I see. Thank you for clarifying that, Lynn.
Yes, I would request that the lender withdraw that information from your credit report in return for payment of an amount you ultimately agree on.
Unfortunately, when you refinanced the property with a different lender, you would typically lose the protection afforded by CA anti-deficiency laws and the first loan would become a recourse loan, such that the lender could potentially pursue a deficiency judgment against you.
Here is a link which summarizes the law on this issue (See item 2 in particular):
If the lender were to pursue a deficiency judgment, they would typically be required to pursue a judicial foreclosure since CA law also requires that the foreclosure and anti-deficiency suit be filed in one action so the lender could not file suit seeking a deficiency judgment after they engage in a non-judicial foreclosure.
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