Potential for Smoke Damage, or Worse

The bricks are part of the fireplace firebox. The handle is the fireplace damper handle. The fluffy stuff is fiberglass insulation. Insulation should be in the attic, walls or under the floor not in the chimney. The damper is open but, the chimney has been blocked with insulation. In its present condition the smoke would be prevented from going up the chimney and would enter the dwelling causing smoke damage. A thorough home inspection discovered this unhealthy and unsafe condition.