First, dispute the listing in question. You mentioned you have already, but for the sake of readers who are unfamiliar with the process, read the Bills.com resource Dispute Credit Report. If your disputing the report is fruitless, then you need to take more drastic measures.
File a lawsuit
Under the Fair Credit Reporting Act, providers of data to the consumer credit reporting agencies are required to report accurate (Section 623(a)(1)), complete and updated information (Section 623(a)(2)). When Bank of America / Countrywide makes inaccurate reports to the credit reporting agencies, Bank of America / Countrywide is in violation of the FCRA.
Hire an attorney who is experienced in consumer law. You may find one who will work on a contingency basis. Ask the attorney to file a lawsuit against Bank of America / Countrywide for making inaccurate reports to the credit reporting agencies in violation of the FCRA.
It would be nice to walk away with some damages, but that is not the point of filing a lawsuit against the creditor here. The point is to resolve the inaccurate report.
Debt following foreclosure
Of course, that assumes the report is inaccurate. The facts in your message are bit unclear, but you mentioned that the proceeds of the foreclosure did not cover the balance of the first and second mortgage. If that is the case, then you may have no cause of action against Bank of America because what the bank is reporting to the credit reporting agencies is accurate.
In general, if the sale price of a foreclosed property is less than the value of the mortgages held against it, then in some states the homeowner could still owe an unsecured balance called a deficiency balance or deficiency judgment. The good news is that this new deficiency balance (if it exists and if your lenders pursue it) is an unsecured debt that may be enrolled into a debt settlement program.
In some states (such as California) and in some circumstances, the second mortgage may be what is called a non-recourse loan. A non-recourse loan means that the lender has no recourse to collect any deficiency balance against the borrower. Its only recourse is the security on the property itself. You will need to review your loan documents and state laws to determine if your second mortgage is a non-recourse loan.
Before you launch into a lawsuit against Bank of America, contact an attorney in your state who is experienced in property law to determine if you owe Bank of America the deficiency balance. Then determine for certain if your old mortgages are recourse or non-recourse. Finally, if Bank of America is violating the FCRA, then consider a lawsuit.
To learn more about your options for resolving debt, see the Bills.com resource Consolidate My Debt.
I hope this information helps you Find. Learn & Save.