If they will not allow a Mold inspection and not willing to clean the home of the mildew, I would see your doctor and get a written statement from the Doctor stating your health issues regarding Mold. If I were the Listing agent, I would present this to my Seller's and see what they would be wiling to do in order to rectify the Mold issue.
Sounds like you have good reason to be concerned based on your description.
Whether or not you can cancel and recover you your GFE depends on the terms of your contract and where in the time line you are. I help people with real estate in California and cannot speak specifically to the pratices in your area. In Orange County, Buyers have the right to cancel during a defined inspection period and before the Buyer's contigenices have been removed. After this, cancellation may expose the buyer to loss of earnest monies.
Are you working with a Realtor or agent? If yes, have you discussed this with them? Are they the people who told you that you would not be able to get the money back? Was the seller previously aware of this condition and did not disclose it? If they did not disclose, that may work in you favor.
Please consult a trusted local professional about your concerns soon. Time is of the essence.
Have you done your home inspection? Was there a mold inspection? Is there an HOA? Is this a short sale where you're awaiting 3rd party approval? There are so many questions like these that needs to be answered in order to accurately address your question. Your agent should be representing you with these concerns, and he/she should clarify your "options or outs" so to speak. If you're not receiving direction there, you may contact your agent's broker directly. I wrote a blog on this very topic a couple of years back since wanting to rescind an offer happens often, for various reasons. Visit http://ariana.featuredblog.com/?p=28
Also, you banker can also cancel your loan approval, and if you have a clause in the contract requiring you to be able to qualify for a loan, and the bank cancels your approval, then you are no longer qualified, and you can request your money back.
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The house is a short sale that I placed a contract on 2/1. I am still waiting for the third party approval. My realtor mention to me beforehand that when you place a contract on a house and you then decide to withdraw it you will automatically lose your deposit. He said that because the seller could've left it on the market for other buyers. I haven't had the inspection done yet we asked for an extension.
On the disclosure the seller checked only "unsure" on every line item.
Mold may be a different issue; or maybe not.
It sounds like you are working without a Buyer's Agent and without good advice:
As Dr. Phil would say; "How's it working for you?"