My house in California was auctioned in 2011 by Bank of America (while a short sale was pending). I received a 1099A for both 1st and 2nd morgages. My 2nd mortgage is a refi. Now I get a letter from a collection agency on my 2nd mortgage. The amount is $28,000. When I called them to tell them I received a 1099A, they said it does not matter they still can collect. They said they could arrange monthly installments. When I said I will call them back, they quickly offered to reduce it to a little less than $8000 if I paid them right away. I called Bank of America to confirm that they did sell my 2nd mortgage to the collection agency, but I am not sure if I am really obligated to pay them or settle with them if my house was already foreclosed. Can they sue eventually and take from my paycheck?