Legal Question in Real Estate Law in California

If you are still in the process of buying the house, you deflinitely have no recourse against Fannie Mae. They have told you that you are buying it with all of its defects and you know it has mold, so that defect has not been hidden from you. If they knew of the mold, knew that you did not know, then there might be a cause of action, but that is not your situation. Buying "as is" means buying it with all of its defects. If the time period for rejecting the purchase because of the inspection you have done has not yet passed, you ned to re-assess whether the house is a good buy or not. You will have to tell tenants and future buyers of the mold and can never be certalin that all of it is removed, so the value of the REO is reduced by much more than the $7,000 cost of repair.

IF you're still in escrow, you could possibly cancel. After closing, the house is yours "as is" and where is. That term really does mean what it says: a disclaimer to put you on notice that the are NOT responsible for anything.