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Hello, I am happy to answer your question.
You say that $4,000 is still due and owing. Are you collecting any fees on this? What does your loan document say, I assume you ARE allowed to foreclose? Also, I assume you have stated that attorneys fees and costs are to be added to the debt in such event?
Your options are these:
1) Go after the client in collection proceedings. There is no reason why you can't just start trying to collect this money. Again, be sure that you are adding all the fees that you can under the law. This could really add up.
2) Go after the title company for messing up the refinance transaction. Proof of paying off a loan does not constitute an oral statement. They were supposed to get written verification from you. The only reason why they didn't is because you are an individual and not a bank. This was not right on their part. You can bring a court action demanding the the transaction be revisited and that you get paid what you are due. I think this may be your best bet.
3) Foreclose. Again, you can put all the charges onto the debt, but you will still have to pay the lawyer and fees out of pocket in the meantime. It doesn't seem like it is worth it to me at this stage. Keep in mind, that EVENTUALLY this property will be transferred, and at the time, as long as you have your mortgage on record, you will get paid, if there is enough to go around after the big boy loans are paid off.
I hope this was helpful and good luck.
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