CA homeowner had 187k 203(k) secured loan. Contractor did all work under invalid permit (permit obtained listed work as 12k), no permit for 6-permitted-task, no inspections, no approved lead certification. Consultants approved work, bank paid work. Homeowner kept advising bank no inspections were done. Now, bank says work illegally performed. Contractor filed mechanic's lien. Contractor filed for arbitration, if contractor does prevail, is mechanic's lien enforceable on 203(k) secured loan? HUD is investigating fraud (payments disbursed without valid permit and approved lead stabilization certificate. Contractor has a RRP, just did not submit for testing on 100-year old that has lead. In a letter to homeowner, bank acknowledges all monies, $140k paid to contractor, who did not have valid permit. Contractor admitted to bank, he obtained an insufficient permit for the project (he did not have money to pay for a proper permit). The consultant's approved all of contractor's work plus $42k, and the homeowner refused to pay, due to no inspections, no permit or lead certificate, contractor, consultant did not verify permit or ensure inspections. contractor pursuing consultant's approved $42. Arbitrator wont do a site inspection.