If the mold was there when you put in the offer, I would recommend that you just factor the cost into your offer price. Generally speaking, banks don’t like to lower their agreed upon price, except in extreme situations.

Of course, if the mold is new, and happened between the time you put the house under contract and the time you closed, you can generally make a good argument for having the bank lower their price a reasonable amount.

What I learned from my mold experience was that mold will spread in a conducive environment but there is probably only one source. In my case it was some studs that got wet during a water heater leak and never quite got dry. But if you looked at the entire basement there was mold showing up where the wet studs where and also in adjacent rooms that had never gotten wet.
However, we did not discover the wet studs until we removed the drywall. Once we removed the drywall and got the studs cleaned and dried the mold in the other areas was just in the surface and I was able to clean it by just wiping it down with bleach solution. It never came back.

Careful with what the mold remediator says…one of the quotes I got told me to re-paint the entire basement with oil based paint, instead of water based, after the treatment. I later found out that oil based paint actually has more organic components than water based paint. After cleaning the moldy surfaces wiping it down with a solution of borate and water will inhibit future mold growth…and it costs about three bucks.

As Steve mentioned, if the bank can’t close by the agreed upon date, I can back out with no penalty (i.e., I get my EM back).

Additionally, if the house is in substantially different condition than it was when I put it under contract, I can also get my EM back and back out of the contract. Whether the mold constitutes “substantially different” can be debated, but more REO sellers wouldn’t put up too much of a fight.

All that said, the bank says they can close in the next couple days, and even though we’re past the contract date, we’ll likely close on it and take care of the extra expense out of our own pocket.

I’ll have more details next week…

Sounds like you are dealing with a severe problem though if it’s in several rooms. You’ll have to remove and re-drywall almost the whole house it sounds like?

If additional mold was the only issue, I would say there is high possibility the earnest money would be toast in an “AS-IS” contract. On the other hand, if the bank, or selling agent knew about the mold and did not disclose it, there is definitely a liability issue on the seller’s part.