Molds (fungi) and bacteria frequently grow heavily in water damaged buildings. Molds produce hundreds of different allergens which can worsen asthma and sinus problems. Molds also produce hundreds of different toxins called mycotoxins- including aflatoxins, ochratoxins, and trichothecenes.
Jannette Hope. A review of the Mechanism of Injury and Treatment Approaches for Illness Resulted from Exposure to Water-Damaged Buildings, Mold and Mycotoxins. Scientific World Journal, 2013; In Press.
Janette Hope, MD has recently published an interesting review of health effects of exposure to indoor molds, mycotoxins, bacteria and water damaged buildings. It is available freely at http://dx.doi.org/10.1155/2013/767482
Many bacteria can cause infections and Gram negative bacteria produce endotoxins which can worsen asthma and allergies and damage the immune system.