Mold is a hot topic with lenders due to many previous losses where dangerous and toxic mold have resulted in foreclosures and homeowners walking away from properties. The key to understanding whether the issue with mold is one that is easily remedied to one that needs a professional remedy is utilizing the services of a certified and/or qualified home inspector. A home inspector can determined for the lender whether the mold is of a serious nature or not.

If the home inspector determines the nature of the mold to be toxic or unsafe the home will have to be professionally treated for mold removal. The cost of the mold removal may be a price you then could determine whether or not you were willing or unwilling to pay to continue with the home purchase. Also, depending upon the terms of your purchase contract you could possible request a price reduction or that the seller cover these costs.

My recommendation would be to discuss these issues with a qualified home inspector in your area and then remedy the situation with the lender. The appraiser will most likely be required by the lender to re-inspect the property to verify by photograph that the repairs were made. The lender should then proceed to closing without any problems.

Decorfan,

Have you asked your lender if money for the repairs could be placed in an escrow account until the work has been completed? Either you or the seller or both could put money up at the closing table for the cost of the repairs and then once the repairs are complete perhaps a reinspection by your home inspector and/or the appraiser to show the lender and the escrow company the work has been completed.

Perhaps another route might be a different kind of loan, like a renovation loan or an FHA 203K? Look at this site for more info on the FHA 203K program. http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm or just google FHA 203K.

Regarding mold, you should read the EPA's Guide on mold: http://www.epa.gov/iaq/molds/moldguide.html

Mold is a naturally occuring substance and needs moisture to grow. If there is that much mold that the appraiser felt it necessary to include on the appriasal, I would investigate the moisture source further. That sounds like an awful lot of mold/ mildew if the bathroom needs to be gutted.

I don't know Cincinnati, but here in SoCal "mildew" is legaleze for "I never said black mold." If it is black mold then don't let a CA lawyer know, bucause it is the lawsuit of choice for rentals right now. If anyone got sick anywhere in the building and found out you had a "mildew" report somewhere... I wouldn't want to be you. (At least in CA)

I called it black mold but the house inspector reports says 'mildew' in the bathroom. he recommends that the bathroom be 'gutted' and new wall convering and a vent to be installed. he has not noticed the mold/mildew anywhere else it the house. he said the mold was caused by a lack of ventilation. they do not open their bathroom window.
I also have to mention that this a 4 apartment house, 2 on each floor. all other 3 units are perfect. there is only one of them that has this issue. it is located on the second floor.

If you fix it out of you pocket you still don't own the house. You may be able to consult an attorney, but I would be very afraid that the seller would try to turn anround and sell the newly remodeled house for more money to someone else. Sometimes morals go out the window when large sums of money are involved.

Thank you for your answers. We did a home inspection and the inspector did say there is mold / mildew. It is actually very visible. The inspector recommended to hav the bathroom gutted and completely replaced. We knew that from the beginning. But our plan was to buy yhe house and to fix it. But the bank says it has to be fixed before we close. Is there a way to work around this? what it he fear of the bank? our preferred option is to buy then fix. The option that the bank wants is fix then buy. In this second option, do we ask the sellers to fix it as we do not own the house yet? or can we fix it ourselves?

Unless you had the mold tested it is very unlikley that it is actually black mold but your concern is still very valid. Mold does all sorts of things to people and also shows that there is a moisture issue with the house. My thoughts are this: The loan officer should have read the appraisal before submitting it to the lender giving you or the seller a chance to spray the mold with bleach to see if that can remove it. Than the appraiser can re-inspect and add that to the appraisal. That can probably still be done now, the appraiser can add a form to the appraisal called a 442, it is a re-insp[ection form to see if some outstanding condition as been corrected. Than it can probably be re-sent to the lender. Also you will probably sign a form at closing stating you are going to occupy the property, usually you have 60 days to do so, I'm sure that is a concern to them too.

Hi Decortan. I agree with Jared regarding the severity of a black mold problem. What I am wondering is, however, how the appraiser determined that there was black mold. With all due respect, appraisers are not mold inspectors. The appraiser may have found evidence of what may be black mold, but unless there was a mold test performed, I don't think the appraiser should say that there is actually mold.
You won't be able to fight the bank on this as they will go by what the appraiser said. At this point, I think the ball is in the seller's court to take care of the problem. The seller can either get a mold test performed to prove that there is no mold or make the necessary repairs. If there is indeed black mold, it will take an expert to remove it and the question is then whether there are any other places in the house that have been affected. I would recommend to you that you research how to find and clean up mold. I included a weblink below to get you started. Good luck.

Black mold is a severe health hazard. You would be better off if the wall was falling down since they may have to tear it out anyway. Now they just do it in Tyvec suits. I imagine it may affect the lenders appraisal, not to mention any clause that says you have to live in the house.