David Cvach found his three-bedroom house in Chevy Chase in just one day. Securing a mortgage, though, took a whole lot longer.
Cvach had a good credit history and was willing to put down 40 percent of the asking price.
The problem? He’s a diplomat.
“I realized really fast that nobody would actually give me a loan,” said Cvach, a counselor at the French Embassy. “I suppose they were fearful that I was somehow protected by my diplomatic status.”
With only a few exceptions, banks have long had policies against lending to diplomats who are protected under immunity provisions that exempt them from local laws and authorities.
Many banks tightened their belts further during the housing crisis, putting a stop to diplomatic lending altogether. Even HSBC, which prides itself on being internationally accessible, has a policy against lending to diplomats with immunity.
“There’s something wrong with this picture,” said Dana Scanlon, a realty agent for Keller Williams Capital Properties in Bethesda, who routinely works with foreign nationals. “Over the years, there have been plenty of people who’ve gotten a mortgage with 0 percent down. But then you have diplomats who are here with visas that have been vetted by the State Department, and they can’t get a loan.”
Although State Department documents say that civil lawsuits can be brought against diplomats if they relate to real estate purchases “not conducted on behalf of the mission,” many banks say it’s too fine a line to draw.
Others say there’s just not enough demand for such mortgages.
“Most diplomats are in the U.S. on temporary assignment and are provided government-paid housing,” said Neil Brazil, a spokesman for HSBC North America.
Scanlon said she sells between two and five homes to diplomats in an average year but added that foreign nationals are increasingly looking to invest in Washington’s stable real estate market.
“The demand is not enormous, but there’s enough demand that it’s more and more of a problem,” she said.
Cvach said he had given up on buying a house in 2009 when someone at the French Embassy suggested he contact Scanlon. She ultimately helped him secure a loan through Chevy Chase Bank (now Capital One).
Cvach put down 40 percent and said his interest rate of about 5 percent was competitive with the going rate at the time.
“I saw the price of rent in Washington and couldn’t believe it,” Cvach said. “I thought it made sense to buy rather than rent in a place like this.”
The bank required Cvach to provide letters from previous landlords in France vouching that he had paid his rent on time.
Often, Scanlon said, regional banks that can afford to keep a diplomat’s mortgage loan on their books are willing to take a chance.
At Pittsburgh-based PNC, for example, all mortgage applications are vetted on a case-by-case basis, said Roger Wallace, a spokesman for the bank.
“From our standpoint, we’ll evaluate each applicant based on their individual risk,” Wallace said.
Even so, Scanlon said it’s difficult to figure out exactly which banks are willing to lend to diplomats at any given time.
“It’s always a changing picture,” Scanlon said. “The lenders who were doing [diplomatic mortgages] five years ago aren’t doing it now. Every six months, someone else will say, ‘No, not anymore.’ ”