Home Buying in 60634>Question Details

Guzman_87, Home Buyer in Chicago, IL

FHA QUESTION: we are interested in buying a property that is a reo and has mold in the basement?

Asked by Guzman_87, Chicago, IL Fri Jul 19, 2013

the disclosure says that the mold is non toxic. does fha let it slide or is mold of any kind a definite no no???

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Deb Russcol, GRI’s answer
Depending on your down payment and credit score you may not have to go FHA 203 K but could get a conventional construction loan. Call Rick Lapins with Wells Fargo at 312-274-4133. He does both the FHA and conventional construction loans. I have worked with Rick for nearly 25 years and he really knows his loans. He'll get it done! This is exactly what they are there for.
0 votes Thank Flag Link Sat Jul 20, 2013
I just closed on a conventional loan home sale, where mold was detected, then tested and found non-toxic. But to provide remediation for what caused or contributed to the mold, a credit of $700 was given by seller to buyer to vent the attic space where it was found, above a bathroom. Test was thru a licensed mold inspector and included the lab fee, total $225. I believe there must be variability among lenders on what they will tolerate. Based on the posts below inb Chicago area. Some people woiuld not spend the money to determine the nature of the mold, toxic or not, and just remediate the mold, about $750. You want to think about alterations to prevent it from coming back if you can.
0 votes Thank Flag Link Mon Sep 30, 2013
You will need remediation. I needed to recently do mold remediation on a friggin conventional loan before I could close. Whole basement gutted before the lender was OK to close with the loan. A nightmare. If this is however YOUR DREAM HOME. Its stressful, but no big deal.
0 votes Thank Flag Link Mon Sep 30, 2013
Hi there,

Will not pass FHA Financing however you can do FHA 203K. That will work !
0 votes Thank Flag Link Fri Sep 20, 2013

FHA does not allow homes to have mold unless you resort to the FHA 203k program. I don't push anyone from these types of loans, but be ware. If the home has mold, there may be other issues.

For any financing questions, feel free to call me anytime.

Alex Romo
Home Loan Expert


0 votes Thank Flag Link Fri Sep 20, 2013

Mold is mold and must be professional removed. You will not be able to finance this home unles as Baraboo2000 stated you take a 203K loan. Contract Mary Kay Laurent with Guaranteed Rate at 773-516-6859. She is fantastic.

Best of Luck
0 votes Thank Flag Link Sat Jul 20, 2013
Hola Guzman,

No, the bank will not finance. The mold must be remediated prior to closing and since you cannot make the repairs yourself it's not going to happen.

Plus there is no way the bank that owns it will take care of the mold. They more than likely took that expense into account when pricing it. If I were you I would move on.

Good luck!
0 votes Thank Flag Link Sat Jul 20, 2013
FHA will not finance this, nor will most conventional as it will be in the appraisal and a bank will decline it.

Sohail A. Salahuddin | Founder and Team Leader

Innovative Property Consultants Group | Sales and Leasing


Jameson Sotheby’s International Realty

425 W. North Ave. | Chicago, IL 60610 

O: 312.335.3230 | C: 312.437.7799 | F: 847.805.6030

"Extraordinary Service For Extraordinary Lives"
0 votes Thank Flag Link Sat Jul 20, 2013
The short answer is no. I would just move on.
0 votes Thank Flag Link Fri Jul 19, 2013
The only way to determine if mold is toxic or not is to have it tested. If they had it tested, get the results and contact a good environmental group to either check or retest. It could be several hundred dollars to test but worth it so you know you are not buying a huge problem. There is some mold that is very toxic and other mold that is not an issue. There are mold spores in the air all the time.

If you are getting an exceptional price it might be worth pursuing, if not a great price then forget it.

A great place to discuss this with is Gabriel environmental on elston ave around division ave. give them a call.
0 votes Thank Flag Link Fri Jul 19, 2013
Los disclosures por lo general son obligados por ley ...el banco or reo property nunca van a decir q el mold no es toxico porque sino le puedes demandar si tiene mold .
Muchas de las propiedades q yo vendo tienen mold y el comprador lo quita antes de q llegue el appraiser ...y solucionado .
Dependiendo q tipo de mold sea...alguno no se pueden quitar ni con una bomba ...
Tu agente q te representa te deberia haber indicado sobre el procedimiento a seguir en estos casos
0 votes Thank Flag Link Fri Jul 19, 2013
I never hear of a disclosure that a reo property tell you in a disclosure that mold is not toxic ..
0 votes Thank Flag Link Fri Jul 19, 2013
not happening.. maybe the bank that owns it will lend to you
0 votes Thank Flag Link Fri Jul 19, 2013
No go. You must have the mold remediatied prior to closing.
If you have any further questions please feel free to contact me
Sam Sharp
Senior VP of Mortgage Lending
Guaranteed Rate
773 290 0455
0 votes Thank Flag Link Fri Jul 19, 2013
Mold can be cured I would think. But Then, what ciaused the mold? Can that cause be corrected? Then, will the bank owning the proerty do the clean up on the mold? The appraiser for an FHA loan has mold on his list of things to look for, I believe? At least a recent FHA appraisal I had did. The disclosure you cite is probably the seller's disclosure so ask the seller for the proof the mold is tested and defined. The lab test is specific. The appraiser will probably ask the same question before he/she approves the appraisal. REOs are notorious because they are closed up for so long. Be careful.
0 votes Thank Flag Link Fri Jul 19, 2013
No way!! You cannot get a regular FHA or even conventional loan when there is mold disclosed. You need a rehab loan. My lender references on my web site can help
0 votes Thank Flag Link Fri Jul 19, 2013
If it's a HUD Home then you should be able to get financing.
0 votes Thank Flag Link Fri Jul 19, 2013
You will need to do an FHA 203k rehab loan to abate and remediate the mold.
0 votes Thank Flag Link Fri Jul 19, 2013
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