I am running into more people with security clearances that need short sales.  The question always arises about the impact of a short sale, DIL or foreclosure on their ability to obtain or retain a secutiry clearance.

Has anyone in the network had any experience with this issue?  Is there a source for information about it?

 

Thanks,

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Hmmm... well... I've had clients with security clearances that will not even consider doing a short sale, DIL or just walking away. Some of them have actually gone out and bought more real estate to "hedge" their loss. (Works for Vegas anyways since it's easy to find properties with a positive cash flow.)

It's a tough situation to evaluate because I have had clients with security sensitive jobs that had to short sale due to a re-assingment to another city hundreds of miles away and they had absolutely no choice but to short sale. (Walking away would have been far, far worse in an "evaluation".) In those situations it's pretty easy to explain... paying off $200,000+ was just impossible to do and turning it into a rental and eating $1,000+ a month to make up the difference also was not possible. I actually had to provide the details in this situation once which I was happy to do for my client. For those that just want to short sale, do a DIL or just walk away just because they are underwater... I would certainly think twice about doing that. If you still have the same income / same job that you had when you bought the home, a matter of personal integrity is going to come into question.

From a previous life long ago when I had a security clearance... I don't know if one of the above would have affected that current job but I'm fairly certain that a ding in the credit with the above three scenarios would have certainly kept me from going further up the ranks. (Promotions - Moving up in the ranks required an updated / current background check which included an updated credit evaluation.)

So... I'm not sure if it will affect the current status of an employee with a security clearance... especially with so many people that have gone through a DIL, foreclosure or short sale.... but I'm fairly certain it's going to hinder a chance for moving up in the ranks for the next couple of years.

I would think that the type of security clearance would also matter. Not sure if having access to personal information such as medical records, etc.. is really going to matter. (It could in certain situations but I'm not going to get into that.) However... having a security clearance when it comes to confidential financial information sensitive in nature is certainly going to matter. I've had clearances in both situations... when it came to the company when I was involved with personal financial information, they would not even hire somebody that had more then $10K in credit card debt even if you had a clean credit report. (Absolutely NO WAY I would consider doing a DIL, Short Sale or Foreclosure if I was still working for that company.)

Personally... I think it's more of the clients evaluation to determine if a DIL, Foreclosure or Short sale is going to have an impact on their job if it requires a security clearance. They should have an idea of the policies pertaining to their employment for what matters... and what does not. I'm certainly not going to be the one that tells them it's not going to matter.

Just my thoughts.. Kind of like doing a short sale for a client.... every situation is different. Just because client X breezed through a short sale with Big Company B, does not mean that client Y is going to breeze through with the same company.

 

 

I understand.  I won't tell them there is no problem because that might not be true.  However, they aren't sure of how to find the answer.  I'm trying to use my networks to help.

 

Thanks,

Keith, I believe that the military is now addressing the security clearance situations.  I was told that the very first thing to do is have your seller contact their superior officer immediately.  They will then take it on a case by case basis. I will try to find the article that was written about it.

If you can find the article that would be wonderful.  It might point me in the right direction. 

 

Thanks,

No experience with this, but just learned something as usual..thanks!

xxx

Yes, I have.  Because this is such an important piece of these people lives I always instruct them to go to HR before doing anything that might jeopardize their job.  I do not attempt in any fashion to advise or consult on this part of the credit.  They must go and speak to their supervisor and HR to find out what can happen if their credit is impacted before I do any work.

   I have done several short sales for Military personal and Government employees that have their credit checked every 6 months to maintain their security clearance.  As long as they do a short sale there is no problem because a short sale is reported on their credit as: Paid in Full for less than owed" or "Paid in full not as agreed". 

If they go Bankrupt or let the home foreclose then they will have that on their credit and could loose their security clearance. Although I have had a client that decided to go bankrupt and still kept his security clearance. And this year he got into a higher E pay grade.   The employers that it on a case by case basis. Especially in today's volatile times they have to make attempts to keep people in place. 

  Watch what happens if they pass the rule for Realtors, if they have gone through a foreclosure or 2 shorts sales of their own personal property they will not be able to renew their license. This came up last year and still lingers it's head now and then. 

Be good

Paul

I absolutely agree I would not even attempt to advise on this cause you could create a bad situation and get yourself in a major jam.  Have the seller go seek advise from their supervisor or HR.  This is the sellers responsibility not the realtor's.

Empower your "special needs" client with an "Exception Affidavit" executed by a professional. Signed by either the RE Listing Agent and/or the real estate closing attorney (both signatures is better).

This should be done in advance of closing. I suggest on the same day that a buyers contract is acquired and before it is sent to the lenders approving the short payoff.This process can be run simultaneous with the short sale approval process.

ADD supporting documentation to that affidavit. MLS and showing history, CMA reports, BPOs or Appraisal reports if in possession, closing agent title opinion etc.

This enables your security clearance client to have a strong argument on record with supporting third party evidence when they approach their HR Dept for exception to the standard guidelines and rules. It also provides them with excellent rebuttal if they are threatened with losing employment post closing.

Then instruct the client to ADD a written statement to their credit reports as allowed by the FCRA. This codifies this blemish entry long after closing so that this item is easier addressed for other borrowing needs years into the future.

I will check with our attorney about the "Exception Affidavit."  I like the concept of providing written support for the seller and their circumstances.

 

Thanks,

Hello,

I am in the military and I have a security clearance. I work in a security sensitive environment as well and many service members I know are having to short sell their homes due to relocations and loss of value in their homes. Many people think if you have any blemish on your credit you will lose your clearance and this simply is not true. You have to be able to show that you are trying to resolve your financial issues. I have seen service members with collections and foreclosures keep their clearances. The best place to go is right to the source that issues your clearance if you want to know how your situation will affect you. Telling your commander is a start just in case you get denied your clearance they will have to vouch for you. I know because I had to do that for one of my Soldiers and I helped them clear up their issue. Just remember to always go to the source (the security office) if your clients have a question because many times commanders (especially young ones) do not know.

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