the foreclosure or short sale was largely beyond your control due to circumstances such as an illness, divorce, etc. you’re in a much better position.

Seek help immediately if you think you’re going to have problems. The biggest mistake people make is avoiding the problem. Being proactive and documenting your actions goes a long way to showing that you are not ignoring the situation, are responsible, and that this isn’t a pattern of behavior or the reaction to a bad investment decision.

The following study by Sheldon Cohen gives examples of specific cases relevant to short sales and foreclosures and security clearances. It’s not all encompassing, but if you have questions about your own situation, reading through the examples may provide some guidance.

Do you have experience with a foreclosure or short sale in regard to obtaining or maintaining a security clearance?  

This entry was posted on Monday, February 07, 2011 4:05 pm

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