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Foreclosures Causing Even More Problems for Federal Employees

June 10, 2011

Foreclosures are causing even more headache for people who work jobs that require federal security clearances. Many of those positions require that any mortgage defaults be reported to the company. Between 2006 and 2010, approximately 70 security appeals involving foreclosures and other distress sales were reported. Of those, 62 resulted in revoked or denied security clearances. Not only does this result in the loss of their job, but it can take years to restore a security clearance so they can work again too. For borrowers at risk of foreclosure, they usually have more success at keeping their security clearance if they can prove that their mortgage was a sensible loan that did not overextend them at the time and also show they’ve tried to find a work-out solution, such as a short sale. However, Price says that even a short sale doesn’t put borrowers in the clear since it can take a long time to complete such transactions and increase the chance of a foreclosure. This doesn’t bode well for federal employees. You would think that the government would have some sort of program to help employees get back on track or help gain control of their financial situation instead of denying their clearances and putting them in a worse situation than they were initially.

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