I live in Denver, Colorado, where it is more arid and mold is rarely an issue. I am not smelling mold or seeing signs of it on the wall.
I haven't yet pulled the paint away, but I want to put it out here to ask if anyone knows how to fix the underlying issue or seen anything of this nature before.
Note: I've attached a photo for reference. Also-when I press on this spot on the wall, I can feel that there is air space between the paint and the wall, proving that it has lifted away from the wall.