Do you know the difference between credit rescoring and credit repair?

Apparently, some lenders don't. As a result, they are refusing to fund mortgages they otherwise would approve.

At the same time, some title companies are starting to play hardball with borrowers who have recently undertaken home improvement projects. Even if the work is relatively minor, and even if it has been completed, the companies are refusing to issue title insurance policies, effectively stopping refinancings in their tracks.

For as long as Richard Temme of Woodland Hills Mortgage in Woodland Hills, Calif., can remember, title companies would write policies on properties with recent or ongoing construction as long as the borrower agreed to indemnify the company against mechanic's liens. But lately, the Southern California mortgage broker reports, title firms have become much more cautious.

The typical indemnification holds the title company harmless from any liabilities, losses, damages, expenses or charges the company may incur because of mechanic's lien disputes between the borrower and the contractor. Borrowers also usually agree to defend any action based on a lien and do all the things necessary or appropriate to clear the lien from the title.

But in an increasing number of cases, that is not enough, says Temme. "We've seen title companies declining to issue on many more loans" than in the past, he says. As a result, "even minor home improvement projects, recent or unfinished, can hold up or kill a loan."

This may be a California phenomenon, for the laws are different in different states. But in the Golden State, contractors, subcontractors and suppliers can file liens retroactively to the day they started their work or furnished materials.

If that date of the lien is prior to the day the mortgage is closed, the lien, not the mortgage, is in the first position. As a result, some title agencies are not writing policies unless the borrower can put a much higher level of net worth behind the indemnification, says Temme. And some are not accepting any indemnification at all.

Meanwhile, otherwise good loans are being rejected by lenders that confuse rescoring with credit repair. They are not the same.

Credit repair is often a scam. In fact, attorneys at the Federal Trade Commission say they've never seen a legitimate operation that offers to erase bad credit; create a new credit identity on your behalf; or remove bankruptcies, judgments, liens or bad loans from your record. If the bad information in your file is correct, there is nothing that can be done to remove it, at least not legally.

No wonder lenders want nothing to do with applicants who have paid someone to clear accurate data from their records. If you have bad credit, after all, you are probably a bad risk.

Rescoring, on the other hand, corrects errors in your file, which may result in an increase to your all-important credit score.

Whereas credit repair firms are not legitimate, the 70-odd companies that provide rescoring are credit reporting agencies that work with the national credit repositories -- Equifax, TransUnion and Experian. As resellers of credit information contained within the three repositories, they not only provide the majority of all credit reports but also have a legal obligation to you and your creditors.

Moreover, according to Terry Clemans of the National Credit Reporting Association, rescoring is a program developed in conjunction with and processed through the big three. Indeed, each repository maintains a special rescoring department that deals directly with resellers.

When a credit file is rescored, it is checked twice for accuracy, first by the reseller and again by the national repository. It is, says Clemans, "one of the safest transactions for any creditor because everything is double-verified."

If a change is warranted -- say, a trade line was reported incorrectly, or the damaging information is not yours at all but someone's with a similar name -- the miscue is corrected at the repository level and a new credit report and credit score are issued.

If you believe data in your credit file is incorrect, you can have it removed on your own if you have the time and patience. It can take anywhere from 30 to 45 days. But if you are in a hurry, you can pay a reseller to do it for you, usually within 24 to 72 hours, says Clemans. The cost ranges from $50 to a few hundred bucks, depending on how complex the problem or problems.

Rescoring has been a popular service for seven or eight years, according to Clemans, and he thinks some lenders are so worried about bad risks that they are "confusing" credit rescoring with credit repair. He calls it a "knee-jerk reaction after all the pain" resulting from the mortgage meltdown.

"I have heard from lenders that ... are claiming they are trying to protect themselves from consumers 'gaming' the system for better rates," he says.

But as the NCRA executive sees it, lenders that object to rescoring are basically telling a consumer seeking a quick resolution of incorrect data that they can't have it corrected for that particular loan application. As a result, he wonders whether it is lenders who are gaming the system in an effort to force borrowers into higher interest rates.

Whether or not that's true, there's little would-be borrowers can do besides take their business elsewhere -- or sue the lender under the Fair Credit Reporting Act.

As far as mechanic's liens are concerned, Temme, the California mortgage broker, is telling his refinancing customers to advise the title company in writing of any construction or rehab projects on the property. Otherwise, he says, if a lien is filed, the title company may sue for the amount it has to pay the lender to pay off the lien.

And tell the title firm early. Even if the company will accept an indemnification, the process can take weeks, he says, noting that loans can be lost during that period.

More than a third of all potential borrowers would be willing to pay a higher rate if the mortgage came with superior service, according to a new survey.

The poll by the Carlisle & Gallagher Consulting Group didn't say how much more the 34 percent were willing to pay. But it did find that the "Pay Mores" are a frustrated bunch.

More than half think the process is too slow. A third find it impossible to track the status of their loan application, an equal percentage say it is too difficult to talk with their lender, and a quarter don't believe the advice they receive.

All this tells Tom Mataconis, vice president of consulting for the firm based in Charlotte, N.C., that banks must do a better job to win market share. But it doesn't tell borrowers how they can determine which lenders offer the best service.

An obvious starting point is to ask your real estate agent. Agents know which lenders keep their promises and close quickly without incident. After all, their livelihoods depend on it.

Also quiz friends, co-workers and relatives about their experiences. People love to talk, good or bad.

Beyond that, prospective borrowers should look for several attributes that will help them find a responsive company or accessible loan officer.

For starters, look for a consistent point of contact. Federal regulators have already settled on this as a requirement for loan servicers -- the companies that collect payments, disburse funds to cover property taxes and homeowners insurance, and otherwise administer loans -- so why not one for borrowers?

"Many lenders have discovered that consumers appreciate a single contact, someone they can reach out to for help or support at any time," says Andy Crisenbery of the mortgage technology company eLynx.

At the same time, you may not want to be bothered during certain periods of the day. If that's the case, make certain your feelings are known, suggests David Lo, director of financial services at J.D. Power and Associates, the market research firm that judges customer satisfaction in various industries. If you want to be reached only by email or only by phone between 9 a.m. and 5 p.m., tell the lender.

Crisenbery also says you'll have a better experience if the lender has a way to get the necessary loan papers to you as quickly as possible. If you are old-fashioned, that might be by fax or overnight delivery. But if you are more hip, it could be via the Internet.

Many institutions are putting all the documents the borrower needs to review directly into an online portal, the eLynx vice president reports.

His company offers a product called eDelivery, which delivers documents by email "almost instantaneously" and which requires several layers of authentication, making it more secure than regular email.

At a recent Mortgage Bankers Association conference in Chicago, an eLynx competitor called LenderMobile launched an app for iPads (and, soon, for Android devices) that allows customers to fill in the standard 1003 application form and otherwise check on the status of their loans, all from their mobile device.

The lender also can set up the app to notify customers when rates hit a desired target or change enough to meaningfully impact monthly cost, either up or down.

The app "puts the entire process in the borrower's hands," vice president Lovina Worick says. "You can even take a picture of a required document and send it straight to the loan file."

At the same show, Kofax debuted software that allows lenders to not only snap photos of W-2s and other support documents with their smart devices but also to extract data from the photos and use it to populate loan applications, all from the kitchen table.

You'll also want to deal with a company that provides up-to-date status information. There's nothing worse than chasing down an unresponsive loan officer to make sure this document or that report has been received, or to find out whether underwriting has looked at the application.

"One complaint borrowers have with the industry relates to the lack of timely status updates," says Crisenbery. "By providing real-time updates, borrowers will know exactly what's happening with their loans."

Beyond technology, Lo at J.D. Power suggests picking a lender that promises to provide the closing documents prior to closing. That way, you'll have plenty of time to find any discrepancies between the initial quote and what's now on the closing sheet, and to have the loan officer explain the differences to your satisfaction.

Speaking of accurate closing costs, LendingTree, the online mortgage search engine, recently asked the 300 companies on its network which questions borrowers should be asking. The top answer: What are the total costs involved in the loan?

In that regard, shopping website MortgageMarvel.com now guarantees that the charges quoted by one of its lenders will be within $50 of actual charges. If they're not, it will pay borrowers up to $2,500.

"We believe it's important for consumers to understand and know these costs as early as they can in the mortgage application process," CEO Rick Allen says. "We've worked hard to make sure the closing fees they see on our site are accurate, and we're willing to stand behind them."

As thousands of would-be buyers have discovered, short sales can be a long shot.

Though selling houses for less than the amount owed on the mortgage has become commonplace, accounting for the lion's share of transactions in many markets, such sales are fraught with complications that can short-circuit the deal. There are no, uh, shortcuts.

Here, courtesy of members of the National Association of Exclusive Buyer Agents (NAEBA), is a short summary of the ways in which a short-sale purchase can be derailed:

-- Often the house is not advertised as a short sale. That's like advertising a house that is not really for sale, because the seller does not have the authority to sell the house at the advertised price, says the Phoenix-based NAEBA, whose members work only on behalf of buyers.

-- The negotiating process is far different in that the seller may not care how much is being offered since he won't be taking any money from the sale. The seller may be so anxious to get away from his underwater mortgage that he'll accept just about any offer. But the bank has the final say-so.

-- Many lenders will not even discuss a short sale with a seller until a purchase contract is in place. That means the buyer who makes the first offer is a guinea pig, because nobody knows whether the lender will even accept a short-sale offer.

Short sales are sometimes listed at a "ridiculously low price" just to get the ball rolling, the NAEBA warns. Similarly, a seller may agree to any offer, no matter how low and no matter whether it has a snowball's chance of being accepted by the bank, just so he can begin negotiations with the lender.

-- A short sale is only one remedy lenders can pursue, and often others are taking place simultaneously. For example, a foreclosure can take place at any time and kill the transaction, even after the lender has approved it. According to NAEBA members, in the vast majority of cases, an approval from the lender is not fully binding on the lender.

"Usually things work out," the buyers' agents report. "But short-sale contract provisions also usually give the lender a path to back away from any transaction."

Likewise, the seller and his lender may come to terms on a loan modification that allows the seller to keep the house. In these cases, the buyer and his agent -- and sometimes even the seller's agent -- may not have any knowledge that the seller is negotiating with his lender until their deal is done.

-- Short sales can be long, drawn-out affairs. The timelines are shorter than they used to be, but it can still take months, especially if the seller doesn't have his paperwork in order. And at any time during the process, the lender is free to change the rules, forcing everyone to start over again.

-- Once lenders approve the short sale, they often require the sale to close within a short period. Consequently, there is not enough time for the buyer to have the house examined by an independent home inspector. The necessary inspections can always be performed prior to the lender's approval. But the buyer loses that money if the lender rejects the deal.

Similarly, if the deal falls through -- even if the buyer gets tired of waiting and wants to move on -- the buyer will lose the money he's forked over for an appraisal, credit report and application fees paid to the lender.

Buyers may not even get their earnest money back. According to NAEBA, sellers are sometimes "frustrated to the point" of refusing to release the buyer's deposit, which can be thousands of dollars.

"Our members have had situations where a seller's lender approves a short sale, then decides to foreclose, and the seller takes out his frustrations on the buyer by not releasing his claim to the earnest money deposit," the buyers' agents report. "The deposits usually end up being returned, but not without additional legal expense and frustration for the buyer."

-- Unpaid homeowner association fees can kill the deal, as can unpaid taxes and utility bills. These become liens on the property that have to be cleared before the deal will close. And guess who's NOT going to pay them? That's right -- the seller and his lender, putting another cost on the buyer's shoulders.

If the seller has a second mortgage, that lender also has to approve the deal. Because subordinate lienholders stand to lose everything if the primary lender forecloses, they often agree to a smaller payoff. But their approval is still needed, which can draw out the process even more. Ditto for mortgage insurance companies.

-- The seller's emotional state can have a big impact on the process. Since there is little benefit -- they rid themselves of a mortgage they can't pay, but their credit is usually already damaged, they get no cash from the deal and they could be dinged with a deficiency judgment requiring them to make up the difference between what they owe and the selling price -- some start a short sale but lose motivation and refuse to complete it.

In other cases, the seller may be listing the house as a short sale just to delay the inevitable foreclosure. And in other instances, the seller makes it difficult to show the property.

"We have witnessed numerous situations where a showing is scheduled, and when the buyers and their agent arrive, the seller is actually inside the home but will not come to the door to let them inside," the buyers' agents warn.