Many people who have government-related jobs need to have security clearances. These jobs are dependent on the people employed to be of the highest moral character because of national security issues. Even local and national law enforcement agencies can be very strict to various degrees about the background of employees.
The employee applying for a job that requires a background check knows that it could take months or longer for his approval. A comment by someone from his past could derail his chances for the job. While these background checks are not perfect, they are an essential part of many government-related jobs.
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The financial services industry and insurance carriers are also on the band wagon for scrutinizing potential clients' or employees' credit history. While bad things do happen to good people, these institutions and the government have set up criteria.
One of the sticking points of these security checks is whether an individual is financially stable. While checking a credit report, an employer can see if the prospective employee has had a bankruptcy or foreclosure. If this is the case, the candidate will be passed over or, if he is lucky, delegated to a less responsible position.
The mortgage crisis has caused a lot of good people to have bad things happen to them. Most simply bought or refinanced a home at the height of the real estate market and are faced with a property that is worth half or less than what they paid. While they are making their payments, they have to question the basic financial decision of whether it makes sense to continue or let the bank take the property back.
Another major group of individuals has lost their jobs, run through their savings and gone into foreclosure. For these people with security clearances, they face the risk of losing their grade or rating because of a pending foreclosure. This lost of "security status" can be devastating because it can take two years or longer to go through the process and all the while the candidate is working in a lower paying position.
The solutions to this problem are to face it head-on and not hide the issue if the employee has a job. The first step is to contact his superior and discuss the problem and show that the loan was sensible at the time it was gotten and that all possible steps have been taken currently to resolve the problem. The burdensome financial obligation that has resulted has to be shown to be in the process of some type of resolution.
The standard resolutions are to sell the property and take a loss, do a loan modification with the lender, rent the property and put in the negative cash flow monthly or do a short sale. Many people take the path of least resistance and keep making mortgage payments they can't afford, rent the property and take a smaller loss each month or try for a loan modification that is at best, a postponement of the inevitable.
Short sales are becoming more and more popular because they eliminate the financial burden immediately and in most cases do not impact one's security clearance. The reason is that the homeowner will not be burdened by continuing financial debt. A short sale is where the lender takes a principal reduction on the mortgage balance due so the property can be sold at current market value.
If the lender decides to foreclose, he is faced with trying to sell to the market and face the issues of an empty property that can be vandalized and is a financial liability that impacts the lender's cash requirements. Therefore, many lenders ask the homeowner to try a short sale so they don't have to foreclose and lose more money on the loan.
The principal amount the lender has reduced the loan balance and the costs to do the short sale can be either taken back as a personal note to the homeowner, turned into a deficiency judgment for future collection, charged to the homeowner in the form of an IRS Form 1099 C, or written off by the lender as an uncollectable bad debt.
If this situation occurs, most homeowners won't sign a personal note because they are uninformed about the collectability of this note. The "value" of the note is similar to credit card debt and can be made much more comfortable over the pending payback. The homeowner should not consider a bankruptcy unless he also has substantial other debts to write off.
Consult with a bankruptcy attorney for specific information on whether you qualify and what steps have to be taken to benefit you the most. In addition, your accountant or CPA should be your source of what effects your actions will have on your income and any current regulations that will help your situation.
In summary, the best attack on the problem of keeping a security clearance is to look at doing a short sale. When concluded, the homeowner's credit is affected but to a substantially lesser degree than a bankruptcy or a foreclosure. This process should substantially reduce security clearance reviews that result in downgrades and potential loss of your job.
In summary, before you do anything, check with the department who runs these security checks and explain your pending issue. Losing your clearance could result in losing your job and another two years to regain it back. Otherwise, your option is to continue making a burdensome mortgage payment or renting the property to reduce the monthly loss or do a short sale which should not affect your clearance.
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