Federal homestead improvement loan. I believe that we may have a misinterpretation in Texas law, concerning a requirement that a mechanic lien and note are required in order for our security instrument to be valid.
Typically, a lender will arrange for a mechanic's lien construction contract with a mechanic's lien note, and arrange for the contractor to assign its lien interests to the lender. But that is not the only way for a home improvement lender to secure the first lien.
Retain a construction attorney to evaluate your legal position and to provide advice.
Good luck.