Sad to say, but a foreclosure may affect a borrower’s security clearance and could cost their job. In fact, even employees who occupy key positions in companies may lose their jobs as a result of a foreclosure.But this is not always the case and there is always an exception to the rule. Especially in this economic crisis that seems to be affecting everyone on Main Street.

It would be advisable to prevent a foreclosure and use another alternative, such as a short sale. If you would like to remain in your home but cannot afford your monthly payments, many professional advise trying for a loan modification before being forced to sell the property.

A security clearance is needed in jobs where a person needs to have access to classified information for him to do his job properly. Usually, a police officer, a CIA agent, a military officer, or even a federal contractor is required to have a security clearance to be qualified for his position or role. The cancellation of the security clearance will therefore mean that he is not longer qualified for such a role or job. Thus, a foreclosure may result in the loss of employment for a police officer, military officer, CIA agent or federal contractor!

Moreover, a person who works in a private company who handles sensitive information may no longer be considered as trustworthy by the employer and may lose his job or may be assigned to another type of work. Employers have the right to conduct credit checks on their employees, particularly those who hold sensitive positions. In fact, foreclosures are said to be one of the most serious events that can happen to affect an individuals security clearance other than a felony or even some misdemeanors.

On the other hand, a short sale is usually recorded on a borrowers credit report as “paid in full” or “paid in less than full.” Thus, the employer may not even be aware that the employee has used a short sale because it will more than likely only show late marks on their credit history. Therefore, short sales are often preferred to foreclosures, assuming that a borrower is able to convince the lender to agree to the short sale. Also a short sale is a much better option for those individuals out there who need security clearance for their line of work.

  • Is this you or a loved one? Here is what I recommend.

I believe honesty is the key here.

You may want to approach your superiors and inform them about your situation. There is usually someone that will deal with this clearance paperwork and be able to help you. Possibly a commander can write letters of explanation to help support you, the adjudicators make the decisions on your clearance.

The best thing you can do is be honest and forthcoming in any adverse situation you are facing. I believe with the government, honesty and transparency will take you a long way. Especially when many of the higher ranks and official are also experiencing the same issues. I am sure many, many new recruits have these issues because of lack of employment.

Moe Bedard
My name is Maurice "Moe" Bedard. I am the founder of America's #1 Mortgage Forum, LoanSafe.org. My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications.