Unpermitted rental unit sale

[John Vu]

Hi,

I'm in escrow on a legal duplex where the attic got converted to a "third unit" unpermitted with unpermitted kitchen and unpermitted bathroom.

I'm using a Fannie/Freddie Mac loan thru bofa. Has anyone encountered this situation before? Does the unit have to come down or become legal before the bank is able to underwrite the loan?

Also appraiser got info from city regard whts unpermitted and now city knows abt unpermitted unit and likely will be sending code violation. Wht issue will this present?

Thanks all