Among the many new facets of June’s update to the National Adjudicative Guidelines for Security Clearances is an interesting clarification to one of the mitigating conditions under Guideline F – the financial considerations category.

For the first time ever, “predatory lending practices” is now explicitly listed as a potentially mitigating condition for delinquent debt. This new clarification is ostensibly the result of the 2008 housing meltdown, during which many security clearance holders tragically lost their homes (and later their clearances, as a result) due to risky, sub-prime loans that were being handed out like candy by the banks to unqualified buyers.

Of course, it has been long-standing principle in security clearance adjudications that issues which are beyond an applicant’s control are reviewed with leniency, provided that the clearance holder or applicant acted reasonably under the circumstances. However, what is and is not beyond a person’s control is often up for debate. For example, should a clearance holder have known that the loan s/he was taking constituted too much of a financial strain; or, was he or she entitled to rely on the lender’s opinion of creditworthiness? I’ve seen administrative judges and adjudicators go both ways on questions like that, with many claiming that the applicant’s lack of due diligence on the initial terms of the loan was at least contributory negligence.

The newly clarified mitigating factor makes it much easier for those who have been the victim of predatory lending practices resulting in delinquent debt to obtain or retain a security clearance. It draws attention to the problem, legitimizes it as a real issue, and establishes a de facto policy against blaming victims. Given the importance of this mitigating condition for many clearance holders with delinquent debt, the question thus naturally arises as to what is actually considered predatory lending practices? Besides the type of example offered above, here are a few more:

  • Variable rate loans disguised as fixed rate loans
  • Excessive, junk fees hidden inside the loan
  • Balloon loans, where a small monthly payment of only interest hides a massive final payment of principal
  • “Equity stripping” – the practice of lending based on a borrower’s equity in the home, not whether s/he can actually make the monthly payments on the loan

This is a complicated area of law, and affected clearance holders should speak with a consumer attorney well-versed in lending laws to determine whether their loan legally qualifies as “predatory.” Nonetheless, the newly clarified mitigating condition is definitely a “win” for clearance holders and applicants with financial difficulties. I simply caution against treating it as a silver bullet – especially when there is a pattern of other delinquent debt outside the one that is being argued as predatory. Predatory lending is a defense to use sparingly and only when the facts actually support it.


This article was written for general information purposes only and should not be construed as legal advice. Consult an attorney regarding the specific facts and circumstances of your case.

Related News

Sean M. Bigley retired from the practice of law in 2023, after a decade representing clients in the security clearance process. He was previously an investigator for the Defense Counterintelligence and Security Agency (then-U.S. Office of Personnel Management) and served from 2020-2024 as a presidentially-appointed member of the National Security Education Board. For security clearance assistance, readers may wish to consider Attorney John Berry, who is available to advise and represent clients in all phases of the security clearance process, including pre-application counseling, denials, revocations, and appeals. Mr. Berry can be found at